662.9331 Manchuria/4: Telegram

The Second Secretary of Embassy in China ( Atcheson ) to the Secretary of State

120. My 118, May 2, 10 a.m.

According to an officer of the German Embassy: (1) it was realized that the Chinese Government would be “worried” by the agreement but the agreement was necessary for economic reasons; (2) the agreement has not yet been actually signed but will be in a short time, probably by Kiep on behalf of Germany and possibly by the Manchukuo Ambassador on behalf of Manchukuo; (3) negotiations for the agreement have been proceeding for about 6 months and resulted from the Kiep economic mission; (4) the agreement does not in any way imply recognition of Manchukuo and is similar to other agreements such as those relating to through rail traffic between North China and Manchuria and postal communications between Manchuria and various countries; (5) any Chinese objections will be met on those grounds and the further ground that the agreement will make for the economic welfare of Germany and Manchuria because Germany (a) is the largest importer of soya beans which it requires for bean cakes for cattle feed, (b) has the better facilities for the manufacture of bean cake and oil, and (c) under the agreement can sell machinery for industrial plants in Manchuria against purchases of soya beans; (6) any loss to German exports arising from Chinese dissatisfaction with the agreement will be temporary only.
Press and other releases indicate to be incorrect the statement that the agreement has not yet been signed.
Repeated to Department and Peiping. By mail to Tokyo and Berlin.