With the fall of Mukden the Chinese Communists have completed their conquest of Manchuria. North China as far south as the Yangtze is in danger of falling under their control. On the economic side, Chiang Kai-shek's government has removed price controls and with them has vanished all hope for its economic reforms. The resulting inflation is destroying the newly-issued money for which the middle class was forced to sacrifice its holdings of gold and foreign currency. With the Republican defeat in the U.S. election discouraging Knomintang expectations for increased military aid, the Nationalist Cabinet has resigned.

The recent news from China crystallizes the utter failure of the two-year-old American policy. For that failure the Truman Administration is not wholly responsible. The Russians have not carried out their agreement at Yalta, namely to assist Chiang in setting up a democratic government for a unified China, Instead they removed Manchurian industries and supplied his communist enemies.

Chiang on his part has neither sought the goals envisioned at Yalta nor has he proved himself a capable general or politician. Disregarding American advice, he has constantly wrecked his military strategy by mixing it with politics. He has wasted American equipment by sending his recruits into the field after only a month of training. Most important, he has relied more and more heavily on the extreme reactionary element in his party, thus driving the liberal intellectuals into the communist camp.

Many Republicans have harshly criticized the Marshall mission of two years ago, which attempted to bring both sides together in a coalition government. Now as then, however, the single alternative to that program is American military support of the Civil War. Such support cannot save the fascistic Kuomintang and will only further estrange the liberals whose friendship is essential to the reconstruction of China along Western lines. In view of the present fiasco, the only realistic policy is to recognize Chiang's defeat and his inability to govern any longer.

He may soon reiterate his perennial offer to resign because he has "lost the Mandate of Heaven." This time Parliament may take him up on it. To fill such a vacuum, the Communists have scheduled a convention for January to form a democratic front government with the liberals now in the national regime.

In despair many Americans will draw an in exact parallel with Czechoslovakia. Although the extent of the tie between the Chinese Communists and Moscow is not clear, it is obvious that their form of communism is radically different from the Russian variety. The Chinese brand is based not on an urban but on an agrarian economy. Industrial backwardness prevents the quick establishment of a police state. Moreover, since the Communists must use the same bureaucracy to carry out its administration, they must modify their demands to make them acceptable to this group.

When the Communists come to power--and only a miracle can prevent it--their attempts to consolidate their position will drive away those liberals who now follow them as the only alternative to Chiang. The U.S. must support the formation of liberals into a third force, virtually non-existent today, and aid it in taking ever the government. That is the sole possibility. Only then can America demonstrate, through the groups it supports, that it has something better to offer Asia than do the Communists.