In the present chaotic state of affairs in China and the complicated intrigues that are apparently taking place between the leaders of the various factions, it is impossible to give a clear summary of the situation. I therefore confine my reply as far as possible to matters of fact. There has been no fighting of any importance since 6th July, when the last summary of the situation was given. On the northern front, it is reported that an armistice has been arranged between Chang Tsung-chang and Chiang Kai-shek: the latter's troops have entirely retired from Shantung and have in large numbers withdrawn to Chinkiang, whence they have proceeded up river.
On the western sector of the front the Fengtien troops have withdrawn to Paotingfu, and the Shansi troops of Yen Hsi-shan have entered Chihli, and are occupying the railway in the south of the province, thus inserting themselves between the Fengtien forces and those of Feng Yu-hsiang, who has advanced his troops across the Yellow River and appears to have occupied the whole of the north of Honan up to the Chihli border. On 18th June martial law was declared in Hankow; various strategical points were occupied by the 35th Army under General Ho Chien; Communists and labour agitators were arrested; the extremist members of the Wuhan administration resigned; and the various Russian "advisers" left for Kiu-kiang. The Government was completely reorganised on non-Communist lines. Borodin and other Russians have since returned to Hankow. Strong forces under Chang Fa-Kwei have proceeded down river to Kiukiang, and have thence gone southward to Nanchang. There are rumours of rapprochements between Nanking and the Wuhan administration, between the latter and Feng Yu-hsing, between Chang Tso-lin and Chiang Kai-shek, and various other combinations.