Following are the answers to your questions [2]:-

(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 [3] 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 [4] 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 [5] 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.

EGGLESTON