"Matching our blood and flesh against the enemy guns, even if we are defeated in battle, in the end we will win the war." -- Chiang Kai-shek, July 1934.

JULY 7 marks the second anniversary of the outbreak of the conflict between China and Japan. It started with a small skirmish at the Marco Polo Bridge near Peiping. Although the Japanese still refer to it as the "China incident," it has developed into a life and death struggle between the two principal nations in the Far East. Millions of troops have been engaged, great cities destroyed, and untold wealth expended. In terms of combatants, costs and extent, it is the biggest war that the Orient has ever experienced; and no one knows how or when it will end.

In reviewing the course of hostilities we find difficulty in discerning any clear-cut plan of the Japanese. They seem to have pursued a policy of expediency, with each new expedient involving greater effort and greater risk. At the start, their objective seemed limited to the occupation of North China. Then they attacked Shanghai and the Yangtze valley. Now they are involved along the entire China coast and far into the interior, and the seizure of Hainan and the Spratly Islands extends their operations beyond Chinese waters. They started to conquer a small part of China. They are now committed to securing the domination of Eastern Asia.

The Chinese have had a great deal to do with bringing this about. They have long been aware of Japan's overweening ambition and they have consciously sought to lead her beyond her depth. An examination of the record of events will show that Chiang Kai-shek has had a consistent plan. Much of it was formulated prior to the outbreak of hostilities, and it has been developed logically under the pressure of events. It is the purpose of this article to examine this plan in its economic, financial and diplomatic as well as its military phases.

In a nutshell, the Chinese purpose has been to resist desperately, and while so doing, to extend as widely as possible the theatre of operations; to make Japan's progress as costly as possible; to withhold from her the fruits of victory and to seek foreign help for a hoped-for counteroffensive.


In its military aspects the Chinese action falls into three phases: (1) the defensive, until the Japanese were completely extended; (2) a period of guerrilla fighting to keep the invaders occupied while reorganizing the main forces; (3) the counteroffensive. The struggle is now in the second phase.

In July 1934, Chiang Kai-shek delivered a series of lectures to his officers at Kuling in which he laid down the basis for China's resistance to Japan. The lectures were secret, since China was then nominally at peace with Japan and Chiang was pursuing a policy of appeasement while preparations for the inevitable conflict were being made. These lectures have now been published. They show clearly that the Generalissimo expected the attack. "Japan believes that with her present military strength she can, if she wants, occupy the whole of China without much difficulty. . . . How much time we still have on hand we can easily guess. It is right in front of us, from three or five years to ten years." This was said just about three years before the war started.

Chiang believed that the Japanese underestimated the Chinese strength and will to resist. "Contempt for China on the part of the enemy is his weak point. Knowledge of this weak point is our strong point." He was cognizant of the superiority of the enemy's equipment, but not hopeless because of it. "It is not quite essential to match big gun for big gun, aëroplane for aëroplane, a new weapon for a new weapon. . . . It is quite possible for us to resist the enemy's new inventions with old weapons, especially China's traditional, time-honored weapons . . . the knowledge of how to utilize whatever we see or can get hold of -- whether man power, manufactured articles, mountains, streams, trees or blades of grass -- is of the greatest military importance. We should exert our intelligence and ability to the utmost to make full use of the materials at our disposal."

Chiang did not expect to fight the war alone. "Japan cannot conquer China with America in her rear, Soviet Russia on her right and England on her left -- her most powerful enemies in the South Sea all flanking her. It is this international situation that constitutes one of Japan's great weaknesses. An understanding of this situation cannot but give us a feeling of security and inspire us in finding the means and the strength to resist."

Chiang stressed the importance of arousing the Chinese people to withstand the attack and he realized that the outcome would depend upon their morale. "We must pay special attention to the organization and training of the masses so that the entire countryside can be mobilized to assist the regular troops in the prosecution of the war. . . . Regardless of trouble, dangers, adverse circumstances, and the strength of the enemy, we must find the ways and means to fight him successfully. The only question is whether we have the determination and the spirit of striving incessantly to the utmost of our ability."

