Office of the Historian

893.0031/11–1946: Telegram

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

Nanking, November 19, 1946—4 p.m.
[Received November 20—12:25 a.m.]

1910. For State, Treasury, Commerce and Agriculture.

1.
Revised temporary foreign trade regulations promulgated March 1 annulled and replaced by new regulations announced November 17 and going into effect immediately. Summary of regulations and schedules being cabled by Consulate General Shanghai to Department.71
New regulations set up a board for temporary regulation of imports under Supreme Economic Council, the operative functions of the board to be performed by a small executive committee consisting chiefly of Central Bank and Customs officials. They extend licensing to all imports, permit applications for import licenses only to importers registered with the board, and divide imports into four schedules, the first consisting of capital goods, the second of goods to be imported under quota, the third (schedule III–A) of goods application for import, license for which will be handled by Foreign Exchange Examination Department of Central Bank, and the fourth of a prohibited list. The prohibited list is in effect substantially extended by schedule III–B, which includes all commodities not listed in other schedules, importation of which is temporarily suspended.
2.
Embassy has as previously reported anticipated measure for some time, as drain on China’s foreign exchange assets made it imperative for her to curtail imports. Therefore in situation in which small exchange adjustments—such as that of August 19—do not significantly benefit her balance of payments position, China decided to restrict her imports directly by tightening up import controls. Delay in introduction of measure due to need for improvising administrative machinery and to political uncertainties. As it is, administrative preparations still in early stages, and period of considerable confusion is expected. Final decision was taken this week-end in Nanking after conferences T. V. Soong, Tsuyee Pei, Blandford,72 Rogers and Li Kan.73
3.
T. V. Soong’s press statement that the period of “shortage” of imports has come to an end and that the inauguration of selective importation will emphasize economic reconstruction is largely window-dressing, [Page 1025] as informed opinion realizes that primary objective of measure is to conserve foreign exchange.
4.
It is understood that regulations regarding pre-zero commitments will be promulgated by Central Bank and Customs in Shanghai in near future. Problems connected with these commitments, quota allocations, and divisions of quotas between Chinese and foreign importers are bound to arise, and Embassy is prepared to make representations to appropriate Chinese authorities in cases where discrimination is clearly involved. Regardless of the facts, it is to be expected that the American business community will regard measure as inconsistent with Sino-American commercial treaty.74 Chinese are, of course, also aware of inopportune nature of measure in view of ITO75 Preparatory Committee meeting in London; but as indicated in Embassy’s telegram 1648, October 12, 3 p.m.,76 in view of China’s long-run balance of payments problem, the actual prospects are inevitably for continued tightening rather than for relaxation of import controls in spite of Chinese emphasis on “purely temporary” character of measure.

Sent Department as 1910; repeated to Shanghai as 745.

Stuart
  1. Undated, unnumbered telegram (not printed) received November 18. The text of the regulations and schedules was transmitted to the Department in the Consulate General’s despatch No. 491, November 18, not printed.↩
  2. John B. Blandford, American financial adviser to the Chinese Government.↩
  3. Deputy Secretary General of the Chinese Supreme Economic Council.↩
  4. Signed at Nanking, November 4, 1946, T.I.A.S. No. 1871; or 63 Stat. (pt. 2) 1299.↩
  5. International Trade Organization.↩
  6. Not printed.↩