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

No. 880

Sir: I have the honor to attach hereto for the Department’s information, copies of the outlines of discussions47 held recently between Dr. Chin Fen, Vice Minister for Economic Affairs for the National Government of China and Chairman of the National Control Commission of Liquid Fuels, and the several representatives of the American and British oil companies established in China, concerning the importation of petroleum products into China and the subsequent marketing of same.

It is of particular interest to note the Chinese Government’s expressed desire that the foreign oil companies resume business and rehabilitate their facilities in China. As for rehabilitation, however, I feel that these companies will hesitate to invest the large sums necessary to restore their properties to pre-war condition until they have some fairly definite assurance that the Chinese Government has no early intention of buying and setting up refineries for handling imported crude oil.

There is also attached a copy of the memorandum48 prepared and submitted by the Standard-Vacuum Oil Company at Dr. Chin Fen’s request, outlining the disadvantages to China of erecting her own refineries so to process imported crude petroleum.

I believe that the Department of Commerce will be much interested in the regulations under which the established oil companies are at [Page 1358] present distributing petroleum products released to them by the United States Armed Forces, as set forth in the account of the meeting held November 13, and also in the “provisional Regulations Governing the Import of Oil Products” as translated by The Shell Company of China, Ltd. I suggest that this material be made available to that Department. Incidentally, substantial orders are being booked for importation early in 1946.

Respectfully yours,

Walter S. Robertson

Memorandum by Representatives of American and British Oil Companies in China


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Aims arid Policies of Chinese Government Respecting Oil for the Short-Range Post-War Period:

Dr. Chin Feng had carefully prepared agenda for this meeting and, at the outset, read the following as representing the aims and policies of the Chinese Government with respect to oil for the short-range post-war period:

China is very badly in need of supplies of petroleum products and will welcome imports into China by the foreign oil companies;
The Chinese Government is going to adopt a policy for the protection of indigenous fuels as these involve alcohol production (largely centered in Szechuan Province) and the development of China’s crude petroleum resources in the Kansu and other fields. (Dr. Chin Feng made it clear that later on it may prove more economic and beneficial for China to utilize molasses, now forming the basis for alcohol distillation, for sugar requirements. In this event, alcohol production will be discontinued.);
The Chinese Government desires the foreign oil companies to rehabilitate their installations and distributing facilities in China on pre-war scales and the Chinese Government will assist the companies in such rehabilitation. The Chinese Government will try its best to solve satisfactorily the inland shipping problems, as these apply to the transportation of oil products and to the benefit of the oil companies. For the present and pending rehabilitation of the foreign oil companies’ terminal and bulk storage facilities and a restoration of normal transportation facilities within China, the Chinese Government desires imports of oils into China to be in drums;
The Chinese Government finds it necessary to conserve its foreign exchange. The Chinese Government wishes the foreign oil companies to import as much oil as possible into China and the Chinese Government will try its best to provide foreign exchange for such imports;
It is essential that the Chinese Government maintain certain controls over distribution of imported petroleum products in China but will amend the wartime regulations on this matter to as simple a basis as possible.

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  1. Outline of discussions of November 13 not printed; for that of November 15, see extract, infra.
  2. Not printed.