The Ambassador in Japan (Grew) to the Secretary of State

No. 3535

Sir: In the weeks since the Embassy’s despatch 3455 of November 25, 1938,50 there have been two Japanese public statements of importance [Page 111] to American interests in China. The earlier is Foreign Minister Arita’s statement to the press on December 19, and the more recent is Prime Minister Konoe’s statement of December 22.

Mr. Arita’s December 19 statement as mimeographed in English and distributed by the Foreign Office is the first enclosure herewith51 (Embassy’s telegram 794, December 20, 7 p.m.). It is mainly a summation, for the press, of views already made known to us through conversations with the Foreign Minister and through other channels. The statement should be regarded as one more step by Japan in the effort, still in flux, to project general convictions of policy gradually forward toward questions of their application; and, viewed in terms of practical application, the statement is not very helpful as indication of treatment to be expected by American interests in China.

The self-sufficient-economic-unit argument is put forward in defense of a tripartite unitary relationship between Japan, “Manchukuo,” and China; but the assertion is made (as in Mr. Arita’s conversations with the British Ambassador) that “the proposed unit in East Asia is by no means to be a system of closed trade.” Adherence by Japan in the past to the principle of equality of commercial opportunity is affirmed, and it is stated that Japan still “upholds the freedom of economic activity in all parts of the world as a matter of principle.” Reference is made to a necessity for the imposing upon the economic activities of other powers of “restrictions dictated by the requirements of the national defense and economic security of the countries grouped under the new order.” The conviction is expressed that the new order “would by no means entail any diminution of the trade between that group and other countries.” (This last statement should be carefully noted. The release includes no assertion that foreign trade in China itself is expected to maintain its past volume; reference is only to the total of trade with the group.)

Remarks made by Mr. Arita to the foreign correspondents in response to questions posed by them at the press conference of December 19 are of interest, though lacking the authority of the prepared written release. The second enclosure herewith51a embodies a newspaper report of the questions and answers. Invited to indicate what kinds of foreign economic activity in China might be considered subject to restrictions dictated by the requirements of national defense and economic security, the Foreign Minister was elusive. On the subject of inapplicability of certain provisions of the nine power pact he added nothing new but admitted that some provisions of the treaty of Portsmouth52 might similarly be inapplicable under present conditions. [Page 112] The Foreign Minister declined to engage in a discussion as to whether other countries are at liberty to denounce certain articles in their commercial treaties with Japan. To the next questions he gave it as his opinion that extraterritoriality will gradually be abolished, that abolition of foreign concessions will depend on developments, that all restrictions to which modern states are not subjected will gradually be abolished. Replying to an enquiry as to whether the Foreign Minister’s statement means the eventual return to China of such foreign possessions as Macao and Hongkong he said that he does not think concessions such as those mentioned could be taken to be implied in his statement. On the subject of a recent American loan to a corporation trading with China Mr. Arita made several comments reported elsewhere (despatch 3536, December 22, 193853). On relations with the Soviet Union he refused to go into details.

The statement by the Premier of December 22 is of more basic importance. This also was mimeographed in English by the Foreign Office, and copy as received from the Foreign Office is enclosed herewith.54 The statement is in the form of a declaration of what Japan demands of China. The introductory paragraphs repeat sentiments expressed before, and the demands are then led up to: (1) Japan desires China to enter of her own will into complete diplomatic relations with “Manchukuo”; (2) Japan considers it an essential condition of the adjustment of Sino-Japanese relations that there be concluded an anti-comintern agreement between the two countries in consonance with the spirit of the anti-comintern agreement between Japan, Germany, and Italy;55 (3) Japan demands that Japanese troops be stationed, as an anti-comintern measure, at specified points during the time the agreement is in force, and also that the Inner Mongolian region be designated as a special anti-comintern area; (4) Japan demands that China recognize freedom of residence and trade on the part of Japanese subjects in the interior of China with a view to promoting the economic interests of both people; and (5) Japan demands that China extend to Japan facilities for the development of China’s natural resources, especially in the regions of north China and Inner Mongolia. The pronouncement refers to Japanese respect for the sovereignty of China and states that Japan is prepared to give positive consideration to abolition of extraterritoriality and return of the concessions. In the course of the declaration it is stated that Japan does not intend to exercise economic monopoly in China nor does she intend to demand of China to limit the interests of those foreign powers [Page 113] who grasp the meaning of the new order and are willing to act accordingly.

A newspaper report of the statement is also enclosed.56

The Premier’s statement is no doubt destined to play an important part in the development of Japanese policy in China. It amounts to a 1938 model of the twenty-one demands.57 Strong as it is, it can not be said to be surprising to those who have been following Japanese affairs in the recent past. The point of particular significance to foreign interests with regard to the statement is that it is unquestionably considered by the Japanese as conservative. It has very little to say about the treatment which foreign interests are expected to be accorded in China, and throws very little light on that subject.

Respectfully yours,

Joseph C. Grew
  1. Not printed.
  2. Foreign Relations, Japan, 1931–1941, vol. i, p. 816.
  3. Not printed.
  4. Treaty of peace between Japan and Russia, signed September 5, 1905, Foreign Relations, 1905, p. 824.
  5. Not printed.
  6. Foreign Relations, Japan, 1931–1941, vol. i, p. 482.
  7. See Foreign Relations, 1937, vol. i, pp. 605 ff.
  8. Not printed.
  9. For correspondence concerning the Japanese demands of 1915, see Foreign Relations, 1915, pp. 79 ff.