"Nevertheless, the Chinese Government and people are still laboring under the double and interrelated burden of civil war and a rapidly deteriorating economy. The strains placed upon the country by eight years of war, and the Japanese occupation and blockade have been increased by internal strife at the very time that reconstruction efforts should be under way. The wartime damage to transport and productive facilities has been greatly accentuated by the continued obstruction and destruction of vital communications by the Communist forces. The civil warfare has further impeded recovery by forcing upon the Government heavy expenditures which greatly exceed revenues. Continual issuances of currency to meet these expenditures have produced drastic inflation with its attendant disruption of normal commercial operations. Under these circumstances China's foreign exchange holdings have been so reduced that it will soon be impossible for China to meet the cost of essential imports. Without such imports, industrial activity would diminish and the rate of economic deterioration would be sharply increased."