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The Secretary of State to the Chargé in China (Robertson)
1708. Article by Lieberman62 in today’s New York Times reports announcement of new company law. Statements made include following in substance:
[Page 1247]According to Sun-Fo the law will necessitate the reorganization of all foreign-owned public utilities in Shanghai as Chinese companies. Their board chairmen must be citizens and residents; at least two American and three British firms are affected. The American companies are Shanghai Power Company and Shanghai Telephone Company. Sun-Fo also states that the reorganization of foreign-owned utilities in Shanghai will have to take place under the definition of an “alien company” in the new act. According to Sun-Fo the phrase “doing business in its country” has the most vital bearing on the future status of Shanghai utilities. He argues that even though they are subsidiaries of foreign companies they are not themselves “doing business” in their own countries. The mentioned companies declined to comment until entire text is available.
The law permits the Government to inspect the books of alien companies whenever necessary and forbids foreign firms to “solicit shares or issue debentures” in China.
The article concludes with the following paragraph:
“American Embassy representatives who have kept the State Department fully informed of the law’s progress, have conferred and corresponded with Dr. Sun on the exact definition of the phrase ‘it was pointed out’ Dr. Sun said ‘that under the definition the Texas China Oil Company, for example, could not do business in China as an American company. That is not the case. The Texas China Oil Company is a subsidiary of the Texas Company but the crucial fact is that it gets its oil in America. The Shanghai Power Company does not get its power in the United States’. Dr. Sun said that Shanghai Power was organized with Chinese capital, the ownership, however, remaining vested in what he referred to as a ‘group of American promoters.’”
Is Department’s assumption that article is based on newspaper interviews with Sun-Fo and Embassy correct? Any comments Embassy may have regarding article, particularly interpretative portions, or Department’s action pending receipt of text, will be appreciated.
- Henry R. Lieberman.↩