Following Jiang Jieshi, He Yingqin, and others' January 13th annihilation of several thousand New Fourth Army soldiers in southern Anhui, and the Chongqing National Government Military Council's announcement of the New Fourth Army's rebellion, rescinding the New Fourth Army's designation, and the counter-revolutionary order to try Ye Ting, the impact on the Chinese political situation has been extremely great. A summary of the situation from all sides is as follows:

1. The Chongqing Kuomintang Central authorities are doing their utmost to mobilize anti-communist public opinion, forcing national newspapers to publish news and editorials slandering the New Fourth Army, and propagandizing to domestic and foreign audiences that this is merely a matter of military discipline, not a political issue; a local issue, not a global issue; a domestic issue, not a diplomatic issue. Jiang Jieshi's January 17th speech similarly attempts to minimize the seriousness of the incident by framing it as a matter of enforcing military discipline, thereby numbing domestic and foreign figures. In the Kuomintang-controlled areas, large numbers of Communist Party members and progressive elements are being arrested, insidious plots are being carried out, surrender movements are being manufactured, and personnel from various offices are being monitored and detained. Militarily, Tang Enbo and Li Pinxian are concentrating 100,000 troops to attack the New Fourth Army in Central China, and secret orders have been issued to treat the Eighth Route Army in Central China as the New Fourth Army to attack. Near the Shaanxi-Gansu-Ningxia Border Region, the construction of a blockade line is being intensified and local offensives are being launched. All these actions are intended to use pressure to subdue us at once. However, there are divisions of opinion within the Kuomintang. He Yingqin and Bai Chongxi advocate a swift and decisive action. He and Bai once telegraphed frontline generals to solicit their attitudes toward the Communist Party issue. Chen Cheng replied by telegram advocating a full-scale offensive. It is rumored that He and Bai telegraphed Fu Zuoyi to arrange military attacks on the Eighth Route Army. He Jian and Chen Jitang advocate killing Ye Ting. Feng Yuxiang vehemently denounced He Yingqin, saying that He was a schemer, but he did not reach Jiang. Sun Ke expressed concern. Yu Youren indignantly said that He had deceived him. Zhang Chong (a Kuomintang Central Committee member who negotiated with us) expressed that he had no solution and was ashamed to face people. Some Kuomintang members are worried about a split. Older members even said that doing so might lead to self-destruction. Many Kuomintang personnel are also worried and indignant, saying that this matter has gone too far, and some are expressing panic.

2. The various small parties and middle-of-the-road factions are greatly disappointed with the Kuomintang and deeply feel the necessity of uniting for democracy and against civil war. Zhang Bojun of the Third Party, Zuo Shunsheng of the Youth Party, and others plan to initiate a democratic united movement, demanding active unity with the CCP to resist the Kuomintang's oppression. Sun Yat-sen's widow, He Xiangning, Liu Yazi, and other Kuomintang Central Committee members and celebrities jointly wrote to Jiang, pointing out He Yingqin's pro-Japanese faction's conspiracy, hoping that Jiang would not be misled by treacherous individuals, would pull back from the brink, and would implement the Premier's Three Principles of the People and Three Great Policies. Many representatives of the national bourgeoisie, such as Huang Yanpei, on the one hand, expressed sympathy for the New Fourth Army in distress, and on the other hand, expressed disappointment with the prospects of the War of Resistance. Huang Yanpei plans to meet with Jiang to present three points: A. He hopes that Jiang will know when to stop; B. Military discipline is important, but attention must also be paid to gathering popular support; C. He asks Jiang to look outward. He told people: Regardless of the right and wrong of the matter, the authorities' actions are absolutely wrong, and he hopes that big problems can be turned into small problems, and small problems can be turned into no problems. Among the middle forces, some hope that the CCP will express a tough stance, while others express pessimism and wavering. Most of the miscellaneous troops and local warlords feel that the disbandment of the New Fourth Army is a prelude to the disbandment of local forces. They say, "Use miscellaneous troops to eliminate miscellaneous troops, but the central government will not allow miscellaneous troops to exist." Therefore, they express panic and sympathy for us.

3. In the financial world, since the incident occurred, various prices have risen even higher, foreign exchange has fallen, and various banks have no market quotations. HSBC has stopped posting rates, and bankers such as Chen Guangfu have stopped investing in the interior.

4. The broad masses and progressive forces express hatred for the Kuomintang and sympathy for the Communist Party, believing that the Kuomintang is undermining unity in the War of Resistance and that civil war in China will lead to national subjugation. Many young students, workers, and staff members shed tears, felt depressed, or were angry when they saw this news. Many progressive elements in schools fled.