These were some of the general ideas of the Chinese leader long before the outbreak of hostilities. Let us see how they have been followed in the course of the war.


The first phase of the war consisted of three principal battles. China lost them all, but I think it can be said that she gained most of her objectives. Into those battles Chiang threw the flower of his army, whatever he had of mechanical equipment, and his new air force. Although his army was defeated, it was never surrounded, never completely broken. The Japanese spoke confidently of a "Tannenberg" but failed to bring it to pass. The Chinese troops always withdrew at the eleventh hour, usually in good order, and took up new positions -- in each case always a little farther from the coast than the ones just lost.

When hostilities began in North China, Chiang did not make a strong stand in that area. He did send reinforcements northward, but his best troops went to Shanghai, some 600 miles from the scene of the initial conflict. By this means he frustrated Japan's plan to achieve a quick triumph in North China as she had six years earlier in Manchuria. Japan's interests in Shanghai were great, and her large population there had been swelled by her nationals coming from interior China. She could not but accept Chiang's challenge, and the first major battle of the war was soon raging. It lasted three months. The Chinese army took a severe beating but retreated in good order. Japan's losses were heavy, but her casualties were estimated to be but a third of Chiang's.

The Japanese pushed on to Nanking, China's capital, which they took without much difficulty. Then there was a lull. The Japanese people thought the war was won and celebrations in Tokyo lasted for five days. But the Chinese did not sue for peace, nor would they even discuss it. Instead they moved their capital to Hankow and concentrated their forces at Suchow at the junction of the north-south Tientsin-Pukow and the east-west Lunghai railways and dared the Japanese to come after them. Once again the challenge was accepted and the second battle of the war ensued. It also lasted three months. At Taierchwang the Chinese administered to the Japanese their most severe military defeat in modern times. But the Japanese won through and Chiang was once more forced to withdraw. His casualties were not proportionately so severe as at Shanghai. It is estimated that he lost two men to Japan's one. He retreated upcountry, with the Japanese in hot pursuit, and finally established his next base of operations at Hankow, a port on the Yangtze about 600 miles from the sea.

The battle at Hankow, like the two former major engagements, took about three months. Chinese resistance to the Japanese along the Yangtze River was determined, but Chiang started to evacuate Hankow well in advance of giving up the city and withdrew his forces in better order than at Suchow. His Government had previously been shifted to Chungking, in the far west, and the Japanese again found themselves with a somewhat empty victory, for the Chinese were still unwilling even to discuss peace.

With the fall of Hankow the first phase of the war ended. Japan had occupied the great coastal plains of China and could move about in them at will. The Chinese forces were withdrawn to more mountainous country. Positional warfare, with great concentrations of troops, gave place to a dispersion of a large part of the Chinese troops and the initiation of guerrilla tactics.


One characteristic of the present phase of the war is the absence of "fronts." We are apt to think in terms of an extended line held by the Chinese in the face of an invading force. The Japanese have penetrated deeply into China, but they have not occupied very much territory. Their advance has been along the arteries of communication which they hold; but the countryside in between is in Chinese hands and under local Chinese administration. Literally, tens of millions of Chinese people, even in the coastal plains, have never seen a Japanese soldier. The present plan of Chiang Kai-shek is to organize these rural people; to support them with army units established in the mountain regions which surround and dot the plains; and to harass the Japanese at as many points as possible. Thus their lines are being constantly broken, isolated groups of the invaders destroyed, regular traffic over the railways impeded, and the pacification of any extended area made extremely difficult. Chiang hopes by these means to keep the Japanese fully occupied so that they must maintain their present large forces in China, and at the same time to prevent them from establishing order, without which they cannot restore business and recoup their costs. Meanwhile, he is using the time to reorganize his main forces for the hoped-for counteroffensive.


