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On March 24th, the Sino-Japanese Conference on the cessation of hostilities was opened. In the meantime, the withdrawal of Japanese military and naval forces had actually begun. On March 20th naval and air contingents left Shanghai, reducing the remaining strength to something not far above normal. The Japanese Headquarters announced on March 27th, on the occasion of further withdrawal, that this had nothing to do with the above-mentioned Conference or with the League of Nations, but was simply the outcome of the independent decision of the Headquarters of the Imperial Japanese Army to recall units no longer required at Shanghai.
On March 30th, the Conference announced that, on the preceding day, an agreement relative to a definite cessation of hostilities had been reached, but further difficulties supervened and it was not till May 5th that a complete armistice agreement was ready for signature. It provided for a definite cessation of hostilities, fixed a line to the west of Shanghai as a temporary limit for the advance of Chinese troops, pending further arrangements upon the re-establishment of normal conditions, and provided for the withdrawal of the Japanese troops to the International Settlement and the extra-Settlement roads (streets) as previous to January 28th. Certain areas outside the Settlement had to be temporarily included, because the number of Japanese troops was too large to be quartered within the Settlement alone, but these do not require to be mentioned as they have since been evacuated. A Joint Commission, in which the assistant friendly Powers—the United States of America, Great Britain, France and Italy and the two parties were represented, was established to certify the mutual withdrawal. This Commission was also to collaborate in arranging for the transfer from the Japanese forces to the Chinese Police.
The Chinese added two qualifications to the agreement. The first declared that nothing in the agreement was to imply permanent restriction of the movement of Chinese troops in Chinese territory, and the second that it was to be understood that, even in areas temporarily provided for the stationing of the Japanese troops, a ll municipal functions, including that of policing, would remain with the Chinese authorities.
The terms of this agreement as a whole have in the main since been carried out. The evacuated areas were turned over to the Chinese Special Police Force between May 9th and 30th. The turning-over, however, of these four areas has been somewhat delayed. It was but natural that, when the Chinese owners of houses and factories, officials of railways and companies, and others began to re-enter the evacuated areas, numerous complaints concerning looting, ·wilful destruction and carrying away of property should have been addressed to the Japanese military authorities. In the opinion of the Chinese, the whole question of reparations remains for further negotiations. They estimate the casualties in killed, wounded and missing as 24,000 officers, men and civilians, and the total material loss at approximately 1,500,000,000 Mexican dollars. A draft agreement dealing with the extra-Settlement road areas bas been initialled by representatives of the Shanghai Municipal Council and of the Chinese Municipality of Greater Shanghai, but it has not yet received the approval of either the Municipal Council or of the City Government. The Municipal Council has referred it to the Senior Consul for the observations of the Consular Body.
Effect on the Manchurian situation of the Chinese resistance at Shanghai.The Shanghai affair undoubtedly exercised considerable influence upon the situation in Manchuria. The ease with which the Japanese had been able to occupy the greater part of Manchuria, and the absence of any resistance by the Chinese troops, not only led to a belief in Japanese naval and military circles that the fighting quality of the Chinese Army was negligible, but also caused profound depression throughout China. The stout resistance put up from the first by the Chinese 19th Route Army,