Sixth Year Begins

This week, on July 7, the Japanese celebrated the anniversary of their attack on China. China's millions, soldiers and civilians, who for five years have fought off Japan with limitless heroism, did not celebrate it. The Chinese heard the word anniversary with a sense of desperation. This was China on July 7, 1942:

China's whole national fabric, corroded by the Japanese attrition, has in the past seven months undergone terrible moral and material shocks. She has found that the Allies, instead of alleviating her position, have increased her immediate difficulties tenfold. She is bewildered by the crushing defeats America and Britain have suffered. Her Burma Road-her so-called lifeline-has been cut. Half the army she sent to Burma may never return. Japan has launched a new attack, designed to conquer her remaining railway lines and perhaps eventually capture Kunming and deliver a death blow.

China Will Eat. It is not likely that China will collapse from economic chaos alone. The terrible food problem, which last year infected every section of society, is no longer a problem. Bumper spring wheat crops and almost certain good fall crops of rice have not only assured maximum essentials for army and civil servants' consumption centers but are likely to leave a surplus. The success of Government price control is seen in the fall of prices of rice and wheat flour since the Dragon Boat Festival (May 5), a period when prices usually rise. The food structure seems guaranteed.

China Will Pay. The general shortage of commodities, however, remains the great weakness of Chinese economy. It creates price rises which have made the political program difficult.

However, in the past three months some startling innovations have been made. The Government now produces cotton at fixed prices and furnishes it to machine spinners. It distributes yarn to weavers, who cross it with hand-spun yarn to weave cloth. This is turned over at fixed prices to the Commodity Administration, which in turn sells it at Government stores at prices 25% lower than the market.

Today on the streets of Chungking can be seen people lined up to buy this cloth. Officials claim there will be enough cloth for the army and the general population. Even Government offices are furnishing uniforms to their employes.

China Will Hoard. The commodity scarcity undoubtedly still continues to lead people to hoard. Medicines today give the best chances of profits for smugglers and hoarders. The Government gives air priority from India to medicine, saying: "Three tons of quinine are worth three tons of guns." To counteract hoarding, the Government announced that American Red Cross supplies were coming in, would be dumped on the market. The Government set up quinine shops in Chungking, where quinine is sold only to patients who swallow it in the shop.

China Will Produce. As long as China is isolated from machinery and raw materials, there will be no chance to build up industry. The idea of building a great industrial base has been abandoned. The Government is concentrating on better utilization of available industries, taking over spindles and looms where private interests have not yet set them up. Lack of power has caused the Government, in some cases, to remove electric plants that lighted small towns.

Isolation has increased the importance of industrial cooperatives. In June the Government voted to raise their capitalization to a hundred million Chinese dollars, and adopted the slogan: "Membership doubled, production tripled within six months." Over 5,000 skilled laborers who escaped from Hong Kong will help speed production.

China Will Save. In finance there have been some sensational changes. The budget, which was made on the expectation that the Burma Road would be kept open, has now been scaled down. When construction work on the Burma Road ceased, millions of dollars had been spent, but millions more will not be spent. Nearly a billion has been saved on the barter agreement with the U.S., since there is now no way to export products. The huge upkeep of Shanghai institutions, such as the courts, has been eliminated and the road-building program has ceased. On the other hand, revenue by land taxation in kind (one of the biggest social experiments of the war) has resulted in collections of 2% above expectations. Early this year the Central Government took over provincial finances. However, districts are still allowed to handle their own finances.

China Will Need. But the military supply situation is desperate. Lend-Lease stuff from the U.S. is piled up in India. Planes flying over the Himalayas, at heights where ice forms on the wings and pilots need oxygen tanks, cannot carry big enough pay loads to dent the Indian piles. Moreover, planes are often grounded and are far too few. If there is anything more than a political gesture behind the sending of U.S. transports (TIME, June 22), they will have to appear in far greater quantities than at present.

War is Normal. As the nation which has been the longest at war, China exhibits to the sharpest degree the growing worldwide tendency to take war as a normal course of life.

Manual laborers have experienced a drop in their standard of living, but a rise in relation to educated workers. Ricksha coolies live as well as clerks and teachers. War has shaken the family system by scattering families, calling youths into war work, liberating women. People banding together to fight economic misery crowd together in houses and form eating cooperatives. People eat more in restaurants because of the high cost of fuel and servants.

But existence is taking on a drab sameness. Amusements are too expensive and people stay home. Visiting has been curtailed, due to the high prices of rickshas and shoes. The movement away from the cities, though arrested by a letup in bombing, is likely to continue because of the housing shortage and high city prices. It results in the citifying of the country with cubistic signboards, barbershops, women in new-style clothes.

China is Fearsome. Educated patriots in the big cities have a bogged-down, fatalistic faith in the victory of the United Nations, but, though they hate to admit it, they are impressed by Japanese successes. Hearing Allied propaganda of huge air armadas and vast production, they wonder why the Allies can do no better. The coolie-in-the-street is beginning to feel uncertain about the outcome of the war.

Apprehension is felt that the U.S. is not devoting enough attention to the Far East. The press believes that Japan means to challenge the U.S.S.R. in open war and therefore urges that Russia strike first and give the U.S. air bases.

Chinese newspapers are unanimous in their opinion that India should be given her independence. This must be done, they say, not only for the establishment of the principle of Asiatic equality, but as the only means of satisfactorily strengthening India's defense.

China is Waiting. Today China awaits a threatened all-out Japanese drive. Japan has not yet shown her hand. She is playing the same clever game she played before Pearl Harbor, threatening to attack several points at once while concentrating on her real plan. The plain fact seems to be that Allied Intelligence does not know what Japan is going to do next.

The situation in China is of appalling gravity. Military supplies in a country bled white by five years of war are small. China's armies are in no condition to launch even local offensives. China has shown an unbelievable capacity for suffering that stands out in bold relief when it is seen how deeply seven months of defeats have bitten into the core of American and British morale in the Far East. But in the near future China's genius, her capacity for suffering, may not be enough.

There is urgent need for supplies from the Allies. If this is not feasible, there is a crying need for the Allies to open another front to take the pressure off China. The changing international situation makes Japan's task of offering peace to China easier. Today, with her wide hold on the Orient, Japan can afford to be less afraid of China. Japan might consider offering to withdraw her troops from all territories south of the Great Wall. The advantages to her would be inestimable and the dangers have been minimized in the last seven months.

That China would accept a peace arrangement seems unlikely, but it would be fatuous to suppose that such an offer would not have some effect. U.S. and British complacency about China is dangerous, ill-advised and unjust. Because the war in China has continued for five years is no reason or assurance that it will continue forever. China has reached the point where, to continue her struggle, she not only asks, but requires, more help than she has had.

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