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MARCH 1948
The second motivating force behind China's policy toward Japan, closely related
to the first, is China's concern over the possibility that its once powerful neighbor will
again assert industrial preeminence in Asia. In this event, China feels it will be
relegated to a position of secondary economic importance in Asia. Fear of such a
consequence will probably lead China to use its influence, as far as possible, to prevent
Japan's recovery as a strong industrial power. Nevertheless, China well knows that
some trading with Japan, especially in the importation of cheap Japanese-made con-
sumer and industrial goods as they become progressively available, would operate
toward an amelioration of China's present desperate economic situation.
China is also aware that Japan's geographic position, dominating the exits and
entrances to the Sea of Japan and Yellow Sea, constitutes a threat to China's security.
The possibility of the establishment of a hostile government in Japan, either (a) because
of a resurgence of military power or (b) because of eventual Communist domination
of that country, continues to be a cause of concern to China. Press opinion in China
is overwhelmingly concerned with fear of renewed Japanese aggression, and has
recently warned that the power of the Zaibatsu remains unbroken, war criminals
remain unpunished, and Japan remains ambitious to regain her former status.
With regard to the question of a peace treaty for Japan, China is now caught
between the conflicting interests of the US and the USSR. The USSR proposed a
Foreign Ministers' Conference to initiate discussions with any of the four powers
present having the right to veto. The US, on the other hand, proposed an eleven-
nation conference, with a two-thirds majority sufficient to carry a motion and no
veto power. China, in an endeavor to find a common ground between the two po-
sitions, has suggested an eleven-power conference, with the USSR, the US, China, and
the UK maintaining the right to veto, an organization similar in structure to the
Far Eastern Commission. The UK, however, has rejected the Chinese suggestion, and
at present the situation is deadlocked, with China maintaining its insistence on the
right to veto. The present stalemate on the treaty issue may continue for some time.
China will doubtless continue to seek US aid in the future, and as long as the
possibility of obtaining such aid exists, China will be reluctant to oppose the US po-
sition on any major issue such as the Japan treaty. On the other hand, China is
very conscious of the strong Soviet position in Korea and Manchuria, and will exert
its efforts to bring about Soviet participation in the peace conference, in order to
have the treaty guaranteed by all the great powers. Chinese officials have stated that
the USSR has exercised "unremitting pressure" on the Chinese Government in respect
to the treaty negotiations.
Whether or not China will remain aloof from a conference not attended by the
Soviets appears to be in some measure contingent upon the prospects of long-range US
guarantees to China. However, China doubtless is aware that the nature of the
peace made with Japan is of deep concern to her well-being, involving as it does long-
range Chinese national security; consequently, China will proceed with caution.
Regarding Japan's future geographic limitations, China believes that Japan should
be reduced to the four main islands, as advocated by the Cairo Declaration. Without
IV-9
SECRET
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"ocrText": "SECRET\nMARCH 1948\nThe second motivating force behind China's policy toward Japan, closely related\nto the first, is China's concern over the possibility that its once powerful neighbor will\nagain assert industrial preeminence in Asia. In this event, China feels it will be\nrelegated to a position of secondary economic importance in Asia. Fear of such a\nconsequence will probably lead China to use its influence, as far as possible, to prevent\nJapan's recovery as a strong industrial power. Nevertheless, China well knows that\nsome trading with Japan, especially in the importation of cheap Japanese-made con-\nsumer and industrial goods as they become progressively available, would operate\ntoward an amelioration of China's present desperate economic situation.\nChina is also aware that Japan's geographic position, dominating the exits and\nentrances to the Sea of Japan and Yellow Sea, constitutes a threat to China's security.\nThe possibility of the establishment of a hostile government in Japan, either (a) because\nof a resurgence of military power or (b) because of eventual Communist domination\nof that country, continues to be a cause of concern to China. Press opinion in China\nis overwhelmingly concerned with fear of renewed Japanese aggression, and has\nrecently warned that the power of the Zaibatsu remains unbroken, war criminals\nremain unpunished, and Japan remains ambitious to regain her former status.\nWith regard to the question of a peace treaty for Japan, China is now caught\nbetween the conflicting interests of the US and the USSR. The USSR proposed a\nForeign Ministers' Conference to initiate discussions with any of the four powers\npresent having the right to veto. The US, on the other hand, proposed an eleven-\nnation conference, with a two-thirds majority sufficient to carry a motion and no\nveto power. China, in an endeavor to find a common ground between the two po-\nsitions, has suggested an eleven-power conference, with the USSR, the US, China, and\nthe UK maintaining the right to veto, an organization similar in structure to the\nFar Eastern Commission. The UK, however, has rejected the Chinese suggestion, and\nat present the situation is deadlocked, with China maintaining its insistence on the\nright to veto. The present stalemate on the treaty issue may continue for some time.\nChina will doubtless continue to seek US aid in the future, and as long as the\npossibility of obtaining such aid exists, China will be reluctant to oppose the US po-\nsition on any major issue such as the Japan treaty. On the other hand, China is\nvery conscious of the strong Soviet position in Korea and Manchuria, and will exert\nits efforts to bring about Soviet participation in the peace conference, in order to\nhave the treaty guaranteed by all the great powers. Chinese officials have stated that\nthe USSR has exercised \"unremitting pressure\" on the Chinese Government in respect\nto the treaty negotiations.\nWhether or not China will remain aloof from a conference not attended by the\nSoviets appears to be in some measure contingent upon the prospects of long-range US\nguarantees to China. However, China doubtless is aware that the nature of the\npeace made with Japan is of deep concern to her well-being, involving as it does long-\nrange Chinese national security; consequently, China will proceed with caution.\nRegarding Japan's future geographic limitations, China believes that Japan should\nbe reduced to the four main islands, as advocated by the Cairo Declaration. Without\nIV-9\nSECRET"
}