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The Chinese Army is increasingly well equipped. In spite of the coastal blockade, we continue to receive munitions from friendly nations who sell them to us. We transferred in good time the arsenals of the front to the rear and the number of their war industries has increased simultaneously with the growth in their importance. In addition to large quantities of rifles and machine guns, they manufacture light artillery. 

More numerous and better equipped, the Chinese Army has also become more active. While it was a case of waging a war in which the Chinese front was up against the better-armed Japanese front, our troops were often in an inferior position. Today Japan occupies definite points in the East of the country and very long lines of communication, of which every element of occupation is liable to surprise attack and to be surrounded. As to the actual front, it is situated in mountainous country where the steep roads do not allow of the use of tanks, and the nature of the ground diminishes the destructiveness of the enemy aviation. Our cities alone offer an easy prey to aerial bombardment. They represent the deaths of thousands of civilians which, while fruitless for Japan, only augment our sorrows and our will to resist and Japan's wrongs and responsibilities towards us. 

We had previously numerous strategical points to defend; now our troops have an enemy, who is uneasy, to surprise and to srround, to weary and to wear out. The morale of the Chinese Army has never been stronger than it is today. "War", said Foch, "is the struggle between two wills". The will of the Japanese soldier is sorely tried; he is fighting in enemy country and his most brilliant victories have only brought him increased difficulties, uncertainties, sufferings and losses. We feel pity for our persecutors:  suicides, alas!, are numerous among the Japanese Army.

Money is the nerve of war. Within the country, the currency of the National Government has the people's complete confidence and even in the invaded regions, where the occupying Power has either imposed a money created by their puppet Governments, or else the Japanese yen, our currency is at a premium. The inhabitants refuse to adopt the money forced upon them by the Occupier. There are even Japanese merchants who accept the national Chinese currency, preferring it to the yen. 

The stability of our finances is assured by the substantial development of industry in the unoccupied provinces. Mills which have been transferred from the East to the West have started to operate; light industry has been begun and even heavy industry. This has enabled us to retain our international trade. Moreover, modern warfare needs money. And, from this point of view, we lack nothing; the Finance Ministry has always been in a position to meet the calls on it, which is all the more remarkable since, under previous Governments, our officials experienced times when their salaries could not be paid to them. This unsatisfactory state of affairs does not occur today: we have gold for the purchase of our munitions abroad: industrial exploitation of the internal provinces has exceeded all forecasts, and our increased exports enable foreign currencies to continue to flow into the country. 

This, broadly, is the situation in China after eighteen months of war. What is the corresponding position in Japan?

Japan is far better known today than a year ago: we are aware of her military forces, her financial possibilities,her ambitions and her domestic political situation.

The myth of the invincibility of the Japanese Army is exploded. Despite their advance in China, the Japanese Army has undergone serious defeats in our country and their Staff estimates and forecasts have proved entirely erroneous. They reckoned that seven divisions would be enough to liquidate "the Chinese incident": the battle of Shanghai alone required twenty. They proclaimed a three months' expedition; the war has already lasted six times as long. They calimed to have wiped out the vital forces of Chiang Kai-shek's troops; but on the contrary the latter's strength has developed.