Forgotten Ally: China's World War II, 1937-1945 (49 page)

Now Milton Miles’s arrival added yet another complication to a relationship already fraught with misunderstandings. The American intelligence agencies promptly launched a turf war with each other. The China branch of the OSS, headed by “Wild Bill” Donovan, had come to a temporary agreement with Miles and Dai Li that it would coordinate intelligence activities with them, but the agreement began to strain at the edges as Donovan moved toward establishing his own separate operation in China.
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In late 1942 Dai Li became ever more suspicious that the OSS would become a front for senior American and British officers who would bypass him when gathering intelligence in China. Dai Li also found it unacceptable to have to cooperate with (or worse yet, report to) Stilwell, whose poisonous relationship with Chiang was clear. Instead, an intelligence operation in which Miles (and the US Navy) would be paramount rather than Stilwell (and the Army) was attractive.

Tensions came to the surface at a banquet that Dai Li held for Donovan on December 2, 1943. Donovan told Dai Li that if he would not cooperate with the OSS, then the OSS would proceed without him. Dai Li threatened to kill any OSS agents who operated outside his command; Donovan then shouted that he would kill Chinese generals in return. The temperature cooled the next day when Chiang Kai-shek told Donovan that the Americans must “remember that this is a sovereign country . . . please conduct yourselves accordingly.”
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But the fundamental quarrel had not been resolved. In the midst of the war against Japan, there was a covert civil war between SACO and OSS in China, and the activities of Dai Li and the Nationalists contributed to the mess, and even took advantage of it. A large part of the dysfunction lay in the inability of the American intelligence agencies to coordinate with each other and decide what their policies in China actually were. The fog of American intelligence confusion in China thickened.
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British intelligence, in the form of the SOE (Special Operations Executive) and the SIS (Secret Intelligence Service), had some successes in China, including making contact with the Communists in north China, but overall, it was equally unable to create a coordinated and effective structure. Indeed, Ambassador Gauss would declare at one point that there were at least fifteen Allied intelligence organizations working in China, and that they were “completely uncoordinated to the delight of the Chinese.”
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Within a year, the lack of intelligence coordination would have grave consequences for the path of the war.
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Meanwhile, Dai Li was able to expand his own empire of terror within the Nationalist state. On April 15, 1943, US secretary of the navy Frank Knox and Chinese foreign minister T. V. Soong formally signed the SACO agreement. The English version declared that the organization was “for the purpose of attacking a common enemy along the Chinese coast, in occupied territories in China, and in other areas held by the Japanese.” The Chinese version specified the formation of special forces and other squads that would carry out special operations behind enemy lines.
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Miles and Dai Li would both use their joint command of SACO (technically, Dai as head and Miles as deputy) to carve out their own power bases: in Miles’s case, solidifying the predominance of US Navy intelligence (the Naval Group China) over the OSS, and in Dai Li’s, emphasizing his own power and autonomy within the Nationalist regime. Miles was also able to impress Dai Li with the technological innovations that he brought to China, everything from deadly toxins to exploding pancake flour.
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SACO’s primary purpose was supposed to be the training of guerrilla forces to harass the Japanese behind enemy lines in tandem with a planned invasion of the Chinese coast by US troops. Although fewer than 27,000 trainees were officially put through SACO’s training camps, some estimates put the number of troops at 40,000 or even higher. The training sessions were a mixture of the sinister and the farcical. The American instructors openly admitted that they could not tell one Chinese from another. (At one point, one suggested that the Chinese recruits should have numbers painted on their backs to differentiate them.) This suited Dai Li’s purposes well, since he preferred that SACO’s recruits serve him alone. His officers were forbidden to fraternize with the Americans on their compound (who made this easier by living in a separate, and much more luxurious house), and even other Nationalist Party organs were not permitted into the SACO training camps. Instead, the recruits were made to subscribe to a personality cult of Chiang Kai-shek, the great leader whose “eyes and ears” the officers were meant to be.
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The forbidden zone that housed SACO’s activities was the hilly area of Geleshan, on the outskirts of Chongqing. This zone, some nine by seven kilometers in area, became the private fiefdom of Dai Li. Nobody was permitted to enter without a transit pass; those who wandered in by chance were captured, often tortured and killed. Not a single woman was allowed to enter, in case she was a honeytrap spy, nor could SACO agents marry while in the service. In the valleys between the hills lay Dai Li’s training camps for MSB agents, housing for the American personnel, and in the smallest valley, the “Bai Mansion,” a concentration camp where political prisoners were tortured to death. Chiang’s regime now had its enforcers, and their training was bankrolled with American cash. Dai Li’s “eyes and ears” would have to defend the fraying Nationalist state where Chiang’s rhetoric and the creaky social-welfare system could not.