The equipment and provisioning of China's fighting forces have become increasingly difficult as the war has progressed. Of food there has been sufficient. During the past two years China has had good crops. Since her economy is essentially agricultural, even the interruption of her rail and some of her water traffic has not resulted in serious food shortages. The countryside is not dependent on the cities and has existed in spite of being divorced from them. Rail transport was meager even before the invasion, and the bulk of China's primary products has always been moved by water, cart, barrow and on the backs of coolies. Chinese troops have been accustomed to living off the country, and now that they are more widely dispersed than in the first phase of the war they will do so more easily.

The supply and transportation of munitions is a much more serious problem. Much of the equipment of China's armies has been destroyed, captured or worn out during nearly two years of war. She has no facilities for manufacturing anything but small arms, ammunition, and perhaps trench mortars. Many of her arsenals even for these necessities have fallen into the hands of the Japanese; but wherever possible the machinery from them was laboriously transported into the far west and is now being established there. In the first year of the war China was able to buy appreciable quantities of military supplies abroad, but one by one her ports have fallen under Japanese naval or military control, so that now only a trickle of war essentials gets through.

It is clear that Chiang Kai-shek expected to lose his seaports and laid his plans for defense accordingly. In fact, before the war began he said: "The enemy's striking force has been prepared, and his warships have been stationed in strategic positions along the seacoasts and the rivers. He can occupy any point in China." While the Chinese ports were being closed and the railway lines occupied, Chiang therefore began the building of roads toward the remote frontiers in the northwest and the southwest in order to form an avenue to foreign ports over which goods could be brought in. He also succeeded in building up reserves of munitions and supplies over and above day-to-day consumption. The amount of these stocks is unknown. They are obviously unbalanced, for example gasoline is scarce. But the fact remains that Chiang has munitions sufficient for a long resistance.

At the time of writing there are three routes connecting the outside world with that part of western China to which the Chinese have moved their center of resistance. The longest of these, and for that reason the least efficient, is a motor road from Chungking, the present capital, to the northwest through Kansu and Sinkiang provinces to the Turk-Sib railway in Soviet Russia. The shortest is by motor road from Chungking to Kunming and thence southward by a narrow-gauge railway to the French port of Haiphong in Indo-China. The third is from Chungking to Kunming and thence westward by road across the border of Burma to Lashio. Lashio is connected with the British port of Rangoon by a railway which proceeds southward through Mandalay. In addition to these trunk lines, the Chinese have been feverishly constructing branch and connecting roads in order to bind the area together and increase its power of resistance. In addition to the 1,540-mile road to Russia, 1,990 miles of highways have been built in the west and southwest since the war started.

These new lines of communication have by no means solved the problem of supply for Chiang Kai-shek's forces. The route from Russia is long, no gasoline supplies are available along its course, and the amount of freight which can be brought over it is small indeed. The railway line through Indo-China is only meter-gauge, the grades are steep, rolling stock is inadequate, and trains have been running only during daylight hours. In addition, the Japanese have brought such pressure on the French that they have declined to transport munitions. The Burma road is the most remote and safest from Japanese air attack, but it also is limited in its capacity and will be very difficult to maintain during the rainy season. It is being paralleled by a railroad line, but this will not be finished for many months.

Hundreds of trucks have been purchased abroad and many of them are now being operated over these new roads. But the old-style methods of transport have by no means been abandoned. Mules, carts and coolies are also being employed. In addition, water transport has been much improved. As the Chinese retreated up the Yangtze they sent their native junks and powerboats ahead of them. At Chungking in early April, a half year after the fall of Hankow 830 miles down river, boats carrying refugees and general cargo were still arriving every day. These have been put in service on the rivers of Szechwan province.

Chiang has made a Herculean effort to salvage what he could of China's meager industrial plant as he moved his forces farther and farther inland. Wherever possible, factories and arsenals were dismantled and the machinery sent far into the interior. It had to be transported much of the way by cart or pack animals or on the backs of coolies. The Yangtze River was the only route by which machinery of any size could be shipped. No one knows how much of an industrial plant Chiang now has or what supplies of raw materials for manufacturing the sinews of war. It is safe to say that it must be inadequate to sustain any large-scale offensive. Planes can be flown in, trucks and light artillery and tanks can be driven in. But planes and trucks need gasoline and guns need ammunition. Most of this must come from abroad.


