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The Ambassador in China (Gauss) to the Secretary of State

1499. Vice Finance Minister orally confirms Central News report that Finance, Economic Affairs, Communications and Foreign Affairs Ministries have jointly drawn up comprehensive plan for “encouragement” of foreign capital investments and had referred plan to Executive Yuan. Although expressing inability to predict if or when plan will be approved, or whether it will be altered materially, he states eventual treatment of foreign capital will “undoubtedly be quite liberal” with adequate provisions for security and reasonable returns. He states proposed revision of insurance banking laws (ReEmbdesps 2857, August 10 and 2877, August 15) have apparently been shelved and officials favoring antiforeign discrimination have been forced to give way to officials favoring liberal treatment.

While these remarks are encouraging and may indicate growth of more liberal attitude, Embassy accepts them with considerable reserve pending more concrete evidence that general Chinese Government tendency in those matters is changing.