IPS DOC 820 – continued ITEM. 5. Decision Adopted by the Imperial Conference Before the Throne, 11 Jan 1938, Re: Fundamental Policy of China Incident. TRANSLATION: No. ANALYSIS: This file contains more than 100 pages, in which the following are selected as particularly important: 1. Foreign Office Report, dated 10 Jan 1938 reveals that War Ministry on 1 Dec 1937 presented its draft of Funda¬mental Policy with Regard to the Solution of the China Incident. But it was revised at the insistence of the Army General Staff, during a conference attended by representatives of General Staff, Foreign Ministry, Navy Ministry and War Ministry. HIRANUMA, President of the Privy Council, was also present at the Conference before the Throne, by the special command of the Emperor. 2 The draft, now revised, was presented to the imperial Conference before the Throne. It contained the following conditions: (a)Recognition of Manchukuo by China (b)China should not be anti-Japanese and nor anti -Manchukuo (c)Demilitarized zones in north China and Inner Mongolia (d)Economic cooperation in north China between Japan, Manchukuo and China (e)Establishment of Inner Mongolia Anti-Commitern Autonomous Government (f)Anti-communistic policy of China in line with that of Japan and Manchukuo (g)Demilitarized zone around Shanghai and economic cooperation between Japan and China (h)Agreements between Japan, Manchukuo and China on economic exploitation,, custom tariff, trade, airway, communication, etc. (i) Chinese indemnities to Japan. 3. Communication of the Military Affairs Department, Military Affairs Bureau, War Ministry, dated the same, to Commander, Kwantung Army, Commander, North China Army, Commander, Mongolian Army, Commander, Central China Army, Commander, Formosan Army, Commander, Korean Army, informing them that the Imperial Confe¬rence before the Throne had decided upon the fundamental policy.