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Labor Action, 13 December 1948


Jack Brad

Washington’s China Policy:
Groping in a Blind Alley


From Labor Action, Vol. 12 No. 50, 13 December 1948, pp. 1 & 4..
Transcribed & marked up by Einde O’Callaghan for ETOL.


Of all the receptions given to supplicants for American financial and political support – and they have in the past few years come from every corner of the globe – that given to Mme. Chiang Kai-shek is by far the strangest. This special emissary of the dying government of China is forced to maintain silence about her few interviews with Secretary of State Marshall, refrains from public addresses and cools her heels while Truman puts off a personal interview for which she has traveled 9,000 miles and which is of the utmost urgency.

The atmosphere in Washington is unmistakably cool toward the Chiang regime – without, however, giving up the regime entirely. In its own fashion Washington has been waging a cold war against Chiang since 1947 when Marshall returned from Nanking.

A few instances will fill in the picture. The administration’s foreign aid program submitted last year did not contain appropriations for China. 475 millions were allocated subsequently, after a furious behind the scenes battle. Despite the deterioration of Chiang’s military position, especially since the autumn offensive of the Stalinists, the Truman administration has not proposed any new program of assistance. A month ago Chiang sent a personal message to Truman asking for a policy statement of support and substantial help. So unfavorable was Truman’s reply, from Chiang’s viewpoint, that he refrained from making it public.

Basic U.S. Policy

This is the backdrop for Mme. Chiang’s difficulties. It is improbable that she can overcome them in time or sufficiently. Her publicity agents have broadcast the tale that she carried the day against heavy odds, including Roosevelt’s opposition, during her last visit during the war. However, the facts are to the contrary. Mme. Chiang tried at that time to reverse the American grand strategy from concentration in Europe to Asia. While she did get increased material assistance, she did not succeed in this basic and decisive objective.

This failure is also a clue to present American policy, which remains basically oriented toward Europe and will not commit itself elsewhere to the detraction from this basic policy. For, in the terms of American imperialism, China has not fulfilled the economic or political promise which America desired of it.

Until virtually the outbreak of World War II, America’s interest in Asia was not very extensive. The peculiar nature of U.S. imperialism is to dominate by sheer economic weight rather than by colonialism. Thus, the United States did not develop a Pacific empire except for the Philippines, Hawaii and other islands. By virtue of its ability to control the world market and as the primary source of capital surplus, the United States, in effect, entered into the British and Dutch empires more or less at will. U.S. investment in Indonesia and Malaya, the chief world source of rubber and major source of tin, oil and quinine, was about one and a quarter million dollars. U.S. trade was largely with Japan and the Southeast Asian colonies. Japan was fourth on the list of markets for finished goods from the United States.

The basic American economic stake was in South and Central America. But even in Asia its interests were elsewhere than in China. Thus, on a list of twenty primary markets for U.S. goods, China does not even appear. In ten years immediately preceding World War II, U.S. imports from China ranged between fifty-two millions and one hundred eleven millions annually and accounted for a negligible three to four per cent total import trade. The leading items imported were tung-oil, raw silk, some tinware, of which articles none are basic or irreplaceable.

It would be false to look at the picture from this one side. For in a year in which China imports from the United States accounted for fifty-seven per cent of all her imports, this same amount was a mere three and four tenths per cent of total U.S. exports. The same ratio holds for Chinese exports to the United States. Thus China’s world trade relationship was so insignificant that her U.S. trade was relatively unimportant. The same is true of China as an outlet for capital investment. For in 1930 the U.S. had a mere 155 millions invested in China. This was the high-water mark of U.S. investments.

Dark Outlook

China never acquired a basic economic relationship to the United States. No substantial section of the American ruling class has an important stake in China. So that, in 1948, with his regime crumbling, the only spokesmen Chiang can find here are a handful of powerless, conservative politicians whose arguments are reduced to the doubtful defense of Chiang’s “democracy” against totalitarian communism. But no one has made out a life and death case for the capitalist class. That is the basic weakness of Chiang’s case.

