404 Sir Frederic Eggleston, Minister to China, to Department of External Affairs

Cablegram 128 CHUNGKING, n.d.

SECRET

General Chou En-lai, influential Communist leader and their representative in Kuomintang, lunched with me today.

It is his opinion that Japan's next move would be directed at Siberia, India, China in that order, and that recent Japanese attacks on Communist positions in the north suggested that move against Siberia is not unlikely.

Other than to remove the menace of Darwin as an Allied point of counter-attack he considers that Australia was in no danger from Japanese invasion.

He went on to say that past experience has clearly demonstrated that constant friction between Japan's Industrialists and Military will severely handicap her efforts of reconstruction and utilization of raw materials and natural resources in occupied territories.

He considers that this year will be a trying one for the Allies as they are defending a vast front with minimum equipment, but that with America coming in 'full swing' and Allied counter-offensive would be possible next year.

We discussed at length land system and finance for farmers though he was alive to the injustice of the system to the peasantry he appeared to accept the view that no reformation was possible during war time.

He anticipated another Japanese attack on Changsha as an effort to prevent the sending of further Chinese troops to Burma.

CABLES]

[DEFENCE: SPECIAL COLLECTION H, MILITARY SITUATION-CHUNGKING