TIME'S Nanking Correspondent Frederick Gruin returned from the recaptured Kalgan area convinced that Chinese Communists' defeats have more than military significance, that the Reds may have undermined their own guerrilla potential. His report:

The "new democracy" practiced by China's Communists in the strategic northwest, vacated by the Japanese more than a year ago, has seemingly ended in a political mistake rivaling their military failure. This is a conclusion hard to escape after a strenuous plane, truck and rail tour of the Chahar Shansi-Suiyuan border region.

Smashed Window. In this area, the economic plexus centering on Kalgan, the Japs built and left largely intact...

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