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"A combination of huge forces, American supplies and transport, plus some
good generalship in the north had put Chiang in what looked like an
unassailable position in the first eighteen months after the end of the war
with Japan. Mercenary armies came back under the Nationalist flag. He had
the active support of the China Lobby in the United States, combining
politicians in Washington, a network of businessmen round T. V. Soong and
H. H. Kung, and the influence of [*Time *magazine and the other Henry] Luce
magazines. The Republican, Thomas Dewey, seemed well placed to beat Truman
in the 1948 presidential election -- after a visit to America, Chen Lifu
told a Shanghai newspaper that this would mean 'extraordinary measures' to
send military aid to China.

But, as so often, Chiang's position was more hollow than it appeared. By
the time he walked through Yan'an, his military fortunes had peaked, and
the disintegration of areas under Nationalist control was racing ahead.

"Hyperinflation was destroying the middle classes and honest officials;
wholesale prices in Shanghai rose by 45 per cent in a single month. The
mother of the author of *Wild Swans*, Jung Chang, had to hire a rickshaw to
carry the huge pile of notes needed to pay her school fees in the
Manchurian city of Jinzhou where beggars tried to sell their children for
food. Labour unrest grew -- there were 4,200 strikes in Shanghai in

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