My telegram addressed to Washington 18 [2] was drafted while I was
in the country. My observations, since my return, have
strengthened my belief that the situation here has deteriorated
seriously. I now learn that the British Ambassador expressed
similar views on the matter and that the General Officer
Commanding the British Military Mission [3] has sent a supporting
telegram to the War Office. Both agree that there is increasing
evidence that the Chinese are getting desperate. Influential
Chinese are now talking more or less openly about the possibility
of China being unable to hold on for more than another year or 18
months.

2. The Chinese Director of Military Intelligence [4] considers
that the present Japanese offensive in Hupei is not an attack on
Chungking, although he admits that the Japanese could undoubtedly
take Chungking if they wanted to. He believes that the Japanese
prefer to see China disunited with Free China struggling under a
major economic crisis than to have the whole country united under
Wang Ching Wei. [5] This is not the view of the Chinese Minister
for War [6] who is gravely concerned at the situation. Chiang Kai-
shek [7] has himself made a rapid trip to the Hupei Front and Chen
Cheng [8] was recalled from Yunan to take charge. The present
Japanese concentrations on Hupei do not indicate sustained drive
at present.

3. Whichever view is right, the general situation is bad, and the
Chinese are no longer responding to Allied victories in other
theatres in the way they once did. Hope throughout the past six
months has centred on the belief that Burma would be recaptured.

Information from military sources suggests that no attempt is
likely to be made in time to relieve the situation here. Press
messages which are sent here from External Affairs Department,
e.g. recent telegram by Rothman [9] to Sydney Morning Herald, and
General Martin's commentary in the London Daily Telegraph, which
we received today, suggest the defeatist attitude that the
recapture of Burma is too difficult, that naval and air action
from the east is also too hazardous and that Japan must be reduced
by blockade. Nothing is more likely to complete the despair of the
Chinese than release of these messages.

4. The position is complicated by the fact that both Americans and
Chinese distrust the General Staff in India and believe that it is
inert and unaggressive. This view seems to be shared by
Australian[s] in India and by some British Officers I have met.

5. I strongly urge that at all cost reinforcements should be sent
to United States General Headquarters here and that immediate
preparations for a large scale attack on Burma are necessary to
prevent China being lost as an Allied base. Such action would tend
to relieve the pressure on Australia.

EGGLESTON