By mid-January 1949, Mao had wrapped up all three major campaigns triumphantly. The country north of the Yangtze, where 80 percent of Chiang’s troops had been stationed, was Mao’s. He now wanted moles to be posted to unconquered areas south of the river, to wait for his army to arrive and then surrender at the opportune moment. Nationalist bigwigs jumped ship in droves. On 7 January Mao informed Stalin that “many prominent” Chiang men, including former defense minister Pai, were seeking deals: “Pai Chung-hsi asked our people — whatever orders come from the CCP, I would fulfill them immediately …” (Pai in fact did not go with Mao.) Mao told supplicants to stay with Chiang, and in some cases even to put up resistance and wait for the right moment. Though the Yangtze was a formidable barrier, and Chiang had a sizable navy, these old and new betrayals made sure that the road was open to the capital, Nanjing, and the financial center, Shanghai — and to the rest of China. On 9–10 January, Mao confidently informed Stalin that his government “can be created in summer,” or “earlier.”
Mao’s victory in the civil war was enormously helped by Chiang’s very poor judgment about people — although it was also not easy to detect and root out the Communist moles. Mao’s own policy was not to take the slightest chance. The terror campaigns in Yenan and the other Red areas had exposed and severed virtually every connection individual Communists had with the Nationalists, and the Communists’ total destruction of privacy meant there was no way those under their rule could contact the Nationalists even if they wanted to.
And Mao never let up. Each time he acquired more territory and personnel, he took relentless steps to enforce control, requiring each new Party enlistee to write down all his or her family and social relations — and this was just for starters. He never stopped seeking, never stopped plugging, every conceivable loophole. Very few agents, Nationalist or foreign, survived his attention, certainly none who reached any position of importance.
CHIANG’S STRONG FEELINGS for his wife contributed heavily to him losing China. His first prime minister after the Sino-Japanese War was T.V. Soong, who was Mme Chiang’s brother. The Soongs and the family Mme Chiang’s elder sister had married into, the Kungs, grew fat on T.V.’s policies. After the Japanese surrender, T.V. set the exchange rate for the currency of the puppet government outside Manchuria at the absurd level of 1 to 200. This saw the family wealth swell, but impoverished the entire population in the former Japanese-occupied areas in China proper, which included the main cities like Shanghai and Nanjing, with the bulk of the nation’s middle class. Under T.V., takeover officials engaged in widespread extortion, shaking down the rich by designating them “collaborators.” Chiang himself acknowledged that his officials were “indulging in extreme extravagance, whoring wildly and gambling with no restraint … They brag, swagger and extort and stop at nothing …” “The Calamity of Victory” was how the influential
At the time of the Japanese surrender, Chiang seemed to be a glorious victor, yet within a very short time he was plunging into decline. Hyper-inflation, food crises, hoarding and panic buying became endemic in the cities. Under T.V., the government managed to squander not only its own reserves, but also the sizable holdings of gold and foreign currency that it inherited from the puppet government.
The Soongs and the Kungs had access to China’s foreign currency reserves at preferential rates, which enabled them to sell US goods in China at a huge profit, causing the largest trade deficit in China’s history in 1946. This dumping bankrupted swaths of industry and commerce, and T.V. was forced to resign as prime minister on 1 March 1947, after being fiercely attacked in the National Assembly and the press. Chiang ordered an investigation, which concluded that Soong and Kung companies had illegally converted more than US$380 million.
But all the Generalissimo did was demote T.V., which outraged and alienated many devoted, and uncorrupt, followers. Demoralization accelerated throughout the population, while many denounced the regime as “a bunch of robbers” and “bloodsuckers.” Chiang’s failure to clean up, and especially to come to grips with the malfeasance of his wife’s family, also lost him support in America.
The report of the investigation into Chiang’s relatives was kept secret. Then the Nationalists’ own newspaper, the
