224 Eggleston to Evatt
Cablegram 23  CHUNGKING, 14 June 1943
MOST SECRET PERSONAL
Following are the answers to your questions :-
(a) In my view the recent Japanese offensive in Hopei was not an all out attack on Chungking although it is too early to say whether this is contemplated. Recent concentrations were inadequate although they may have been preparatory. It seems more likely that, if the attack comes, it will be simultaneous drives on the Yellow River front and Hupei. The present operations were probably designed to capture the Chinese rice-lands, improve the Japanese line and stave off possibility of the Chinese operations and they have succeeded in doing this.
(b) The Chinese communiques were definitely inaccurate. In spite of large claims of Japanese casualties, the Chinese Director of Military Intelligence  had no figures on June 9th. The threat to Chungking was exaggerated probably to bolster up the Chinese claims for more aid, while the importance of victory was emphasised to give the impression that the Chinese, too, are fighting successfully. At the same time, judging by the speed of the Japanese withdrawal, the Chinese have inflicted a real reverse on the Japanese, although not a major disaster, as claimed by the Press, since the Chinese have not regained any new towns or rice- lands or even recovered all their losses.
(c) I do not believe that there is any link between Chiang Kai- shek  and the Japanese. There are undoubtedly high officials here who maintain contact with the Japanese and also a highly efficient Japanese espionage system as well as extensive trading with the enemy. Limited nature of the Japanese operations may sometimes be due to arrangements between local commanders due to trading between the Chinese and Japanese. Also probable that Wang Ching Wei  is behind some of provincial disturbances. Troops which gave way to the Japanese in Hupei were from Szechuan and probably belong to a disaffected War Lord in this Province. On the other hand the Chinese successes due in part to disaffection among puppet troops used by the Japanese. Chiang Kai-shek is at present non-cooperative and dispirited but I do not doubt his loyalty.
There is nothing to suggest a rapprochement between Chungking and the Japanese.
(d) The Japanese forces have been considerably decreased and replaced by Manchurians, Koreans and puppets. At the same time the low state of the Chinese morale probably means that there are still enough Japanese troops to make possible concentrations of forces large enough to capture Chungking. The government are despondent and losing the confidence of the people. Some indications that an anti-foreign campaign is being worked up.
Corruption of the government and profiteering of the wealthy classes is causing dissatisfaction but there is at present no acceptable alternative and the position seems likely to drift. How long the present drift will go on without either economic collapse or a Japanese offensive is hard to say.