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

2036. In response to statement made orally by Minister-Counselor along lines Deptel 928, October 24, Dr. Wong Wen-hao stated December 4 (1) that Chinese authorities are giving serious consideration to severance production-marketing and regulatory functions of China Petroleum Corporation and (2) that paragraph from SNDA [SNDC] 1944 resolution cited Dept’s telegram still considerable [considered] by Chinese Govt to be guiding principle in establishment and operation Govt enterprise.

Regarding (1), Wong, though giving no indication that early action might be taken, expressed sympathy for this point of view. Commenting (2), Wong referred to Chinese Govt operation of former enemy-owned textile mills and other light industry plants and said that Govt would follow announced plan to sell there properties to private investors 2 years after cessation of World War II hostilities or if necessary, within the permissive 1 year additional. He said Govt would continue to operate only those seized plants which fall into heavy industry category.

US Govt concern over points raised Deptels 928 and 948, October 29, expressed in letter presented Wong at conclusion conversation with request he make reply for reference to Dept. Question CPC–AIOC contract and collaboration not brought up in talk but forcefully raised in letter. Embassy will expect send Dept copies both letters.

(Source information Embtel 2010, November 30, 3 p.m., states Wong and other official CPC confided to him recently their desire have regulatory powers taken away from CPC and to operate only as fully integrated oil company.)