5. The CCP's entire position is reflected in the order and statement of the CCP Central Military Commission issued on January 20th, which includes eleven demands. The entire Party unanimously supports it and is extremely excited. Non-Party figures such as Feng Yuxiang said that only the Communist Party's eleven demands can solve national affairs. Zhang Yimi and other councilors were extremely happy after reading them. Middle-of-the-road figures who previously feared that the Communist Party was too tough and would cause a split now approve of our Party's adoption of a tough stance. Jiang, He, and Bai originally estimated that we could be intimidated, believing that the Soviet Union did not want a split and that the CCP would certainly not dare to be tough. Now that they see this, it is beyond their expectations and they are showing panic. Jiang has repeatedly sent his representatives Zhang Chong and Zhang Zhizhong to negotiate a compromise with Zhou Enlai, and has sent Ye Jianying back to Yan'an.

6. In the British and American spheres, apart from a few, such as the American ambassador and his naval attaché and three secretaries, who all listen to He's words, saying that the New Fourth Army's resistance against Japan is not genuine, and some reactionary reporters who believe that this is a local issue within China and has nothing to do with Britain and the United States, most foreigners believe that this matter directly affects the future of China's War of Resistance and the interests of Britain and the United States. They issued dispatches, demanding that the British and American authorities put pressure on the Chinese authorities to prevent the incident from escalating. A certain American reporter in Hong Kong sent out a message saying: The New Fourth Army did not disobey orders. In conversations with various important figures in Chongqing, he deeply felt the seriousness of the Chinese situation and hoped that Britain and the United States would pay attention. After the CCP's troops all entered Hebei, the Kuomintang troops would definitely draw a buffer zone with the Japanese troops. In this way, the Japanese troops would easily advance south, and he hoped that Britain and the United States would pay attention. A certain foreigner in Chongqing said that foreigners, including old ladies from the church, were all indignant, saying that no matter what the reason, the New Fourth Army was resisting Japan. An editorial in the Hong Kong English-language "South China Morning Post" pointed out: A. It is heard that the area from which the New Fourth Army withdrew has been occupied by Wang Jingwei's troops. B. The CCP's strength has been generally recognized as an indispensable part of the entire Chinese War of Resistance. C. No matter from which aspect one observes, the CCP's basic demands and hopes for China, as well as its foresight, are much stronger than those of feudal national leaders. D. The Kuomintang still needs to rectify its internal discipline. The British ambassador met with Jiang and advised him to stop domestic conflicts. It is heard that the British and American sides told the Kuomintang that although the Communist Party opposes capitalism, for the sake of the overall situation in China, the central Kuomintang should not handle the issue too hastily, so as not to force an incident. The American Currie came to China, and it is heard that it is related to investigating the New Fourth Army issue. It is heard that the American loan and the Sino-Indian air route have been obstructed due to the New Fourth Army incident. A German news agency dispatch said: The New Fourth Army is the best unit in resisting Japan. When they were moving in accordance with orders, they were attacked by a large army. It is feared that this is related to Britain and the United States. At present, internal contradictions in China are sharp, and there are fears that Jiang and Wang will cooperate in the future. He estimates that if the United States and Germany go to war, Japan will definitely withdraw from the alliance. At that time, Japan and the United States will unite to sacrifice China. Koreans heard that Ye Ting was captured and were very indignant, saying that if China has a civil war, the Korean people's hope for liberation will be over.

7. The Japanese invaders expressed great joy. A celebration meeting was held in Nanjing. Wang Jingwei gave a speech, saying that Jiang Jieshi had not done a single good thing in recent years, and only this matter was done very well. Taking advantage of the fact that the Chongqing side was concentrating its forces on opposing communism, especially after the order of January 17th was issued, the Japanese began to mobilize seven divisions on the 18th, and launched a major offensive towards Henan on the 24th. Now the National Army is hastily fighting back, and many generals feel that they have been tricked by the pro-Japanese faction He Yingqin.

8. Summarizing the situation from all sides, as of today, due to Jiang Jieshi's making too many mistakes, our justified and tough attitude, the Japanese offensive towards Henan, the diplomatic pressure from Britain, the United States, and the Soviet Union, the contradictions within the Kuomintang, the sympathy of the middle-of-the-road factions for us, the indignation of the broad masses towards Jiang, and other reasons, a basis for compromise has begun to emerge, civil war can be avoided, and there are signs that the Chinese situation is developing in a way that is favorable to us.