Foreign Relations of the United States, 1946, The Far East: China, Volume X

711.9327/9–1246: Telegram

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

Nanking, September 12, 1946—5 p.m.
[Received September 13—3:25 a.m.]

1471. Powell to Norton. Was aware of Hong Kong airport situation as result of investigation made here. Had made necessary changes in language in standard form of Air Transport Agreement to constitute it a bilateral contract with effective date provision and language provision before submitting it to Chinese Government. Preamble like that in agreement with Iceland²⁸ had been included. Negotiations completed today with understanding that proposed agreement would be submitted to Executive Yuan and to the Department for final approval. The Yuan has already informally approved except for inclusion of Mukden and certain other minor points. I strongly advise no further attempt to get additional traffic points or to make any other changes. Chinese will not agree to indefinite term and regard the 4-year provision indispensable. They will not agree to additional traffic points for reasons of record stated in letter, but actually because they are seeking to protect CNAC²⁹ which is said to be controlled by T. V. Soong, President of Executive Yuan, and CATC³⁰ which is said to be controlled by political group. Chinese are not interested in trading additional points in China for additional points in United States because they recognize it will be some time in the future before they are able to fly these international routes whereas they are presently able to fly in China. I am convinced that further effort would be fruitless and would open the door for them to insist on the following points which they strongly pressed at final session:

(a) Rate provision which would require rates of Chinese carriers and American carriers to be equal over the same routes so as to eliminate competition. It was only after extended argument that I was able to persuade them not to insist on this provision.

(b) A loan agreement which would be related to Air Transport Agreement whereby United States would advance large sums for improvement of Chinese airports. The Minister of Commerce [Communications?] insisted on this personally. In addition to position previously taken on this point I presented them with a study showing the amount of items included in recent surplus property sale³¹ which could be used by China for this purpose. I hope they will not insist further on this point.

(c) Route 2 of the Chinese was presented and contained traffic stops at Seattle, Chicago, Detroit and New York. I took position that this would be completely out of question with only Canton, Shanghai and Tientsin being granted to United States. After an extended deadlocked argument we finally agreed to trade on basis of following route annex and letter.

Annex.

“A. Airlines of the United States authorized under the present agreement are accorded rights of transit and nontraffic stop in Chinese territory, as well as the right to pick up and discharge international traffic in passengers, cargo and mail at Mukden, Shanghai, Tientsin, and Canton, as well as at such additional points as may be agreed upon from time to time, on the following routes, via intermediate points in both directions:

1. The United States over a Pacific route to Mukden, Tientsin, and Shanghai and thence to the Philippine Islands and beyond, as well as connecting at Shanghai with route No. 3 described below.

2. The United States over a Pacific route to Shanghai and Canton and beyond.

3. The United States over an Atlantic route via intermediate points in Europe, Africa, the Near East, India, Burma and Indo-China to Canton and Shanghai and beyond.

On each of the above routes the airline authorized to operate such route may operate non-stop flights between any of the points on such route omitting stops at one or more of the other points on such route.

B. Airlines of China authorized under the present agreement are accorded rights of transit and non-traffic stop in the territory of the United States, as well as the right to pick up and discharge international traffic in passengers, cargo and mail at San Francisco, Seattle, New York, and Honolulu, on the following routes, via intermediate points in both directions:

1. China over a Pacific route via Tokyo, Kurile Islands, the Aleutian Islands, and Alaska to Seattle and San Francisco.

2. China over a Pacific route via the intermediate points of Manila, Guam, Wake, and Honolulu to San Francisco.

3. China over an Atlantic route via intermediate points in Indo-China, Burma, India, Near East, Africa and Europe to New York.

Of each of the above routes the airline authorized to operate such a route may operate non-stop flights between any of the points on such route omitting stops at one or more of the other points on such route.”

Letter:

“I have the honor to refer to the Air Transport Agreement between the Governments of the United States and China which has been signed today.

“The Government of China, appreciating the viewpoint of the Government of the United States with respect to the necessity for the use of airport facilities at Peiping in order to presently serve the traffic point of Tientsin designated in the aforesaid agreement, assures the Government of the United States that until such time as the airport facilities at Tientsin are enlarged and improved to the extent necessary to accommodate aircraft flying the international route serving Tientsin, there will be no objection on the part of the Government of China to the aircraft serving this route landing for international traffic purposes at Peiping. It is understood and agreed, however, that upon the completion of the necessary enlargement and improvements of the airport at Tientsin, the airport at Peiping will no longer be used for international traffic purposes by American aircraft flying this route.

“The Government of China also assures the Government of the United States that there will be no objection to United States carriers, designated to serve routes 2 and 3, serving Hong Kong instead of Canton; at their option provided, however, no shuttle service will be operated by the designated United States carriers between Hong Kong and any one of the points in Chinese territory mentioned in the annex attached to the Air Transport Agreement.

“The Government of China appreciates the viewpoint of the Government of the United States in desiring that its carriers serve additional international traffic points in China. However, in view of the present unsettled situation in certain areas of China it is not deemed practicable that such additional international traffic points be granted at this time. In addition, lack of adequate airport, customs and immigration facilities make it impossible for the Government of China to designate certain additional international traffic points. The Government of China assures the Government of the United States that it will re-open the question of such additional service at such time as it becomes feasible, and that in any event United States carriers will be authorized to render such services as soon as the carriers of any third country are so authorized.

“The Government of China wishes to emphasize, in order that there be no misunderstanding, that because of the unsettled situation in Manchuria it may become necessary at any time to invoke the provisions of the final proviso of Article 2 (A) of the agreement in connection with the proposed service to Mukden.

“I avail myself etc. etc.”

Have advised Chinese representatives that article 3 may be omitted from agreement insofar as we are concerned and recommended its omission if they had no specific reason for retaining it; that we recommend the further amendment of article 7 in accord with your radio in interest of clarity but would not insist on it if they preferred it in the first amended form submitted; and in interest of clarity article 11 should be further amended as you suggested. Recommend you authorize approval regardless of Chinese action on these three minor amendments. Also recommend we be authorized to accept any amendments to proposed letter which do not prejudice the points we seek to establish thereby. Indications are that Chinese do not wish to publish letter, but will make certain of this point before signing.

On signing of this agreement, which barring complications will be effected the first of next week, I plan to return to Manila to conclude agreement there if it has not already been signed. This would make my estimated time of arrival in Washington about September 28–30. What are your plans for me after that? [Powell.]

Sent Department 1471; Department please repeat reply to Shanghai.

Stuart

28. Signed at Reykjavik, January 27, 1945, B.A.S. No. 463, or 59 Stat. (pt. 2) 1464.
29. China National Aviation Corporation.
30. Central Air Transport Corporation.
31. For text of agreement between the United States and China for the sale of certain surplus war property (“Bulk Sale to China”), signed at Shanghai, August 30, 1946, see Department of State Publication No. 2655, Report to Congress on Foreign Surplus Property Disposal, October 1946, p. 40.