January 1: The Generalissimo made a speech last night indicating that he was prepared to resign – in certain circumstances. There were many “ifs” and “buts”, yet it was a very different kind of speech from his usual “8 more years of Communist-Bandit suppression”. At least, the door is now open for compromise and bargaining, although the Gimo has waited so long to take this step that the Communists can pretty well lay down their own terms. The great question underlying any settlement seems to me to be: will the Russians, through puppets and stooges, control whatever new government comes in, or will it be a purely Chinese show? If the former, we are in for serious trouble; if the latter, we’ll be here a long time.