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

2056. In letter to Embassy dated December 5 marked “informal” Dr. Wong Wen-hao (Deptels 928, October 24 and 948, October 29 and Embtels 2010, November 30 and 2036, December 5) states: [Page 1393]

CPC–AIOC contracts signed August 1946 solely for purchase crude for “refineries already established by Japanese in war period and not a single provision was made concerning financial or technical assistance” from AIOC;
Only foreign firm giving CPC technical assistance is Universal Oil Products Company of Chicago;
ME [Re?] market for oil products in China, bulk of demand has been and still being supplied by Standard Vacuum, Caltex and Shell and “there has been established no monopolistic right for any organization” as testified by “fact that source of supply of oil comes from different companies”.
Wong states he is “informed” AIOC intends to enter China oil market shortly because of huge war time development of production capacity and that “marketing of oil by any new firm in China requires no agreement with Chinese Petroleum Corporation”.
Wong not asked directly of AIOC interest in Kansu development but this point, in so far as contract concerned, seemingly covered by following statement, “I assure you with my word of honor that no secret clause of whatever nature has been entered into contract on purchase of crude oil for Takao Plant.”
Re purchases of oil or its products, “usual procedure in past was to go ahead according to practical convenience,” or without competitive bidding. The requirement of crude oil of the Takao refineries was made known to at least two important firms, namely Aramco and AIOC. The contract was finally entered with latter company. However, [“]the door will never be closed to any firm which is willing or capable of supplying China with her oil requirement in future”.
Wong asserts in view foregoing in his opinion no part of guiding principle of SNDC 1944 resolution is involved and that “I wish to avail myself of this opportunity in expressing to you on behalf CPC its due respect to all foreign firms which have made substantial capital investment in China during last few decades”.
Wong closed letter by expressing hope Embassy will understand problem and stating that “after all the Chinese are aiming at modest home production in order to meet portion of her domestic requirement”. Embassy awaits Department’s instruction before taking further action.