Military Situation in China The military situation in China has
changed surprisingly little in the past week. The Chinese resistance at Shanghai has been unexpectedly effective, but it is not yet clear whether the Japanese have been engaged in a major effort. They are not likely to admit that until the effort has demonstrably succeeded, and it seems probable that they have so far achieved substantially less than they had counted on. But they have gained sufficient footing at Woosung to enable reinforcements to be landed without great difficulty, and under increasing pressure the Chinese may be expected to fall back. The question of what Japan's intentions in the Shanghai area are may then be answered. It cannot be long before the Chinese run short of munitions, for with the whole coast blockaded sea-borne supplies will be unobtainable, and except for aeroplanes from Russia there is no hope of imports across land-frontiers. But neither in north nor south is there any sign of a weakening of Chinese resolve. Japanese aggression has cemented rather than impaired Chinese unity, and though Japan's military superiority is not in doubt, her economic and financial problems will increase steadily as she carries her invasion further into China. The banks, which are already saturated with Government bonds, are in a poor position to take up new issues.
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