Although China is considered to be a poor country, the cost of the war has fallen more lightly on her than on her enemy. In the fiscal year which ended just before the outbreak of hostilities, the Chinese Government spent a total of some $990,000,000 in Chinese currency. At three to one, that would be 330,000,000 American dollars. During the same year the American Government spent $8,105,000,000. The per capita cost for China, in our currency, was 73 cents; for the United States, $62. Despite the fact that the financial resources of the Chinese Government were so small, it had been able to build up a huge army and has managed to continue the war against Japan with very little financial help from abroad. The fact that China's normal expenditures were so small was a source of strength to her when the exigencies of war threw an added burden on her. Though she has lost the main sources of her revenue, the amount involved has not been so great that new sources could not provide it -- from either taxation or borrowing. The income of her Government in 1937 (expressed in terms of an American dollar worth three Chinese dollars) was made up as follows:


Customs$105,990,000Salt63,060,000Other taxes57,560,000Other receipts29,720,000Borrowing73,890,000 ---------- $330,220,000

Of this total, $169,050,000, or more than half, was made up of customs and salt receipts. But these revenues are pledged for the debt service. The charge for the loan service that year was about $79,000,000, and this amount was not available to the National Government. In addition, $35,000,000 was allocated as subsidies to provincial governments and $17,000,000 for administrative expenses of the customs and salt services. If these items are subtracted, it will be seen that the National Government expended for all of its activities a total of only $199,220,000. Of this sum $107,303,000 was for the military establishment.

China has lost 80 percent of her revenue from maritime customs since most of her ports are in Japanese hands; she has also lost a large proportion of her revenue from the salt gabelle. Meanwhile the new income tax which went into effect in 1937 is yielding important sums, and inheritance, war profits and other taxes have been inaugurated. The bulk of the taxes for the Central Government used to come from the port cities. Now that the Government has been moved into the interior, it is likely that the revenue of the provinces still in Chinese hands -- revenue which in the past seldom reached Nanking -- will find its way into the national treasury.

In addition to finding new sources of income the Government has been able in two important ways to support its currency and finance the war. The first was through the nationalization of silver. This provided Chiang with a war chest, and since the United States has continued to buy silver at a good price, the Chinese have shipped it out and secured the necessary foreign exchange to balance their accounts. While the $25,000,000 loan of the United States Export-Import Bank was not designed as a currency support, it has provided exchange for Chinese purchases abroad and so indirectly has contributed to that end. Secondly, Chiang has succeeded in getting British help to support his currency.

Remittances from Chinese abroad have always been an important item in China's balance of payments. The Generalissimo has won the allegiance of Chinese all over the world, and a steady stream of contributions has helped to support the currency and to furnishing direct material aid to the Government. The Chinese have been so successful in the management of their national finances that at the time of writing the yuan is accepted more willingly in the Shanghai exchange market than the Japanese yen and stands at practical parity with it. In the battle of the currencies, less spectacular than the clash of arms but equally hard fought, China has scored a series of smashing victories.


Japan has had a major military success in China. Judged by the usual standards of conquest, she has subjugated a huge area and an enormous population. Presuming that her troops move in sufficient numbers, she can proceed wherever she likes in China's great coastal plains; and there are tens of millions of unarmed Chinese in the area which she nominally controls who are subject to her power. But her leaders constantly remind the Japanese people that the war is not yet won -- that they must gird up their loins for further fighting which, they are promised, will continue for a long time to come.

It is hard for westerners to understand why Japan has been unable more rapidly to consolidate her position, even in North China which she occupied nearly two years ago. They are accustomed to judging events by the light of experience in the West. But events in Europe and in the Orient cannot be judged by the same criteria. When Hitler moved into Czechoslovakia, for example, he was not only able to assume effective control at once, but whatever there was of wealth or of organization became his to utilize for his own purposes. When the Japanese went into China, they encountered entirely different conditions.