This is graphically emphasized by post-war developments in China itself where the vampire-like expansion of the Four Families has brought most of China’s economy under their bureaucratic-capitalist control. Both native and foreign businesses are being strangled to death by the crushing Kuomintang monopolies.

In consequence, the hopes of sections of U.S. capitalism for a monopoly over a growing extension in the Chinese economy are frustrated to the point where the dominant sentiment of U.S. and Chinese capitalists is anti-Chiang and is willing to gamble on Stalinism.

Guenther Stein writes as follows in September 1947:

“Now, however, a good many American businessmen seem to be nearer than they had ever been to despairing of China and of the chances of developing within the foreseeable future sound and broadening business relationships. Another new factor, too, is that a greater number of independent Chinese businessmen than ever in the past are reported to be in agreement with them on the darkness of the outlook.”

An American banker is quoted in Business Week (Nov. 20):

“Maybe they (the Communist Party) will welcome us for continuous trade. After all, China must trade – and the Communists are realists.”

The New York Times’ Tientsin correspondent reports on December 5:

“Both Chinese and American businessmen here are bluntly outspoken in their criticism of any proposal for further U.S. aid to the regime of Generalissimo Chiang Kai-shek. Both groups, talking in terms of trying to do business with the Communists, say that further U.S. aid now would make U.S.-China trade impossible later.”

One U.S. businessman is quoted:

“I am willing to take a gamble. It can’t be worse than trying to do business under the present regime.”

Strategic Value

These are the economic realities. Native and foreign capitalists are alienated from the Kuomintang and see no future under it. There is no pressure from these interested groups for support of Chiang; quite the contrary is true. The entire prospect on which U.S. policy was based has reached an impasse. In the late 1930’s Carl Craw wrote a book entitled 400 Million Customers whose title exemplified the aspiration of U.S. imperialism in China. Henry Ford once said that if the Chinese could be made to wear their garments one inch longer, it would provide such a market as to solve the crisis. In February 1940 a survey report stated that in ten to twenty years China may become “the biggest single market for American capital,” taking at the rate of “several billion dollars a year.” (America’s Future in the Pacific, p. 44)

Thus China was forever the potential market. The post-war years have been disillusioning; the prospect is dimmed and effort futile and unprofitable. In addition to the historic dislocations, which prevented establishment of a firm axis between U.S. and Chinese economy, is added the new and specific anti-capitalist program of the Kuomintang feudal-bureaucratic monopolists.

China has mainly a strategic significance in the inter-imperialist cold war. The collapse of American policy is a result of Chiang’s weakness as an instrument in such a cold war. Since he cannot serve this elemental need, his maintenance in power becomes meaningless to U.S. imperialism. The plain truth is that Chiang and his Kuomintang are not suitable instruments for any war, not to speak of the complex world struggle in which America is engaged with Russia.

America’s China policy since Pearl Harbor was the establishment of a strong central government capable of ruling a unified nation. With the U.S. as the sole dominator of such a state it would gain for itself a pre-eminent position in Asia. The history of the intervening years is the record of the failure to unify China politically, to create a strong, centralized state or to establish American hegemony.

General Marshall spent a year in China trying to bring an end to the civil war and establish a coalition regime in which the differences could be contained within a viable political framework. When he failed he placed the blame equally on the “dominant reactionary group in the government and the irreconcilable Communists.”

Marshall’s Difficulties

There are three reasons for Marshall’s failure and therefore for U.S. policy.

