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TOP aA transmission lines and sub-stations. In North China, political difficulties will need to be resolved before any permanent improvement or expansion of power systems would be justified. Railways-The railways of China, operated by the Ministry of Communications as a government monopoly, may be grouped as follows: Kilometers Operable Total (by Natl Govt) Manchuria 11336 1647 North China 5749 2362 South and Central China including Lunghai Railroad 8837 6199 Taiwan (Formosa) 3925 3925 Hainan Island 289 Totals 30136 14133 From July 1937, when Japan initiated war against China, to October 1938, China lost virtually all railway lines to the enemy or through her own scorched earth policy. On V-J Day 8772 km were in operation in China proper and approximately 11000 km in Manchuria, but since then 3649 km in China proper and 9353 km in Manchuria have been captured or destroyed by the Communists. With railroad materials and rolling stock furnished by UNRRA, and cannibalized from branch lines and sidings, since V-J Day, 3816 km of railways have been restored in China proper, but largely on an emergency basis with temporary timber bridges and other sub-standard materials. Deficiencies in transport are a major obstacle to economic recovery but until the political situation is resolved in Manchuria and North China, no rehabilitation of railways in those areas, except on an emergency basis, is feasible. This includes the Lunghai Line which, since the change in course of the Yellow River to the old bed, is now considered in Central rather than North China. Proposed railway rehabilitation programs have there- fore been confined to lines south of the Yangtze River, the important North and South artery between Canton (Kowloon) and Hankow, (1242 km main, 106 km branch) and nearly complete rebuilding of the diagonal Chekiang-Kiangsi Railway, from Hangchow to Chuchow (1076 km main, 68 km branch) where it connects with the Canton-Hankow Railway ; and the Hunan-Kwangsi-Kweichow line which runs from Hengyang to Kweilin and Tuyun. The latter line could probably be rebuilt at least in part with materials sal- vaged in rebuilding the other two lines. Estimates run high, up to $100,000,000 and more, for this program and include such maintenance of way material, rolling stock and railway shop equipment which must be imported. A major obstacle to additional investment in these lines on a loan basis is the heavy and involved capital structure, which is completely out of line with the present de- teriorated plant value. Financial reorganization is indicated, with assumption by the National Government of war damage. Shipping-Inadequacy of coastal and river shipping is a contributing factor to the 44 TOP SECRET

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    "ocrText": "TOP\naA\ntransmission lines and sub-stations. In North China, political difficulties will need to be\nresolved before any permanent improvement or expansion of power systems would be\njustified.\nRailways-The railways of China, operated by the Ministry of Communications as\na government monopoly, may be grouped as follows:\nKilometers\nOperable\nTotal\n(by Natl Govt)\nManchuria\n11336\n1647\nNorth China\n5749\n2362\nSouth and Central China including Lunghai Railroad\n8837\n6199\nTaiwan (Formosa)\n3925\n3925\nHainan Island\n289\nTotals\n30136\n14133\nFrom July 1937, when Japan initiated war against China, to October 1938, China lost\nvirtually all railway lines to the enemy or through her own scorched earth policy. On\nV-J Day 8772 km were in operation in China proper and approximately 11000 km in\nManchuria, but since then 3649 km in China proper and 9353 km in Manchuria have been\ncaptured or destroyed by the Communists.\nWith railroad materials and rolling stock furnished by UNRRA, and cannibalized\nfrom branch lines and sidings, since V-J Day, 3816 km of railways have been restored in\nChina proper, but largely on an emergency basis with temporary timber bridges and other\nsub-standard materials.\nDeficiencies in transport are a major obstacle to economic recovery but until the\npolitical situation is resolved in Manchuria and North China, no rehabilitation of railways\nin those areas, except on an emergency basis, is feasible. This includes the Lunghai Line\nwhich, since the change in course of the Yellow River to the old bed, is now considered in\nCentral rather than North China. Proposed railway rehabilitation programs have there-\nfore been confined to lines south of the Yangtze River, the important North and South\nartery between Canton (Kowloon) and Hankow, (1242 km main, 106 km branch) and\nnearly complete rebuilding of the diagonal Chekiang-Kiangsi Railway, from Hangchow\nto Chuchow (1076 km main, 68 km branch) where it connects with the Canton-Hankow\nRailway ; and the Hunan-Kwangsi-Kweichow line which runs from Hengyang to Kweilin\nand Tuyun. The latter line could probably be rebuilt at least in part with materials sal-\nvaged in rebuilding the other two lines.\nEstimates run high, up to $100,000,000 and more, for this program and include such\nmaintenance of way material, rolling stock and railway shop equipment which must be\nimported. A major obstacle to additional investment in these lines on a loan basis is the\nheavy and involved capital structure, which is completely out of line with the present de-\nteriorated plant value. Financial reorganization is indicated, with assumption by the\nNational Government of war damage.\nShipping-Inadequacy of coastal and river shipping is a contributing factor to the\n44\nTOP SECRET"
}