CRISIS IN CHINA BUILDING UP

Chronicle (Levin), 20 June 1947, Page 5

CRISIS IN CHINA BUILDING UP

CREEPING POLITICAL DEBiLITY AND GALLOPING INFLAT10N Received Thursday, 7.0 p.m. NEW YORK, June 19. "The crisis in China is building up to a point where it may shortly steal the lieadlines from Russia and the Balkans," writes the, United Press 's foreign editor, Ilarrison Salisbury. "The United States is faced with a difficult problehi as to liow to avert a general eollapse of Chiang Kai-shek's regime. "Secretary of State Marshall, although now engrossed in projects for rescuing European ceonomy, is believed to be turning his attention to the creeping political debility and galloping inflation of the Chinese. The National Government is now confronted with a major military crisis in the form of sensational Communist sneeesses in Manchuria, the latest of which was the Communist landing near Tientsin and the advance to Tangku. "This neAv Communist threat empliasised the inability of tlie Government forces to parry the blows of the fast-moving Communist troops. In Manchuria itself the Communist drive has succeeded in paralysing the Nationalist armies despite the fact that they 1 eonstitnted some of the best in Chiang's command and they are mostly Ameriean-trained and American-equipped.

"For all practieal purposes the Comniunists have now confined the Nationalists to a few large cities — Mukden, Szepingkai, Changehun, Fashun and Kirin. Several of these points are elosely besieged and might fall to an aggressive assault. Furthermore,- the Nationalists have recently- lost. a eonsiderable percentage of their troops and large quantities of equipment. "The loss of Manchuria with its rich uatural resources and heavy industries would be a blow which would rock the Chiang Kai-shek regime to its foundations. In this situation the Chinese Gdyernment is besieging Mr. Marshall for American asaistance, particularly for the releaso of the 500,000,000-doliar

export-import loan which has been withheld pending a solution of China 's internal difficulties. ".However, there is now considerable doubt whether even a large loan would solve China 's difficulties for very long. The Government 's failure to check the riotous inflation' plus the military failure has produced great political uneasiness. Some American quarters fear that the situation is.now past mending and no matter what remedia] action is taken China will experiehce an explojsive blow-up which may result in splittmg the country into regioual areas controlled by'war lords as it was twenty yOars ago."