The Consul General at Shanghai ( Davis ) to the Secretary of State

1353. Representatives Stanvac and Shell China had conversation in Shanghai July 25 with Wong Wen-hao, Vice President, Executive Yuan and President and chairman of board of Chinese Petroleum Corporation (CPC), and quota [quoted] latter as saying that he regretted no agreement on Kansu had materialized during the visit of delegation (RefEmbtel about petroleum negotiations) and that in his opinion obstacles in way concluding agreement had been exaggerated. Meyer, Stanvac, replied that delegation was disappointed also but did not share view that obstacles had been exaggerated.

Wong requested the foreigners present to endeavor to appreciate position Chinese Government and his own position. He referred to Taiwan problem and stressed the point that “delicate matter of war booty” involved and that public opinion China would not approve foreign companies acquiring large share such property. He felt foreign companies would not be satisfied with small share and he had [Page 1382] reached conclusion that joint ownership Takao refinery is practicable. He emphasized the “delicateness” of problem by describing situation Manchuria where Russians after having removed major portion of petroleum plants had proposed to Chinese Government that a 50–50 Sino-Russian company be formed to develop Manchurian petroleum potentialities. Wong implored the foreign representatives to make latter point clear to their home offices.

With great earnestness, Wong reiterated desire develop Kansu in partnership with foreign companies and hoped to find solution difficulties blocking such arrangement. He thought there must be some means, other than joint ownership of Takao, would resolve issue as he was fully prepared cooperate with foreign companies on matters common interest such as distribution and marketing.

Wong requested representatives to get word back to him regarding attitude their home offices as Chinese Government cannot wait indefinitely to formulate Kansu plan.

Stanvac representative invited attention fact that Americans wanted private enterprise and that formation of CPC gave rise to doubt in regard to China’s commercial and economic future. T. K. Chang, CPC, stated that Chinese private enterprise not able to handle petroleum and therefore only natural for government to form CPC. Despatch enclosing full memorandum of discussion will be airmailed.12

Repeated to Nanking as 751.

  1. Despatch No. 155, July 30, not printed.