visit with him. The Ambassador transmitted on this occasion the thanks of the Japanese Government for the endeavors of Germany for the re-establishment of peace in East Asia. Upon my question how Japan envisi ns the further development of the matter in China, the Ambassador declared that the Japanese Government could, after the military defeat of Chiang Kai-shek, no longer recognize him asrepresentative of the Chinese people and that the Chinese Central Government did no longer exist. Japan would now /endeavor/ to negotiate about the end of the state of war with a new Chinese government, which probably would be composed of the already existing governments in Peking and Shanghai. /In reply/ to my objection that there would then probably still remain a big and not yet pacified area of China, the Ambassador replied that they were prepared for everything in Japan and that they would also know how to carry the burden of a prolonged state of war. “Then the Ambassador mentioned that his government is desirous of expanding the trade fo goods with Germany. However, it is of importance for them to obtain long range credits for the receipt of German goods beyond the present volume. I told the Ambassador that he knew our situation and that I could tell him already today that even with the best intentions we were not in a position to grant any bigger long term credits. The Ambassador declared then that Japan does not wish to change the present structure