The Ambassador in China (Stuart) to the Secretary of State
[Received August 30—6 a.m.]
1404. For Norton TRC21 from Powell. Negotiations with Chinese officials reveal their concern over large number of international traffic points requested within Chinese territory. They have expressed fear that the granting of the 9 traffic points requested would seriously curtail the feeder line business of Chinese national airlines between other points in China and international airports. They have indicated that negotiations would be simplified if the number of international traffic points in China are reduced to about 4, such as Tientsin, [Page 1233] Shanghai, Canton and Kunming. They have also indicated that Chinese interest might require that each US route enjoy only one of these traffic points in China and request advice as to how far Dept and CAB are willing to go in compromising this point. Vice Minister for Foreign Affairs has also confidentially informed Embassy that mention of traffic points in Manchuria would be very embarrassing in view of Chinese reluctance to allow Soviets to operate in that area.
Chinese representatives have also expressed fear that provision in proposed routes now that “US carriers designated to serve routes 2 and 3 may at their option serve Hong Kong from and to Shanghai” would result in the operation of a shuttle service between Shanghai and Hong Kong offering serious competition to Chinese national carriers. I have advised that this provision would not authorize the operation of a shuttle service by US carriers between these points and that purpose of this provision is to authorize US carriers flying proposed routes 2 and 3 to land for traffic purposes at Hong Kong instead of Canton.
Formal Chinese counterproposals have not been offered as yet but these two points have been raised informally in our discussions.
We are advised that formal Chinese counterproposals will be forwarded to the Executive Yuan for final approval before being offered. Hope to conclude negotiations during first week in September and to return with Mr. Petersen’s22 party. [Powell.]
Dept repeat reply Shanghai.