  1. The historic error of Roosevelt at Yalta. Basing himself on the erroneous idea that the war would be a continental one in Asia, he gave to Russia a sphere of influence in Manchuria similar to what it had in czarist times. This area became the base from which Chinese Stalinism could consolidate and expand.
  2. Completely misunderstanding the Kuomintang, Marshall did not see that it was primarily a feudal bureaucracy whose first interest was in preventing any social change, especially in land. This was not a. negotiable antagonism. In China’s context this meant the Kuomintang was committed to war to the death with Stalinism. Therefore, American aid to Chiang could not go, as the United States desired, to national unification but went into expanding the civil war.
  3. The basic problem of China is the land question. Marshall understood this only vaguely. He understood it enough to know that some “reform” was necessary but he thought of it in terms of elimination of graft, of streamlining, etc. The social revolution which Chinese Stalinism has inherited and distorted is an overwhelming force undermining and destroying the props under the Kuomintang.

But, while the United States sought to find other “liberal” groupings to support it, it had to continue to hold on to Chiang. Thus, in the first two post-war years the United States poured two and a quarter billion dollars into China. U.S. planes carried Kuomintang troops to the civil war fronts. Since it could not develop an alternative to the Kuomintang and since this state no longer served any useful political purpose, the U.S. was gradually left without any alternatives. It has not been able to bring the social revolution in agriculture into its own political orbit. For that reason, everything it has built turns to sand. It cannot find a way of abolishing feudalism without aiding Stalinism.

Can’t Be Stopped

The basis of colonial policy for all imperialist powers has been alliance with native feudalism. The United States arrives late on the colonial scene; feudalism’s day is done as is the day of the empire. An alliance with feudal China does not suit the needs of the cold war.

Today the United States has no China policy, or, more accurately, it does not have the means of putting into effect a policy of its own. It is being driven out of Asia but it is helpless to stop it. The name of America has become synonymous with foreign oppression. For, as part of its policy of restoring European capitalism, the United States also supports actively the restoration of British, French and Dutch rule. In China it is completely tarred with Kuomintang mud, for everyone knows that without U.S. dollars the Kuomintang would have fallen long ago.

With America committed to Europe it is unlikely that it can send to Chiang enough to make a difference, even if it would help. The present estimates of one million dollars a year for three years that Mme. Chiang is reportedly asking is meaningless come-on bait. If the United States were to accept the commitment implicit in this proposal it could not stop at any fixed sum. It would have to assume whatever needs arose from the struggle. It is doubtful whether this is possible without taking full control of China. As a matter of fact, the despicable and treasonous proposals of Premier Sun Fo, and of Chiang himself, call for a “MacArthur for China “ and complete U.S. control of the crumbling Kuomintang armies.

Such a commitment would have a double-barreled effect. Instead of becoming a positive factor in the cold war, China would become a united force behind native Stalinism against the American invasion and its puppets. Secondly, it would not only give Russia this additional political weapon but would chance the possibility of World War III, meanwhile further alienating Asia’s masses.

Two-Sided Approach

The State Department is gradually moving toward a two-sided approach to its dilemma in China. While waiting to see what the future will bring it assumes a Stalinist victory. While not wishing this victory, it will do nothing to create an irreconcilable antagonism between Chinese Stalinism and itself. It hopes that the economic needs of the new regime will force it to some kind of “Titoism.” In the meanwhile, U.S. capitalism gains something even more substantial than eventual Titoism, for the policy of the Chinese Communist Party has been summarized by two of their slogans: “Protect the Property of Foreigners” and “Factories to Their Owners.” U.S. capitalists on the scene are being assured freer operations than under the Kuomintang. While there are few illusions as to how long this will last, at the moment it represents an improvement over Kuomintang rule.

Secondly, the United States continues to search for support in all directions. It sends another thousand marines to Tsingtao in the North. It siphons all aid funds to T.V. Soong in Canton. There are rumors of direct deals with several warlords like General Fu. These are not elements in a policy but a search for strong points as a means of obtaining operating tools for maneuver.

To complete this picture it is necessary to examine Chinese Stalinism. This we hope to do next week.

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Last updated on 8 October 2018