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17. The rival factors in China are contending for the favor of the Soviet government so as not to be liable to attack from the rear in their present struggle. The Japanese, who made a terrible muddle of their attempted occupation of Siberia and their designs on upper Manchuria, are establishing banks in an attempt at financial penetration. The only people who are really calm are the old Chinamen who keep right on colonizing the whole country and gradually driving everybody before them in an economic way. The tide of Chinese immigration has set in in the north. No matter who dominate politically, the great mass of the inhabitants will be Chinese.
18. The affairs in Siberia east of Baikal are in a very chaotic condition. The Soviet has about fifteen thousand troops stationed along the Amor River and throughout this area. These men are poorly equipped, poorly supplied, and poorly organized, but are loyal to the Soviet Government. They have five gun boats on the Amor River, two of which are out of commission and three of which are in great need of overhauling. This force is incapable of taking the offensive, is incapable of resisting invasion by any well organized troops, but is capable of keeping down

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