740.00119 PW/2–2646: Telegram
The Counselor of Embassy in China (Smyth) to the Secretary of State
[Received February 27—2:31 a.m.]
368. Dr. Wang Shih-chieh, Minister for Foreign Affairs, called me to Foreign Office last evening and said that Foreign Office reply [Page 1110] to Embassy’s note of February 11 regarding Manchuria (Depths 261, February 928 and Embassy’s 274, February 12) would be ready today. Dr. Wang then discussed Manchurian developments; his remarks are being reported by separate telegram.29 FonOff reply dated February 25 was handed to Embassy this morning and full text thereof is quoted below:
Begin Note: I have the honor to acknowledge the receipt of your note of February 11 in which you were good enough to transmit to the Chinese Govt, the views of Secretary of State James F. Byrnes concerning discussions between officials of Chinese Govt, and Soviet Govt, with regard to Jap enterprises in Manchuria. It will be greatly appreciated if you will kindly communicate the following reply to Secretary State:
“The Chinese Govt, appreciates the US Govt.’s concern over the Sino-Soviet discussions and will be glad to take Secretary State Byrnes’ views into careful consideration.
On September 3, 1945 a memo was presented by Chinese Ministry for (Foreign?) Affairs to American and Soviet Embassies in Chungking in which it was stated that in view of heavy losses sustained by China as a result of Japanese aggression in the years following the Mukden incident of September 18, 1931, Chinese Govt, had decided to take over all Japanese public and private properties as well as enterprises in China as a part of reparations to be claimed from Japan by this country and that Chinese Govt, requested US and Soviet Union to support the position taken by China and to instruct their troops stationed in all recovered areas of China to take necessary measures to prevent the enemy from resorting to acts of destruction, sabotage, concealment, removal or transfers. During Foreign Ministers’ conference in London identic memos30 to same effect were handed to Secretary State Byrnes and M. Molotov, Soviet Foreign Commissar on 13 and 18 of September respectively. In his letter replying to this memo30 the Secretary State declared that he was entirely sympathetic with desire of China (1) to retain Japanese assets in China, (2) to have necessary measures taken by Allied forces to prevent the enemy from resorting to acts of destruction or sabotage in Formosa and other territory to be restored to China and (3) to receive a liberal percentage of and a liberal priority in respect to reparations to be taken from Japan.
The Soviet Govt, declared in a memo addressed to Chinese Govt, on January 21, 1946 that all Japanese enterprises in the Chinese northeastern provinces which had rendered services to the Kwantung [Japanese] Army were regarded by Soviet Union as war booty of Soviet forces. The Chinese Govt, considers this claim of Soviet Govt, as far exceeding the scope of war booty as generally recognized by international law and international usage and for this reason the two Governments have not been able to reach a unanimity of views of fundamental principles involved.
[Page 1111]In another memo presented to officials of the Generalissimo’s Hqs in Changchun the Soviet Govt, declared that it proposed to hand over to China a part of the Japanese enterprises which Soviet Union regarded as war booty while remaining enterprises (including specified coal mines, power plants, iron and steel industries, chemical industries and cement industries) were to be jointly operated by China and Soviet Union. Chinese Govt, on its part has found it impossible to agree to this Soviet proposal because it goes beyond provisions of the Sino-Soviet agreements of August 14, 1945 and is contrary to the aforesaid stand of Chinese Govt, regarding Japanese properties and enterprises in China.
Secretary State Byrnes may rest assured that Chinese Govt, will keep US Govt, duly informed of future developments of the Sino-Soviet discussions.
As to the suggestion for establishment of an inter-Allied Reparations Commission the Chinese Govt, will be ready to express its views on the matter when details of the plan are supplied by US Govt.
With regard to withdrawal of Soviet forces from Manchuria no definite reply has been received from Soviet Govt, despite repeated inquiries made by Chinese Govt. The Secretary State is certainly aware of fact that there has been an agreement between Chinese Govt, and Soviet Govt, stipulating completion of withdrawal of Soviet troops from Manchuria on February 1, 1946. It is therefore hoped that Soviet Union will withdraw her forces from Manchuria without further delay as has been agreed upon between the two Governments.” End Note.