The Chargé in China (Atcheson) to the Secretary of State

No. 1196

Sir: With reference to the Department’s telegram no. 602, May 10, 10 p.m., in regard to the Industrial Reconstruction Planning Conference held in Chungking from April 26 to May 6, as well as the Sixteenth Annual Meeting of the Chinese Economic Society, there is enclosed herewith a memorandum of conversation between Dr. Wong Wen-hao, Minister of Economic Affairs and the Embassy’s Commercial Attaché.

The Embassy hopes to be able to forward additional information on this subject in the near future and will also report as completely as possible on other scheduled conferences, including a Production Conference to be held early in June, under the auspices of the National Mobilization Board, and a conference of the Supreme National Defense Council, to be held at the end of May, in which the Central Planning Board is expected to play a prominent part.

It is not believed that anything of particular importance came out of the Sixteenth Annual Meeting of the Chinese Economic Society. According to a member, it was not attended by any prominent officials and did not agree on any recommendations as to economic reconstruction. [Page 855] The Embassy is endeavoring to obtain additional information on the subject.

It is believed that the enclosed memorandum and future reports on the subject may be of interest to the Board of Economic Warfare and to the Bureau of Foreign and Domestic Commerce.

Respectfully yours,

George Atcheson, Jr.

Memorandum of Conversation, by the Commercial Attaché in China (Richards)

Dr. Wong Wen-hao, Minister of Economic Affairs, was very reluctant to discuss the recent Industrial Reconstruction Planning Conference and suggested that it would be much better for Dr. T. V. Soong to give out the information in Washington. He mentioned that even the delegates who attended the conference have not been permitted to keep their minutes, but was not entirely clear as to why such secrecy should be observed, his only explanation being that the proposals discussed at the conference have no official standing unless they are approved by the Generalissimo and the Executive Yuan. He admitted that there were proposals discussed and that there were approximately 140, but he made light of them, saying that they were of no importance.

With regard to the five-year plan for post-war industrial reconstruction, Dr. Wong said that the conference did not go into much detail but merely discussed estimates of the cost of such a plan. It was agreed that an industrialization project such as China could afford would not be very imposing from the western point of view and would not even bring China up to a par with India industrially, but that it is better to be realistic and not to undertake anything too ambitious. In the case of steel, it was agreed that China might try for a production of about 2,000,000 tons a year, of which Japanese equipment already in China, if not destroyed, would account for nearly half. Part of the steel industry would be located in the Yangtze Valley, where there is a big market but only limited ore reserves, but most of it would have to be in Manchuria, where there are fairly good ore reserves but which is remote from the principal markets. Other industrial projects would be devoted to the manufacture of machinery, farm implements, heavy chemicals, etc. Dr. Wong does not favor a large armaments industry, unless Japan should be permitted to retain important heavy industries with the potentiality of resuming arms production.

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Dr. Wong said that he has not publicly made any suggestion that part of the industrial equipment in Japan be turned over to China, but that he did discuss it once at a dinner party and feels that it is a good suggestion, not only because China is entitled to reparation from Japan but also because Japan will continue a source of uneasiness in the Far East so long as she is permitted to retain on a large scale heavy industries that could be turned to arms production.

Dr. Wong said that the Ministry of Education participated with the Ministry of Economics in the Industrial Reconstruction Planning Conference and that the Minister of Communications had a representative present, though he could not attend himself.

Comment: As Dr. Wong was able to spare only twenty minutes, I was not able to question him as closely as I should have liked. I got the impression that he would prefer to avoid the responsibility of deciding what might be given out, but he agreed to think it over and talk to me about it again in a few days. Though he insisted that the 140 proposals were of no particular importance, I got the impression that he was reluctant to discuss them, at least until the Generalissimo and the Executive Yuan have had a chance to consider them. Dr. C. C. Chien, Vice Chairman of the National Resources Commission, with whom I discussed the Industrial Reconstruction Planning Conference last week, obviously did not feel that he could give out any information about it without permission.

J. Bartlett Richards