893.50/1–345
The Appointed Ambassador in China (Hurley) to the Secretary of State
No. 53
Chungking, January 3,
1945.
[Received January 24.]
Sir: The appointed Ambassador has the honor to
transmit herewith a copy of an article regarding postwar policy toward
economic enterprises which appeared in the Government sponsored National Herald, English language newspaper of
Chungking, December 29, 1944.
The article quotes a statement attributed to a spokesman of the Supreme
National Defense Council. When asked by a member of the Embassy for a copy
of the policy statement agreed upon by the Council, General Wu Te-chen,
Secretary-General of the Central Executive Committee of the Kuomintang,
replied that it had appeared in the press on December 29th. It is believed,
therefore, that the press statement was fully authorized.
It may be remarked that the contents of the statement as published in the National Herald conform closely to information
contained in previously transmitted memoranda of conversations between
Government and Party leaders, and members of the Embassy. It is consistent
also with the statements of Dr. Sun Fo2 in a recent address. A copy of
his statement was enclosed with despatch no. 3212, on December 8, 1944,3 entitled
“Address by Dr. Sun Fo on China’s Postwar Economic Policy.”
[Enclosure]
Chinese Statement on Postwar Economic Policy
The following appeared in the National Herald,
Government sponsored English language newspaper in Chungking, December
29, 1944.
[Page 1333]
“General Principles on Economic
Enterprises Outlined by SNDC4
“The task of China’s economic reconstruction must be undertaken along the
lines of planning in accordance with the teachings of Dr. Sun
Yat-sen5 so that free economic development under
a General Reconstruction Plan will eventually lead to the establishment
of the economic system prescribed in the Three Principles of the
Peoples, a spokesman of the Supreme National Defence Council told the
Central News yesterday.
“In the future all possible measures, he continued, should be taken to
encourage free enterprise in so far as they are not inconsistent with
the principles of the ‘regulation of capital’. Various means should also
be devised to attract foreign capital, which is to be utilized in China
in the spirit of fostering international economic cooperation on the
basis of equality and reciprocity, provided that such cooperation does
not prove detrimental to our sovereign rights or to the realization of
our Economic Plan. In this manner it is hoped that free enterprise will
furnish an impetus to the economic development of China and help hasten
the consummation of our Reconstruction Plan.
“The spokesman then revealed the following guiding principles for
economic enterprises adopted at the 148th meeting of the Standing
Committee of the Council:
- “I. The industrial development of China should be carried out
along two lines:
“(1) by private enterprises and (2) by state
enterprises.
- “II. In order to facilitate the division of labor under the
General Plan for Economic Reconstruction the following
provisions concerning economic enterprises are to be observed:
- “(1) The kinds of state monopolies should not be
too numerous. Such monopolies include inter alia (a) postal service and tele-communications,
(b) arsenals, (c) mints, (d) principal railroads and (e) large-scale hydraulic power
plants.
- “(2) Private capital may engage in any enterprise
other than state monopolies.
- “(3) The Government may, on its own account or in
cooperation with Chinese or foreign capital, engage
enterprises which private capital is not fully
capable of developing or which the Government
regards as being of special importance, such as
large-scale petroleum fields, steel plants, air and
water transportation, etc.
- “(4) All enterprises which are operated by the
Government in cooperation with Chinese or foreign
capital should be organized in the form of business
corporations. The Government, apart from exercising
such administrative supervision as is provided by
law, is entitled to participate in the management of
all matters relating to [Page 1334] the business, finance and
personnel of such corporations solely in its
capacity as a shareholder.
- “(5) With the exception of state monopolies, all
enterprises operated by the Government, whether with
or without the cooperation of Chinese or foreign
capital, in so far as they are of a commercial
character, should, as regards their rights and
obligations, be treated in same manner as private
enterprises of a like character.
- “III. The establishment of any important private enterprise
should, according to law, be submitted to the examination and
approval of the Government on the basis of the General Plan for
Economic Reconstruction. (Important matters to be considered
include: location of the projected plant, production capacity,
kind and quality of output, issuance of shares and bonds,
etc.)
- “To all private enterprises that conform to the General Plan
for Economic Reconstruction the Government should give special
encouragement including financial aid and technical and
transportation facilities, so that they may achieve their
scheduled progress.
- “IV. No restriction shall be placed on the percentage of
foreign share of capital in any Sino-foreign enterprise. In the
organization of such a corporation it shall not be made a fixed
rule that the General Manager be a Chinese, although the
Chairman of the Board of Directors must be a Chinese.
- “V. State enterprises may contract foreign loans or seek
foreign investments through competent Government organs provided
that they first be approved by the Government on the basis of
the General Plan for Economic Reconstruction. Private
enterprises may also directly undertake such negotiations,
provided that similar approval of the competent government
organs is obtained.
- “VI. All enterprises in China which are directly financed and
operated by foreign nationals on their own account should
observe Chinese laws and regulations. In the case of certain
special enterprises which would require special authorization
for their establishment and operations, special charters of
franchises may be granted to foreign nations upon application to
and approval by the Chinese Government.
- “VII. Persons in the government service prohibited to
participate in the operation and management of any enterprise
that falls within the scope of their supervisory
functions.
- “Concluding, the spokesman pointed out that as it seems
inevitable that the existing laws and regulations concerned will
in certain cases be found to be in conflict with the
above-stated principles, the matter should be referred to the
Legislative Yuan for revision with a view to harmonizing all
existing legislation on the subject.”