Chiang’s regime was not the only one to create a wartime terror state. From the earliest days of its collaboration with the Japanese in 1938, Wang Jingwei’s government in Nanjing had started to develop its own security organization.
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Zhou Fohai had started the process shortly after Wang’s defection from Hanoi, and had recruited two Shanghai gangsters named Li Shiqun and Ding Mocun as the face of his operation. The burly Li and the frail Ding had, like Zhou, begun their political lives in the Communist Party, but had quickly defected and become part of Dai Li’s MSB. They developed a taste for thuggish violence and political brutality before defecting once again, this time to Wang’s service early in 1939. The Japanese lieutenant colonel Haruke Keiin shivered at Ding’s “cold manner and snake-like eyes,” but was more cheered by Li’s “bright and cheerful manner.”
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Ding’s appearance was a better indication of how the two men operated. Throughout 1939, as Wang Jingwei sought to negotiate terms with the Japanese, Zhou Fohai worked with Ding and Li to create a terror apparatus that would enable them to control Shanghai’s political life. With the assistance of Lieutenant Colonel Haruke, Ding and Li held court at a large house at 76 Jessfield Road, in the area of Shanghai that was under no one clear authority and had become known as the “Badlands” because of the crime and terror that flourished there.
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“Number 76” became a name that filled Shanghai’s citizens with fear, just as “Wanglongmen” did for their counterparts in Chongqing. Political hostages were kept in a basement at “Number 76”: if Dai Li’s undercover men in Shanghai killed a pro-Wang public figure, a pro-Nationalist figure would be shot in retaliation.
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Li and Ding’s operation carried on as Wang’s regime was officially inaugurated in March 1940. Over the next three years, it became clear that their murderous and criminal efforts were working in the short term, giving them control over the streets, but weakening the legitimacy of Wang’s state overall. By 1943, Wang Jingwei himself looked just a shadow of the man who had made that flight into the unknown in 1938. And one of his closest associates had lost confidence in him. “I feel Wang Jingwei is dominated by his wife, surrounded by his followers, and gradually losing all his status as a leader,” grumbled Zhou Fohai early in the year.
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Zhou’s comment reflected a real split in the Wang government’s top ministers. Chen Bijun, Wang’s wife, had a coterie of relatives around her known as the “palace faction.” Zhou, in contrast, was closer to Li Shiqun and Ding Mocun, but even here there were tensions; by early 1942 Zhou and Li were also fighting for dominance.
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The division had become more acute in December 1941, just as war was breaking out between Japan and the West, when the Wang government’s security service swooped down on key MSB agents of the Chongqing government who had been secretly working at the highest levels of Wang’s regime, including Yang Xinghua, Zhou’s own brother-in-law. This was potentially a disaster for Zhou. He stood firm against Li Shiqun’s demand that the agents should be executed, and instead had them restored to government as part of his own faction.

Zhou was disturbed by more than just the turf wars. Three years after he had helped Wang Jingwei to defect, Zhou was becoming convinced that he had made the wrong decision. Now that the Chongqing government had two mighty Western nations on its side, there was little need for a collaborationist government to act as a bridge between Chiang and Tokyo. Dai Li used his MSB network, with its underground agents in Shanghai and Nanjing, to pile on the pressure from afar. He arranged for a letter to be delivered to Zhou with a verse reading “be aware of your mother in adversity in Chongqing; she leans against the gate hoping for her son to return.” Zhou’s sleep became troubled, as he saw visions of his mother in his nightmares. His thoughts even became suicidal.
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By late 1942 Zhou had decided that he would again change allegiance.

