After Action Report 05
Submitted by Richard Hands on 19 Oct 2005
The Kuomintang – Secret CIA Report for President Truman, August 1945

Mr President,

You have asked us for a brief history of and the current prospects of the Ho regime in China. Disentangling the web of half-truths that surround the course of the Last War has been a difficult one, and we are still not entirely sure that we have been able to do so. However, we have been able
to piece together the following account:
During 1942 the Chinese communist forces conducted no major field operations. The Kuomintang conducted minor, probing attacks only, although these tied down significant numbers of Japanese troops, who were under-resourced and frequently were unable to bring to bear their significant advantage in military hardware. As a result, territorial gains were made in the south of the country.
During 1943, the Kuomintang became bolder, and General Ho was able to capture Macao and advance into the northern part of French Indo-China following the delivery of Soviet T-34s. However, they continued to be unable to make best use of their industrial production due to a chronic shortage of rubber. It is believed that this was why some T-34s were 'abandoned' to Japanese forces during 1943, in exchange for rubber deliveries to keep Kuomintang factories running. By the end of the year, however, even these had run out, and for about six months nationalist industry was effectively idle for lack of rubber.
As is now clearly established, the Chinese communist forces used this period to consolidate in the north, and while the KMT was facing piecemeal Japanese counterattacks in the south, a major communist offensive was launched against the KMT in the north. However, the superiority of KMT
field forces was such that they were able to defeat the communists and capture their major resource site. A major opportunity for the elimination of the Chinese communists was missed at this stage, as the previous US administration allowed itself to be bamboozled by communist propaganda into
believing that the KMT had started the fighting, and, together with the USSR, we pressured the KMT to return the resource sites to the communists and cobble together a peace deal. The KMT leadership also missed a trick, since it gave too much prominence to pressure from Stalin, who during 1943
could not have exerted any military pressure on them. As a result, the Chinese communists were given a vital respite, and consequently have been allowed to expand to the present situation where they own half of China.
The only meaningful concession given to Chiang Kai Shek at this time was his presence as the official Chinese delegation to the Yalta talks, although he came away largely empty handed.
Nevertheless, during late 1943 and into 1944 the KMT continued to help British forces in Burma, reopening the Burma road and pressuring Japanese forces in theatre. It is also believed that it was during this period that the KMT was able to supply nationalist guerrillas in French Indo-China, which was the start of the uprising there. The communists soon followed suit.
Undoubtedly, however, we must regard that failings of both KMT and our own leadership meant that the KMT was not aided to the extent that it could have been. The Japanese finally began to conduct significant offensive operations in China and many of the territorial gains of early 1943 were
lost. The major turning point for the KMT, ironically, was US assistance to the USSR in terms of synthetic rubber production. This gave the USSR sufficient surplus that it could trade it with the KMT for tungsten, and KMT factories were able to not only reopen but gear up production. Our own military assistance finally began to make itself felt during 1944, as significant numbers of US fighters and armour, and finally heavy bombers arrived in theatre, and our assistance in helping the KMT set up their own tank production line meant that they were able to conduct significant combat operations against the Japanese during late 1944.
Unfortunately, Soviet assistance to the Chinese communists meant that during 1944 the communist field force finally felt able to mount a significant challenge to the Nationalists, and as well as expanding as far as the Mongolian border, there was a major communist drive towards Chungking. The resulting battle saw the communists driven back due in large part to Nationalist air power, however.
The collapse of Japanese forces in Asia proceeded during 1945 as our naval campaign finally starved them of resources, and the British were able to make significant gains in southeast Asia, and a KMT drive recaptured Shanghai.
General Ho's popularity had been steadily building as he scored military victories against the Japanese, and the absence of Chiang Kai Shek from the battlefield during the war meant that Ho had not only played a large part in Nationalist propaganda, but was also personally popular with army commanders. It is perhaps therefore unsurprising that he took advantage of the Shanghai victory parade to arrest and execute Chiang as a "traitor to the people."
As we survey the scene in late 1945, the Ho regime nevertheless appears to be fairly stable and settled, and the nationalist war machine is drastically improved from its parlous state in 1942. It now has two lines of tank production and significant logistics capability, and has demonstrated its competence in large-scale campaigns against the Japanese.
The nationalist air force includes many squadrons of US-built aircraft, including nearly 1,000 B-17 bombers, a capability which we believe the communists still lack. Nationalist industry is rated better than communist, although the communists now control far more raw materials supplies.
Furthermore, the communist forces are also much expanded and improved, and now include significant armour and air resources from the USSR. While the nationalists probably still have a slight edge militarily, this edge is being rapidly eroded.
Overall, we believe that the battle for China is far from lost, and much now depends upon the relative willingness of the US and USSR to continue to supply their respective client states. We believe that – perhaps with assistance from Japanese forces in-theatre – a successful campaign for control of China is achievable. Stalin has however demonstrated his commitment to the communist regime. We believe that the US must do likewise for the KMT if we are to prevent China from becoming a communist satellite.