This question is part of the old "Who lost China?" discussion. One of Gordon Tullock's lesser known books is Open Secrets of American Foreign Policy. He also wrote a draft paper with the same title (pdf) in 2004. In the section on the Chinese Civil War I found the passage below (emphasis added):
With the collapse of Japan and the invasion of Manchuria by Russia, everyone tried to occupy the newly vacated areas. The Communists withdrew the bulk of their forces into Manchuria where they were re-equipped by the Russians, mainly with Japanese arms. They also acquired the Japanese armament factories there. The Nationalists moved to replace the Japanese and Communists in the rest of China although some Communists still remained south of the Great wall. The Provincial governors-warlords also took advantage of the opportunity. Most of them held formal commissions in the National army or civil service.
The Nationalists then moved north and invaded Manchuria. The Communists tried to stop them and at Su Ping Kai the Nationalists won a major victory. The United States quickly slammed an arms embargo on the Nationalists. What led General Marshall to do this is has never been explained.
Its ostensible objective was to force the Nationalists to form a coalition government with the Communists. At this time preventing such coalitions in France and Italy was a major objective of American foreign policy.
I remember seeing a newsreel in which reporters asked President Truman why he was trying to set up a coalition with the Communists in China and trying to prevent similar coalitions in France and Italy. He responded simply by saying that a coalition between the Nationalists and Communists in China was very important and did not mention France and Italy.
I assume the battle to which he refers is the latter part of the Campaign to Defend Siping.
Tullock goes on to say that the embargo was lifted only with the outbreak of the Korean War. He acknowledges that it's "not obvious" that the Nationalists would have won without the embargo.
Tullock appears to be grinding an old axe in this particular discussion, which is that Marshall almost seemingly sabotaged the Chinese Nationalists. Not that he's necessarily on Joe McCarthy's side, but this was an allegation of McCarthy's during the Red Scare.
Some background on this. Both the Nationalists (KMT) and the Communists had spent the war aware of the fact that once hostilities ceased with the Japanese, they would have to turn on each other. The Nationalists faced the overwhelming brunt of the fighting, and while they came out ahead at the end of the war, they were also a profoundly spent force, with a devalued currency and a tenuous grasp on much of the territory they held. The Communists were in many senses better prepared, both because of land reform campaigns they had carried out that won peasant support, and because they had faced less of the Japanese military, less exhausted by the fighting. Assessments of the Nationalists during the war had been poor: Joseph Stillwell frequently made the case that the Nationalists were unwilling to fight and corrupt. Odd Arne Westad's Decisive Encounters: The Chinese Civil War downplays some of that, but does nevertheless note the weakness of the KMT in the postwar period.
George Marshall was tasked by Truman with trying to broker a peace agreement between the two groups and arrived in December of 1945. He rapidly gets nowhere with them, partly because both sides are pretty committed to trying to win a military struggle. But there are other issues here as well. The weakness of the Nationalists makes a military victory unlikely, so a negotiated settlement is imperative; Marshall didn't see a plausible path to victory that omitted a coalition government. Even in France and Italy, the goal of the United States was to prevent communist dominated governments, but American policymakers resigned themselves to the fact that Italian and French Communist parties would play roles in postwar governments. The United States didn't really have any meaningful leverage with the Chinese Communists. There was also the problem Marshall had as middle man: the United States was supplying arms to one side while trying to broker a peace agreement. The fact that Jiang Jieshi was as committed to a military settlement as Mao meant that Marshall's best play (in his mind) was to place an arms embargo on him and try to push him toward a negotiated settlement. It failed, because of intransigence on both sides.
I'm not sure why Tullock thinks it "has never been explained." To be sure, Marshall's actions engendered not-inconsiderable pushback in the United States, where the KMT had a number of influential friends. This piece from the Foreign Relations of the United States speaks to some of this: former Ambassador William Bullitt apparently had some negative things to say about Marshall's decision, which this official from the State Department responds to: Memorandum by the Director of the Office of Far Eastern Affairs. Also, as you might note in that particular document, the arms embargo was suspended in May of 1947, after Marshall concluded his mission and returned to the United States to become secretary of state; American military aid resumed after that for another year, until the Truman Administration decided the KMT couldn't be saved (by that point, the KMT had received over 4 billion dollars in aid since 1945; by contrast, Marshall Plan aid totaled 13 billion, so this was a substantial outlay).