700.0011 Pacific/19: Telegram
The Counselor of Embassy in China (Peck) to the Secretary of State
[Received July 1—9:35 a.m.]
252. 1. At a farewell call on the Minister for Foreign Affairs prior to his departure for the summer capital July 2 Dr. Wang informed me confidentially in reply to questions that his discussions with the Soviet Ambassador for a trade treaty have resulted in deadlock on two points. He informed me of only one which relates to the amount of reciprocal purchases to be guaranteed. The Chinese Government definitely expects to achieve a degree of control of foreign trade which will enable it to guarantee such trade balances. In order to elicit a statement I said that information had come to hand indicating that a military agreement had been reached between the Chinese and Soviet Governments. Wang did not deny this but asked laughingly whether this information had come from Japan.
2. The Minister for Foreign Affairs inquired what attitude the American Government had taken toward the proposal made by Lyons45 for a Pacific non-aggression pact.46 I replied that I had no definite information on this subject and he did not indicate any desire that I obtain it for [him?]. He said that long before Lyons made the proposal at the Imperial Conference in London the Soviet Ambassador had urged on him the concluding of such a pact. I inquired whether the Minister for Foreign Affairs personally felt that Japan could be induced to enter a non-aggression pact and he replied that he did not think so but he felt that it would be advantageous for the other powers in the Pacific area to conclude a non-aggression pact between themselves and leave it open to Japan to join whenever so inclined.
3. Wang said that the Chinese Government was anxious to bring about the termination of the East Hopei régime as soon as possible and to adjust other outstanding questions with Japan but was determined to adhere to its policy of avoiding any precipitation of actual conflict while equally avoiding any surrender of rights. He did not think that the Japanese Government would make any further aggressive move for the time being. During this lull the Chinese Government will strain every effort to strengthen its powers of self-defense in anticipation of a resort to force in defense of its rights. It is especially anxious to defer hostilities until after the National Congress on November 12 (I inferred that the Government desires through the delegates to the Congress either to test or to solidify public opinion on the matter of armed resistance). In the meantime [Page 126] the Government will keep alive popular realization that China is faced with a crisis and is straining every nerve in preparing.
4. Wang expressed satisfaction with the nationwide progress of unification and strengthening of authority. Prospects are good that the military forces in Szechuan will soon be completely nationalized and a portion of the Communist forces in Northern Shensi have already accepted the Government’s terms. Wang confirmed the supposition that the Government is favorably disposed toward keeping the Communist forces intact as a useful weapon in an emergency. (American businessmen confidentially informed the Embassy yesterday that they had sold some trucks to these Communist forces and believed that the money must have come from the Central Government.)