Memorandum, State Department Summary of Telegrams

DEPARTMENT OF STATE OFFICE OF THE SECRETARY WASHINGTON May 16, 1949 SUMMARY OF TELEGRAMS CHINA Our Embassy Office in Canton reports that certain followers of Acting President Li are organizing an anti-Communist resistance movement to carry on after the Communists have achieved control of all China. The movement will operate openly with headquarters in Hong Kong and covertly in China proper, with the aim of furthering fac- tionalism within the Chinese Communist Party and breaking down pro-Soviet orientation. Our Embassy Office feels that this movement if properly led might develop a considerable following and could be effective. Embassy Office Canton estimates that the Communists will take Canton by about mid-June, separating Taiwan from south China and preventing united action between Chiang Kai-shek and Acting President Li. Li will probably try moving the capital from Canton, offer some further resistance on a limited regional basis, and then will probably leave China to work with the resistance movement, according to the Embassy Office. Our Consul General in Shanghai expresses his belief that we must take some action to prevent the demolition of utilities and industries there. He contends that both Nationalists and Communists will try to affix responsibility on us for whatever happens in Shanghai. He points out that without some cooperation in securing supplies the Communists will not be able to prevent complete collapse and economic chaos in Shanghai. He feels that we must take remedial action before the crisis or be prepared to sacrifice our diplomatic position and assets there. FOREIGN In his first discussion with British and French represen- MINISTERS tatives, Ambassador Jessup received the impression that substantial agreement exists on the principal problems which will confront the Foreign Ministers. These points were discussed: 1) agreement that a united Germany, if formed, must be allowed freedom to maintain the same associations with the west now contemplated for western Germany; 2) regrouping of military forces, with Jessup emphasizing that we do not favor any disposition of US forces which would weaken our influence in Europe; and 3) Soviet participation in the Ruhr DECLASSIFIED E.O. 12065, Sec. 3-402 authority State Dept. Guideline, June 12, 1979 By NLT HC NARS, Date, 11-13-to T