The reasons for this are threefold. First, the Chinese are extremely individualistic. They are not integrated either economically or socially (except in the family, which is a small unit). Their integration is racial and cultural and this is a liability to an invader, not an asset. Secondly, Chinese economy is essentially agricultural; the countryside is therefore easily able to maintain itself without the cities or even the ports and railway lines. Japan has thus found it impossible to lay hold of the really vital strength of the occupied areas. Some wealth she has taken; but the real wealth of China lies in the productiveness of her rural population which has been beyond Japan's reach. Thirdly, Chiang has followed a plan of deliberately destroying everything of even potential economic value to the Japanese before he has retreated from a given area. This has come to be called the "scorched earth policy." Factories have been dismantled and what machinery could not be moved has been wrecked; railway rolling stock, and in some cases the rails, have been taken along by the Chinese as they have fallen back. Even the peasants in many regions have deserted their fields and villages, so that when the Japanese moved in they found a barren land. Non-coöperation, at which the Chinese are particularly adept, has been organized in every form and on a large scale. Japanese goods have been boycotted. The paper currency which the invaders have sought to introduce has been accepted only in the towns and villages where their military forces were at hand to force its use. Farmers have been induced to raise food crops instead of cotton or other products which Japan had hoped to secure from the area.

In addition to all these rather negative methods of resistance, positive action has been taken through guerrilla warfare. Local forces, recently joined by regular army units which have filtered back into the occupied territory, have raided and often cut Japan's long lines of communications. Small units of the enemy forces which have ventured away from the main garrisons have been attacked and in some instances annihilated. Positions long in Japanese hands have been won back by the guerrillas, necessitating the dispatch of larger forces to recover them. While each of these engagements is little more than a pinprick, their aggregate scattered along the several thousand miles of Japanese lines has a considerable effect. The guerrilla warfare makes impossible the withdrawal of any substantial part of the invading forces; and it is very wearing on their morale, for there is no satisfactory way to retaliate. When the Japanese counterattack, the guerrillas withdraw, and the shooting of a few villagers as an example does not compensate the invaders nor has it served to intimidate the Chinese.


The Chinese have had a firm conviction that their cause was just, and a clear belief that if they could continue their resistance long enough other Powers would come to their assistance. There is an old Chinese proverb which says: "Virtue never lacks company; it will ever find support." Chinese diplomacy has been energetic both in making it understood abroad that China's course was virtuous and in seeking support. It has thus far gained widespread moral assistance and even a little material aid.

The Chinese Government has sought to show that it was fighting, not only to save its homeland from a ruthless invasion, but to defend the inviolability of treaty engagements and to preserve or restore some semblance of international morality. It has pictured itself as occupying the front-line trenches in a war which really involves every nation which hopes to live in a world of law. Chiang has declared that China will fight this good fight alone, if need be; but that he has a right to expect like-minded nations to do their duty also. This has been the positive side of the Chinese claim for help. On the negative side the Chinese have sought to show that a Japanese victory would result in the total loss of the rights and interests of all other foreigners in China. While their points have been well taken and ably argued, the actions of Japan have tended to supply the proof. As the war has progressed, foreign countries have come more and more to feel that the Chinese contention is correct. This feeling is doubtless the basis for the financial aid which has been given China by the Western Powers.

After the fall of Hankow, Chiang stated that henceforth any effective action taken by Japan would bear more heavily on the interests of other nations than on China's. Certainly if Japan hopes to control China completely, she must take over the International Settlement at Shanghai and other foreign concessions, which serve as centers of Chinese irredentism. It is not too much to say that Chiang, despite the loss to certain of his countrymen, would greet such an attempt with satisfaction. It would increase very greatly the chance that the Western nations would align themselves more actively on China's side.


