The Secretary of State to the Embassy in China
297. For General Marshall. While Eximbank has not yet consummated credit of $33 million to China for purchase of cotton as recommended in Urtel 2241, Dec. 29,72 Bank has offered to do so upon receipt appropriate assurance from S. C. Wang73 Chinese representative here.
Wang offered to sign letter on behalf Govt giving assurance that cotton purchased by Govt under credit will be allocated by China Textile Industries Inc.74 in non-discriminatory manner among private and governmentally owned textile mills.
Eximbank with approval of Dept has asked for additional assurance that credit (as well as cotton) will be made available on reasonable [Page 941]conditions to private purchasers without discrimination or preference. It is also requested that public announcement of above policy be made in China. Eximbank would be free to make similar announcement this country.
Wang objects to second assurance on grounds that change in present Chinese plans would be required and that Eximbank request represents intervention in Chinese domestic affairs in a manner not required other countries. Member of Bank after Directors meeting Feb 13 informed Wang that there is no discrimination against China and that requested assurance is necessary due to announced intent Chinese Govt to monopolize purchases under credit and distribution of cotton.
When Wang informed member that text of requested letter had not been wired to Chungking he was asked to do so.
Dept regards case as important means of indicating to Chinese Govt and people, and to American business, that this Govt does not desire Exim credits generally to be used to foster monopolization of either materials purchased or credits by Chinese Govt in general manufacturing industry.
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