FOREIGN RELATIONS, 1934, VOLUME III



  The principal events of this period were (1) the return to China of
Marshal Chang Hsueh-liang (January) and his appointment to a
post in Central China under General Chiang Kai-shek (February);
(2) suppression of rebellion in Fukien Province (January); (3) re-
bellion in the Northwest of General Sun Tien-ying (January) and
its suppression (March); (4) transfer of more than 100,000 of Mar-
shal Chang Hsueh-liang's troops from North to Central China (March
to June); (5) initiation by General Chiang of the "New Life Move-
ment" (March); (6) inauguration of an "autonomous" government
in Inner Mongolia (Chahar and Suiyuan Provinces) (April); (7)
departure from Peiping of General Huang Fu, Chief of the Peiping
Political Affairs Readjustment Committee, and his conference with
General Chiang Kai-shek and Dr. Wang Ching-wei (April); (8)
conference of leaders of the Southwest with representatives of the
Central Government (June) ; and (9) announcement of agreement with
Japan to reestablish on July 1st through passenger traffic on the Peip-
ing-Mukden Railway (June).
  During these six months the fundamentals of China's political and
economic situation have not altered. As previously, however, there
were developments indicating a growing understanding on the part
of some of the country's leaders of its needs. But until there is evi-
dence that these leaders intend effectively to implement this under-
standing with action, there will be little reason to view the present
situation in China with other than pessimism. It might also be
recalled that the masses were subjected during the years 1925 to 1929
by the leaders of the Kuomintang to a pleasant stream of propaganda
to the effect that they, the people, were unconquerable and that they,
with the help of the Kuomintang, would get back all rights and priv-
ileges lost by treaty in previous years. The result of this is that now
it is well nigh impossible for any leader to turn the thoughts of the
people in other directions, no matter how much the leader may under-
stand the needs of the country. Nor are the leaders of China of a
calibre to admit the failure of the Kuomintang program of those
years.
I. Military and Political developments:
  General Chiang Kai-shek has continued to consolidate his position
as the dominant military figure, directing at the same time the chief
political, economic, and financial activities of the Central Government.
His prestige, enhanced at the expense of the debilitated Kuomintang,
was indicated by the perfunctory progress of the Fourth Plenary
Session of the Central Executive Committee of the Kuomintang (in
January), and was primarily due to his unexpectedly rapid suppres-
sion, early in the year, of the rebellion in Fukien Province, which had
a salutary effect not only on politicians but also on those of China's



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