Memorandum, Foreign Economic Developments, Far Eastern Unit

Cleina - Not for further dissemination L.O, 11832, Sec. 3(E) and 5(D) FOREIGN ECONOMIC DEVELOPMENTS E.0.10501 NLT-CC Data 6.24.75 Far Eastern Unit China: SOME FEATURES OF CHINA'S INTRA-PARTY STRUGGLE. Recent moves and appointments by the Kuomintang Government in China point up not only the reactionary character and dangerous drift of the Chinese ruling party, but indicate the progress of a parallel intra-party struggle. Factions, parties and ideologies are represented in China, as elsewhere, by outstanding personalities. While personal ambitions are of extreme importance, what may appear to be only clashes of personalities within the Kuomintang are actually the outer manifestations of much deeper conflicts. Ever since the purge of left-wing elements in the party as far back as 1927, when a small but militant trade union movement was liquidated, the Kuomintang has been emerging as the property of reactionary and conservative forces. Within the party two main groups manoeuvre for power: the feudal landlord and country merchant class - whose economic and political power is based on the exploitation of the farming population - and the "modern" industrial and financial interests most obviously represented by men like H. H. Kung and T. V. Soong. SERVICE" is Around and within these two main groups are other smaller and less well defined factions. The most important of these are first the Military Clique, lead by General Ho Ying-chin, Chief of Staff, which leans heavily toward the most reactionary elements in the party because the officer corps is recruited mainly from the landed gentry; and second the so-called Political Science Group, which favors the decentralized economic development of China and thus also finds political support in conservative provincial circles. The "C-C" Clique -- so-called because the two Chen brothers, Chen Kuo- fu and Chen Li-fu, are the leading exponents -- is a political machine of a fascist pattern with its own political secret police. The immense political influence of this group results from the fact that its men hold most of the strategic positions in China's one legal party, the Kuomingtang. It is in such a set-up that Generalissimo Chiang Kai-shek endeavors to maintain a precarious balance. One of the effects of Japan's occupation of the commercial and industrialized areas of China was to give added weight in political power to the provincial landlord elements in the Kuomintang, and to reduce the influence of the "modern" business-banking groups. Adroit whangling on the part of Chiang Kai-shek, and a sense of common cause against the rising pressure of the common people, has so far succeeded in reconciling the conflicting economic interests of the groups within the party. The conflict that has ebbed and flowed with the vicissitudes of Chinese affairs in the past two decades is again resurgent, however, as the commercial and industrialized areas of China once more fall under the domination of the Kuomintang; and recent moves and appointments appear to signify the attempts of reactionary provincial landlord-militarist groups to consolidate a position they attained during the war.