I felt it essential in the interview with the Minister for Foreign
Affairs [1] to avoid any impression that Australia was weakening
in her support of the common front and therefore suggested that we
had learned from Washington that the Chinese intervention had
created the impression that she wished the talks to fail, thus
risking the creation of an opinion in the United States
unfavourable to China. He denied summarily that China requires
intervention and emphasised the importance of Chiang Kaishek's [2]
message (see my telegram No., 83), that China is willing for the
talks to continue, but he indicated the belief that Japan would
not fight and it was only necessary to call her bluff. Chinese
firmly believe that Japan is not in a position to conduct large
scale operations. Chiang Kaishek put the risk at four to one
against in the interview with His Majesty's Ambassador. [4] Local
press estimates the troops in Indo-China at 110,000 which is the
figure quoted a month ago. The Minister for Foreign Affairs'
attitude was quite inconsistent with the attitude taken by Chiang
Kaishek and the Minister for Foreign Affairs to me three weeks
ago. The Foreign Minister was not communicative and was vague in
his reference to the modus vivendi. I think he was convinced of
Australia's continued support of the common front but he later
told His Majesty's Ambassador that he did not quite know what to
make of the Australian attitude. He said that our objectives are
to keep China in the war and protect India and Siam, while
completing in the meantime our own preparations against raids.

Under these circumstances I believe it wrong to put pressure on
China whose resistance may collapse after her long struggle.

Disintegration of democratic front would not necessarily
precipitate Chinese collapse and China could fight on providing
American supplies arrived, but if Burma Road cut China might only
last a few months. Thus it seems essential to check the Japanese
attack on Siam which would form a base for operations against
Burma Road. I strongly urge joint Australian Dutch British
decision should be sought to treat violation of Siam integrity as
casus belli. Gravely concerned at evidence of British indecision
over Siam. Siam represents an important step nearer Australia as
well as threat to vital Chinese communications. Netherlands Indies
in my opinion more vital and need encouragement.

I consider a strong attitude to Japan by ourselves and Americans
is best method to check Japanese aggression and any signs of
weakening will produce immediate Japanese advance. Presentation of
the original American proposals in such a weak form has done
considerable damage and greatly impaired Chinese confidence. Might
not Casey [5] stress this point, as America originated the
economic blockade, and urge strong attitude to Japan and
fulfilment of promises to China. This is a matter in which
Australia might be in a position to do some good.