The Chinese are a fatalistic race. Nature and their own ineptitude have combined to make them so. No people have such a desperate struggle for mere existence. Floods, famines, poverty and civil wars have for centuries challenged them to survive. But they have survived, and in the process they have built up an immunity to disaster which has stood them in good stead during the past two terrible years. This Chinese optimism should serve as an example to some western peoples who, despite an infinitely higher standard of living, feel nothing but complete despair when the business curve dips temporarily downward.

The outcome of the war depends upon the ability of the Chinese to continue their resistance, not only in the military sense that they oblige Japan to maintain a large army in the country, but also in the political sense of denying her any opportunity to profit from her occupation of Chinese territory. Chiang has, of course, appreciated the importance of maintaining the people's morale and in all his speeches and messages lays great stress on the development of the "revolutionary spirit" in order not only to defeat the invader but also to regenerate the nation. The effect of this is to focus attention both on the immediate struggle and on a long-term policy. In other words, it is not a question of months; the people are asked to prepare for long years of patient, resolute, self-sacrificing effort.

The Chinese people are notable for their realism. They are accustomed to compromise. While they seldom change their direction, they are willing to make progress by easy stages. These characteristics may be their undoing, for in order to return to a "business as usual" policy they may make what they would regard as a temporary arrangement with the Japanese, with the idea of postponing the final showdown. They might, led by their merchant class, begin to trade again with the enemy, hoping in the future to edge the Japanese out little by little instead of attempting by a major counteroffensive to throw them out now. Whether the new Chinese nationalism is sufficiently strong to overcome these traditional Chinese traits, time alone will show.


After nearly two years of war, in which she has won all the battles, Japan still has to maintain in China proper (that is, south of the Great Wall) an army of at least 900,000 men (the Japanese Admiralty spokesman on May 11 said there were more than 1,000,000 men in Central China). These are divided roughly as follows: Canton area, 60,000; Hankow area, 300,000; Shansi, 120,000; Honan, Hopei and Western Shantung, 200,000. The remaining 220,000 are in garrisons and on lines of communications. In addition, there are probably over 300,000 troops in Manchuria and 40,000 in Korea.

The Chinese forces, if guerrillas and bandits are included, probably number over 2,000,000 men. Of these about a third are at the points of Japanese penetration; a third have been split up into small units and sent back into the occupied area for guerrilla warfare; and a third are in the far west, for reorganization and training. Of those at the "front," probably 350,000 are in the Hankow area south of the Yangtze, 150,000 are in the south in Kwangtung, and 100,000 in the northern province of Shansi.

The Japanese forces have been likened to swimmers in a swimming pool. They can move about wherever they like in the pool, but they do not occupy it. When they are in any certain spot the water surrounds them but offers little resistance; when they move, the water rushes in again to fill the place where they had stood. But to get out of China is not so easy as getting out of a swimming pool. Dr. P. C. Chang has described Chinese resistance in a novel way: "It is not like one fist striking another," he says. "It is like a fist striking soft glue. As the fist advances the glue engulfs it. The fist may feel very proud that it is going ahead. But the farther it goes in, the harder to get it out. So I should not be surprised if the Japanese troops were beginning to be alarmed as to when and how they will ever get home."

One would be very rash indeed to make any prophecies as to when the conflict in China may end, or to pick the winner. It is perhaps possible to say that the struggle is of such a fundamental nature that it will go on in some form for many years to come. And for this same reason it seems unlikely that either side will win a clear-cut and decisive victory.

For China to win, without outside military aid, she must be able to reorganize and on the material side greatly strengthen her armies and carry out a counteroffensive of surprising skill and force. Alternatively, Japan must collapse at home. Neither of these possibilities seem imminent. For Japan to win, she must not only crush all active military resistance and restore order in the country, she must also succeed in getting the Chinese themselves to coöperate with her. This possibility too appears remote. Thus the likely outcome would seem to be some sort of compromise which would afford temporary peace, and later the renewal of the struggle, perhaps in a different form. This leaves out of account the chance that China will get the active military aid of some other Power or Powers. Chiang Kai-shek has counted on this from the beginning, and still counts on it.

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