6. Most likely course of. action. Intensify the war of attri-
 
tion against UNITED NATIONS shipping and resume the offensive in
 
RUSSIA at the earliest practicable moment, while assuming the
 
defensive on all other fronts and retaining as long as possible
 
the Tunisian bridgehead.
 
                       JAPANESE SITUATION
 
7. JAPAN has established control of the WESTERN PACIFIC, the
 
east coast of the Asiatic continent, and SOUTHEASTERN ASIA. She
 
is exploiting the resources and providing for the security of
 
these areas by establishing defensive positions and opposing
 
UNITED NATIONS efforts to penetrate her defensive barrier. She
 
is protecting her northern flank by maintaining neutral relations
 
with RUSSIA.
 
          JAPAN has suffered substantial air and, naval losses. The 
 
losses to her ground forces have been insignificant.
 
a. Military. The strength of her army is currently esti-
 
mated at 72 Japanese divisions, plus about 600,000 Chinese
 
and Manchurian troops. She is making use of such puppet
 
troops to anincreasing extent.
 
          Her operational air strength is estimated at 3700 combat 
 
aircraft with a production of about 600 combat planes per
 
month, which is presumed to be increasing. The limited size
 
of this force precludes adequate air support for simultaneous
 
extensive operations on two fronts.
 
     The Japanese Navy remains powerful. JAPAN' S limited
 
capacity for naval construction places her at a disadvantage,
 
in a war of attrition.
 
     b  Economic.  Japanese exploitation of captured resources 
 
is limited by shortages in shipping, skilled manpower, and
 
fabricating equipment.  It is estimated that her industrial
 
expansion under favorable conditions will be at the rate of
.            
10% to 15% per year. Those essential industrial facilities
 
located in JAPAN proper are concentrated in a few relatively
 
small areas.
 
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