Appendix No. 2

Hayashi Cabinet's China Policy and Guidance Principles for North China

China Policy agreed upon on 16 April 1937 at a conference of the Premier and Ministers of Foreign Affairs, Finance, War, and Navy

1. Policy in regard to the Nanking regime

Japan will take a fair and impartial attitude toward the Nanking regime and its movement for the unification of China, and, at the same time, try to root out the basic causes of China's insulting attitude toward Japan. In this line, practical measures should be taken to have the regime gradually renounce its pro-Communist and pro-Western policies and draw nearer to our Empire. In North China, in particular, Japan will positively assist to establish those organizations necessary for the cooperation and mutual aid of Japan, Manchukuo and China.

In order to carry out this policy without having the Nanking regime lose face, Japan will refrain from taking such measures as might force the regime to take an anti-Japanese stand. Particular efforts should be made in such cultural and economic movements as to make the Chinese people realize the necessity of implementing the principle of "live-and-let-live" and coprosperity in the true sense of the word. This will contribute to the improvement of diplomatic relations between Japan and China.

In view of the result of last year's negotiations conducted in Nanking between Japan and China, and China's political trend thereafter, the following pending matters should be settled as soon as possible:

(1) Repression of anti-Japanese speech and activities.
(2) Employment of Japanese advisors by the Nanking regime.
(3) Opening of an airline between Shanghai and Fukuoka.
(4) Reduction of customs duties.


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(5) Arrest and surrender to Japan of rebellious Koreans.
(6) Settlement of various incidents which have occurred in Shanghai and other places.

2. Policy toward North China.

The primary object of the policy toward North China is to develop this area into an anti-Communist and pro-Japanese and pro-Manchurian zone, and, at the same time, to secure national defense resources and develop transportation facilities. The policy aims at coping with the menace of Red influence, on one hand, and, on the other, developing this area into a base for realizing cooperation and mutual aim between Japan, Manchuria and China. These objectives should be achieved mainly through economic measures. Any political measures aimed at separating North China from China or apt to disturb the internal affairs of China should be avoided. Thus, Japan will strive to clear herself of world suspicion and to remove China's unrest concerning Japan. At the same timed measures will be taken to load China to positive cooperation with Japan in exploiting her economic resources, developing transportation and tightening cultural relationship between the two nations.

3. Policy to be taken toward local regimes.

The main object of the policy toward local regimes is to realize practical cooperation with them in order to extend our rights and interests and, at the same time, to create a pro-Japanese trend throughout China. Therefore, any aid policy which is intended to promote the unification or division of local regimes should be avoided.

4. Policy toward Inner Mongolia

Winning the confidence of the Mongolian people toward Japan is the principal aim of our policy toward Inner Mongolia. Although the ultimate objective is to bolster Japan's position against the Soviet Union by guiding the Mongolians toward the establishment of


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their own government based on cooperation between Japan and Manchukuo, efforts should be concentrated, for the time being, upon strengthening the political power of the Inner Mongolian regime governing Hsilinkole and Chahaerh Provinces. This policy should be secretly carried out, and any trouble with the Chinese should be settled as peacefully as possible. Above all, this policy should be enforced in harmony with out over-all policy toward the Soviet Union and China.

Policy for Guiding North China

General Policy

1. The primary objective of guiding North China lies in developing this area into a solid anti-Communist and pro-Japanese and pro-Manchurian zone as well as securing our national defense resources and developing traffic facilities in the area. In other words, the objective is to make preparations against the menace of Red influences and, at the same time, to make this area a base of cooperation and mutual aid between Japan, Manchuria and China.

2. To achieve this objective, importance should be placed, for the time being, on the enforcement of the economic program. Proper measures should be taken toward the Nanking regime in addition to the policies of guiding the North China regime, so as to make the Nanking regime recognize the special position of North China and cooperate with Japan in carrying out measures for cooperation and mutual aid between Japan, Manchukuo and China.

Gist of Guidance

1. Attitude to be taken for guidance of North China

Perhaps because of the geographical characteristics of North China, our policy toward that area often created an impression with China and other powers that Japan might be attempting to enlarge the buffer zone, extend the border of Manchukuo, and realize the independence of North China. Therefore, in carrying out this policy towards North China in the future, we should strictly refrain from


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any conduct that might create an undesirable misunderstanding, and should concentrate all efforts upon the execution of cultural and economic measures aimed at securing a peaceful and comfortable living for the people of North China. This will contribute much to the achievement of our ultimate aim.

In developing the culture and economy of North China, it is necessary for us not only to assume a lenient policy in order to encourage free operation of private capital, but also to maintain an understanding attitude toward any demand of the Nanking or Chitung-Chahaerh regimes considered necessary to save face. The problems of special trade in the Chitung area and free flight over North China should be solved as quickly as possible.

2. Guidance of the Chitung-Chahaery regime

A fair attitude should be taken in the guidance of this regime. Especially, it is necessary for us to win the confidence of the people by eliminating the influence of military cliques in financial, economic, military and all other fields.

3. Guidance of the Chitung autonomous government

In the guidance of this government, we should strive for the improvement of its internal administration, and thoroughgoing measures should be taken for the development of its industries, thus making this area a model area where the people can live peacefully and comfortably, free from exploitation by military cliques. In this manner we should make an effort to show by deeds that our policy toward North China is really fair. However, in carrying out the foregoing policy we should refrain from taking any measure detrimental to the over-all guidance of local regimes in North China, taking into consideration the fact that the Chitung autonomous government is, after all, incapable of continuing its existence alone.

4. Guidance of local regimes in Shantung, Shanhsi and Suiyuan

The primary objective of policies toward these local re-


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gimes, especially for the Shantung regime, is to draw them closer to Japan through the gradual enforcement of cultural and economic measures aimed at establishing friendly relations and cooperation between Japan, Manchukuo and China.

In carrying out the above-measures, it is necessary for us to assume the fairest attitude and to avoid any political tactics which might unnecessarily provoke demonstrations, thereby providing an excuse for the Chinese authorities to teach anti-Japanese policies.

5. Policy on economic development

The primary objectives of our policy to develop the economy of North China are the expansion of our rights and interests on the basis of free operation of private capital and also the mobilization of native Chinese capital toward the establishment of a closer Sino-Japanese relationship based on common economic interests, and, eventually, to secure North China as a pro-Japanese territory both in peace and in war. Especially the exploitation of military resources necessary for our national defense and the construction of power and transportation facilities in connection therewith should be vigorously carried out, even resorting to the employment of special capital if the occasion demands.

In exploiting natural resources we will respect the rights and interests of third powers and, at the same time, they will be required to respect our rights and interests. Every effort will be made to cooperate with third powers, particularly with Great Britain and the United States, even to the extent of agreements for joint use of materials and resources.


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