HIGHLY CONFIDENTIAL — NOT FOR EXTERNAL DISTRIBUTION

Office of the President of the Republic of China

July 12th, 1949

The National Preservation Project

It is a possibility that despite the brave and continuing efforts of our soldiers and people, and the aid of our allies abroad, that the tide of Soviet communism will sweep over China on the heels of their tanks. In this horrific event, it is vital that some core of national resistance be established, as it was in 1937, to continue the conflict for the liberation of the Chinese people. As in 1937, the national redoubt must be physically inaccessible to the enemy and relatively economically prosperous, enough to maintain the nation’s armed forces and present the facts of national resistance to the people.

A number of potential candidates for this location exist. The most obvious is Sichuan, the redoubt of the anti-Japanese war and one of the most populous provinces in the nation. Ringed by mountains on all sides, Sichuan is an excellent defensive position. Furthermore, the KMT apparatus is strongest in this province, and postwar development has built up a considerable arms industry in the region. However, this isolation, in the west of China, also presents difficulties of its own. Our primary lines of communication to our anti-communist allies are by sea, while Sichuan is landlocked — even if we were to successfully hold out, in the long term, this would prove disadvantageous, as the experience of the anti-Japanese war shows. With the seemingly infinite supplies of material available to the rebels, this is likely not feasible barring some dramatic change in the politics of either India or Burma, both of which are currently unfriendly to the KMT.

A second option is the southern provinces of Yunnan and Guangxi. These locations should be dismissed as only a last resort. Their population and economic base are too small to host the forces necessary for national liberation, and while their terrain does present extreme problems to the invader, native Chinese forces would no doubt find some way to overcome those challenges, just as we did against the Japanese. At most, these two will host pro-ROC guerilla movements.

Thirdly, there is the province of Guangzhou, the historical origin of the KMT state. Our own experience has shown that this region is fairly inaccessible to a northern opponent, to a similar degree as Sichuan, while remaining connected to the sea. The primary downside is that Japanese occupation and some unfortunate political circumstances have resulted in Guangdong being greatly under the influence of both the Li Zongren-dominated Guangxi Clique and warlord Zhang Fakui, both of whom are loyal and competent by all accounts but… well, not Chiangs.

Finally, there is Formosa, a place whose benefits are mostly self-explanatory. Island, extensive industry and developed cash-crop agriculture inherited from the Japanese, good ports, and so on. The primary issue is that the island has a rather small population, is largely composed of natives with dubious loyalties, and as an island has the issue that once we’re there, it’s going to be rather difficult to return to the mainland. For these reasons, while Taiwan will in such a scenario continue to be valuable to the cause, making it our primary redoubt should be mostly a last resort and operations relating to the island should prioritize its for its safety rather than its military utility.

With these considerations in mind, the National Preservation Project will encompass a number of activities intended to improve the future resiliency of the Republic of China.

In line with previous efforts, plans will be made for the organization of the defense of the Sichuan basin. Our engineers will conduct a thorough survey of the region’s terrain and begin drafting defensive plans for a variety of scenarios. Meanwhile, raw materials will be stockpiled for the continued operation of the region’s industry, and accommodations and infrastructure for the operation of our troops in the region investigated and plans made for their usage. Similar efforts will be made in Guangdong to allow for the rapid creation of a viable national defense in the province.

In Guangxi and Yunnan. KMT liaisons will being making contacts with local minority populations, familiarizing them with the local KMT military command and informing them (often through cash payments) of the benefits of KMT rule. Supplies for potential future KMT guerillas will be cached through the local Juntong organization. Dai Li’s adventure in Laos and Vietnam is also useful for this purpose, since a great number of excess troops, equipment, and so forth have been stashed across the border, so to speak. These resources can be mobilized to continue building our base area both in and across from these two southern provinces.

Finally, Taiwan is expected to serve as a sort of safehouse, a home base guaranteeing the safety of key assets to continue the military struggle on the mainland. We envision Taiwan serving as a center for the training and R&R activities of soldiers, mediating the delivery of supplies to the mainland, and providing a useful stable economic and social base for building up the strength of the party. In accordance with this plan, the ROC will begin shifting to Taiwan:

• The national bullion reserves, totalling some $300-400 million in gold and silver, a total of over 3 million taels of gold and at least four times that much in silver, plus large quantities of silver and gold coin (much of it confiscated from private holders).

• Physical reserves of foreign currency, primarily US dollars.

• The capital of key industries, primarily the textile and chemical industries of Shanghai. The industries of Shanghai have a combined capital of some $25 million in fixed equipment.

• Skilled personnel, particularly those with military skills, to serve as the basis for a secure training base for the military, and to provide technicians for Taiwan’s key oil refining and arms manufacturing industries.

• National cultural treasures, because Chiang likes them.

All transfers will be done solely through the authority of the President of the Republic (i.e. by Chiang’s personal orders, using men and machines loyal solely to him) and thus will not be interfered with by any other party (i.e. Li Zongren or any particularly meddlesome Kungs and Soongs). Air transport will be prioritized, considering it has the least potential for publicity and is comparatively safe, but sea transport via the navy will be used for larger bulk items.