Just as he had done when defecting in 1938, Zhou concealed his intentions from those closest to him. He showed no signs of his change of heart in public, but sent a message to Dai Li offering his “voluntary surrender.” Dai Li was delighted to have such a senior catch, and began to make full use of Zhou as a ringer inside Wang’s government. Zhou arranged for a powerful radio transmitter to be hidden in his residence on Yuyuan Road in Shanghai. (Astonishingly, Zhou was able to install the transmitter with the approval of sympathetic Japanese officers who were keen to monitor news from Chongqing.) Yet, as had happened during his previous attempts to negotiate with Chongqing, Zhou had little success in opening any direct conversations with his former friend Chiang Kai-shek. In March 1943 Zhou sent Wu Kaixian—an old associate of his from the Nationalist Party’s “CC Clique” and by then a senior figure in the underground Nationalist Party in Shanghai—to Chongqing with proposals extending a peace offer to Chiang. There was no response.
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Zhou’s secret contacts would have to be confined to Dai Li’s shadowy empire. Any whisper of collaboration attached to Chiang himself could have destroyed American confidence in the Nationalist regime.

In September 1943 Dai Li sent a new demand: Zhou must help to assassinate Li Shiqun, who was proving too effective a head of security for Wang’s regime. Far too many MSB agents were being uncovered and assassinated in the Wang regime’s territories.
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Li was the main obstacle blocking Zhou’s path to power, and Zhou must have felt sanguine enough about the plot to set aside a million Chinese dollars to bankroll it. But in the end it was the Japanese who acted. Fearful that Li was beginning to overreach himself, an officer of the Military Police (Kempeitai) invited him to a dinner at the Broadway Mansions, an upmarket hotel near Shanghai’s waterfront, on September 9, 1943. Shortly after he had dined, Li began to sweat, and then became racked with agonizing pain. Within a day he was dead. The Japanese had laced his fish dish with a deadly toxin.
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Now Zhou’s great rival was off the scene. Any possibility of a disciplined, rational system of intelligence that could strengthen Wang’s regime had begun to fall apart in a nest of deadly personal rivalries.

While the secret services of the Chongqing and Nanjing regimes battled with each other in the south and center of China, the Communists continued to discipline their population in the north. They did this in the face of an initial setback. The Hundred Regiments Campaign of late 1940 had surprised the Japanese, as the Communists had undertaken few formal military campaigns. In response, in the spring of 1941, the Japanese launched a policy known as the “Three Alls”
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orders to Japan’s North China Area Army (NCAA) to “kill all, burn all, loot all.” Over the next three years the 250,000 troops in the Communist bases in north China were subjected to a wrenching assault by 150,000 men of the NCAA assisted by 100,000 Chinese collaborator troops. Rather than launching raids and then leaving, the Japanese army would destroy whole villages, ruin local crops, and confiscate grain stores; then they would return repeatedly to make sure that no resistance could spring up again. Communist sources admitted that the population of the base areas shrank from some 44 million to 25 million people, and there were large numbers of desertions from the Communist armies.
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The top priority for the Communists in most of the north was not active resistance, but sheer survival.
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The exception was Mao’s base area of ShaanGanNing.

The Japanese fury in north China made the continuing resistance of Yan’an yet more important, as well as giving Mao a significant advantage. While his area was relatively safe from either Nationalist or Japanese attack, many of the other Communist bases were effectively behind Japanese lines. Throughout the war, there had been two poles of resistance to Japan. Marine Corps officer Evans Carlson—who had reported on China to the US government after conducting an extensive tour of the country in the late 1930s—wrote that Chiang and Mao were the “twin stars” of China: their capital cities, Chongqing and Yan’an, symbolized the hopes of millions that China would triumph. But the years of war had worn away at Chongqing, whereas the power of Yan’an had grown. Policy was central to the rise of Yan’an—but as in Nanjing and Chongqing, so was terror.