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CHINESE PREPARING FOR LONG CONFLICT

Industries Will be Developed in Far West With Government and Bank Loans

JAPANESE PUSH DOUBTED

Tokyo Expected to Mark Time in China While Studying When to Attack Soviet

By HARRISON FORMAN
Wireless to THE NEW YORK TIMES

CHUNGKING, China, June 20 - "China is experiencing a crisis similar to that following the loss of the political capital at Nanking and the economic capital at Hankow," said Dr. T. F. Tsiang, American-educated Minister without portfolio, in an interview today.

"The war will be a long one, with no room for east optimism nor helpless pessimism, so the government has decided to develop what is left of our country against the time it is strong enough to drive the enemy from occupied areas.

"Vast areas of China are neglected by economic exploitation, which heretofore has been concentrated mostly in coastal provinces. The cities and provinces lost to the invading enemy loom too large in the public consciousness. Pessimism is wholely unwarranted with vast unexploited territory here in the west.

"The Japanese claim they have an economic stranglehold on China with possession of the seaboard, but China has a hundred small 'Ukraines' scattered about, with those here in the west more than sufficient to sustain continued resistance to the enemy's aggression.

Government to Aid Industries

"The government is embarking on a policy to counteract industrial, financial and economic slothfulness due to pessimism or equally pernicious overoptimism, stemming from the belief that the west soon will be abandoned with the defeat of the enemy and the subsequent return of the government and investment capital to the east. There has been reluctance to devote full energies and private resources to develop the hinterland."

Chinese industrial cooperatives will be considerably developed. The government will lend $60,000,000 in long-term loans and private bans will lend $40,000,000 in short-term loans. The number of cooperatives will be doubled and production will be trebled.

"There still is no indication that Japan is trying an all-out knock-out blow against China. While Japanese operations in China are of a major character in a political sense, they still are only minor in a military sense.  Both sides are seriously hampered by the lack of transport facilities.

"Japan's eyes are still covetously fixed on Siberia," said Dr. Tsiang, "and it is my belief she is merely playing a waiting game while closely watching the Germans on the Russian front. If the Germans can handle Russia alone, why waste bullets aiding an Axis partner for whom she enjoys no love?

"The Japanese believe Stalin soon will be forced to withdraw troops from Siberia, thus weakening a prey that can be easily gobbled later. Meanwhile Japan is marking time in China while consolidating and exploiting territorial gains in the Southwest Pacific and engaging in occasional diversional operations such as the Aleutians attack."

Japanese have forestalled, at least temporarily, any big-scale air attacks upon Japan from Chinese bases, it was acknowledged here.

The general impression in Chungking official circles is that the Japanese Eastern China offensive soon will be dissipated, probably after seizure of the forty-eight-mile stretch of the Chekiang-Kiangsi railroad that still remains in Chinese hands.

NEW CHINA ROUTE STUDIED

Surveyors Map Line to India to Replace Burma Road

CHUNGKING, China, June 20 (AP) - Toiling over some of the most difficult terrain in the world, two groups of surveyors are mapping a new supply line from India to China, which the Chinese hope may be in operation before the end of the year.

The new route, planned to replace the Burma Road, closed by the Japanese, will run from Northeast India to Sikiang, about 300 miles southwest of Chungking, Chinese sources said. The airline distance is 450 miles, but scores of miles will be added by the curves made necessary by the mountains.

The two groups of surveyors set out simultaneously from opposite ends of the line on June 15 and are expected to meet on the Chinese-Indian border in a month. The surveyors travel on horses and carry all their food and other supplies, because much of the region is unpopulated. Experts said about 100 horses were required to carry supplies for each unit of ten persons working on the route.

It is believed the new supply line may be ready for service by Christmas, when a stream of bullock carts and pack ponies will resume  the freight handling that was done by fast motor trucks on the Burma Road.

Since the closing of the Burma Road this Spring, the only supplies reaching Chungking from the outside have been brought in at great risk by American Army transport planes.