INFLATION IN CHINA

Press, Volume LXXXII, Issue 24907, 21 June 1946, Page 7

INFLATION IN CHINA

Army Expenditure Blamed U.S. PLANS FOR REDUCTION (N.Z. Press Association—Copyright) (Rec. 10 p.m.) NANKING, June 20. Declaring that it was impossible to curb disastrous inflation in China without internal peace, the Prime Minister (Mr T. V. Soong J revealed that 80 per cent, of the Government’s revenues was being used to finance the huge Chinese National Army. Mr Soong drew a sombre picture of economic conditions and said that broken communications and Communist blockades were interfering with the free flow of goods and creating severe coal and rice shortages. However, the disrupted Chinese economy would quickly .be restored if "lasting peace In Washington the Acting-Secretary of State (Mr Dean Acheson) and the Secretary of War (Mr Robert A. Patterson) told the House of Representatives Foreign Affairs Committee that the United States Ambassador in Chipa (General G. C. Marshall) had proposed a sharp reduction and the reorganisation of China’s armed forces as a means of promoting peace in the Far East. Under General Marshall’s scheme the Chinese Army would be reduced to 60 divisions. At present its strength is estimated at 250 to 375 divisions. Mr Acheson and Mr Patterson suggested that Congress should pass a bill authorising the transfer of war goods to China and the training of Chinese by United States officers. They pointed out that if General Marshall’s plan was adopted great numbers of Chinese would be released for reconstruction work, the rehabilitation of farm lands, and for planting urgently needed crops. Mr Acheson said under General Marshall’s plan the Nationalist and Communist armies would be integrated into one unit, with five-sixths of the total Nationalist and ohe-slxth Communist.