Foreign Relations of the United States, 1947, The Far East: China, Volume VII

800.48FRP/9–1347

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

Nanking, September 13, 1947—11 a.m.
[Received 11:22 a.m.]

1917. Par 17. Summary of tentative Chinese reactions to draft relief agreement given in following paragraphs. (Reference Par 10,⁷² Par 16⁷³ and Deptel 1105 to Nanking of September 4,⁷⁴ repeated Shanghai.) In two meetings with Foreign Office on September 9 and 10, Chinese representatives emphasized that their objections and recommendations were being informally and tentatively submitted. Chinese apparently desire to sound out U. S. reactions to their proposed changes before submitting them formally. Substance of comments made by Embassy representatives noted with points to which they were addressed. Department may also find it useful to refer to Consulate General’s despatch 288 to Nanking of September 2⁷⁵ in connection with considerations involved.

1. Article I (a). Chinese said they felt that amount of program should be stated under this section and suggested adding at end of it “with a delivered value of not less than U. S. $30,000,000”. Chinese were informed that it was unlikely, in view of flexibility inherent in program for China thus far discussed and in view absence such commitment in agreements already signed [with other countries, that mention of any specific figure in agreement would be concurred in by U. S. Emb representatives suggested as possibility that separate]⁷⁶ letter might be given to Chinese at time agreement was signed setting forth target size and supply nature of program. Believe this will satisfy Chinese. Please confirm if acceptable, in which event Embassy will submit to Department in advance proposed text of supplementary letter.

2. Article I (d). Chinese requested revision beginning second sentence and reads as follows: “The U. S. program for relief in which requirements shall be agreed upon by the Chinese Government and the Government of the U. S., and the procurement shall be confined to items contained in such program”. It was recognized and pointed out to the Chinese that this change would impair freedom of action on the part of the U. S. Chinese emphasized the political importance to them of maintaining the principle of consultation and joint agreement. Assume Department will insist upon original wording. Please instruct.

3. Article I (e). Chinese strongly urged deletion of whole second sentence on grounds of Chinese political sensibilities or alternatively to amend sentence to read “the U. S. Government, whenever it deems it desirable, may retain possession of any U. S. relief supplies, or may recover possession of such supplies transferred for reallocation within the country”. Recognizing that bulk of supplies would be distributed in receiving ports or larger bank [large urban] centers, and that those sent to interior would be largely in hands of voluntary agencies, Embassy representatives suggested compromise whereby last phrase of sentence reading “up to the city or local community where such supplies are made available to the ultimate consumers” would be deleted. Believe this concession warranted since China program is on much smaller scale than European counterparts and since Embassy assumes Department will resist most other changes proposed by Chinese in agreement.

4. Article II (a). Chinese wish to incorporate wording which would insure voluntary agencies being used only with Chinese approval, and affirmed that they were most unhappy with the inclusion of phrase “direct supervision and control”. They suggested paragraph should read “all United States relief supplies shall be distributed by the Chinese Government and by established voluntary agencies in China as agreed upon between the two governments. Such distribution will be under the supervision of the United States representatives and in accordance with the terms of this agreement”.

Whereas it is Embassy’s intent to proceed wherever possible along lines mutually agreed upon, including the extent of voluntary agency participation, it is believed desirable to adhere to the wording originally proposed. Chinese obviously are primarily motivated by sovereignty considerations in attempting to soften wording of this paragraph, and Embassy feels for that very reason that right of U. S. to supervise and control distribution must be specified.

5. Article II (d). Chinese wish to delete condition of non-discrimination because of implied obligation to treat command national [Communist- and Nationalist-] held areas equally. Embassy representatives suggested that only qualification of discrimination reading “as to race, creed or political belief” be removed to meet Chinese point. Believe it desirable to go this far in meeting Chinese position and request Department’s approval of this minor change. It has been emphasized to Chinese that political discrimination within zones which National Government administers without challenge will not be tolerated.

Chinese urged that reference to “similar supplies, etc.” should not be made on ground that from a practical standpoint Chinese Government could not give undertakings on this question and live up to them. Chinese also questioned how we would determine the diversion of an “excessive amount” of relief supplies for military purposes. Embassy accepts Chinese qualifications as sincere and valid, and suggests revision of paragraph to read “the Chinese Government will distribute United States relief supplies without discrimination and will not permit the diversion of any such supplies to nonessential uses or for export or removal from the country while need therefor for relief purposes continues. The Chinese Government will not permit the diversion of United States relief supplies for any kind of military usage whatsoever”.

6. Article II (e). Chinese raised similar objections as noted in paragraph 5 above and suggested deletion of this section altogether. Embassy representatives recommended rather that last two words “throughout China” be left out and insertion made at the opening of section so that it would read “the Chinese Government will endeavor so to conduct etc”. Recommend Department’s acceptance of this in view of distribution difficulties here in China.

7. Article II (f). After considerable discussion, revision to meet Chinese objections was proposed as follows:

“A distribution and price-control system shall be inaugurated in such major urban centers of China as circumstances permit, with the intent of insuring that as many of the population as possible, irrespective of their purchasing power, shall receive a fair share of imported or indigenously produced relief supplies. U. S. relief supplies made available under this agreement may be utilized in support of these Chinese efforts to improve consumption and price controls to the extent agreed upon from time to time by the appropriate representatives of the two Governments. It is understood, however, that the U. S. Government, in so permitting the use of relief supplies furnished by it, can undertake no responsibility for the success of these urban-controlled distribution programs, and reserves the right to withdraw from them in the event that the stated objectives are not being achieved.”

Believe revised wording protects U. S. interests and gives U. S. fully adequate flexibility. Request Department’s approval therefor.

8. Article III (c). Chinese desire words “with approval” instead of “upon approval”. Embassy representatives see no objection.

9. Article III (d). Chinese requested insertion to read “advance funds against proceeds from the sale of relief supplies to the U. S. representatives”. Embassy agreed subject to Washington concurrence. Request this in view of fact that supplies would not arrive Shanghai for some time whereas we wish to draw on local currency account at early date.

10. Article IV. Chinese proposed deletion of entire article containing provisions which were not really necessary in view of the limitations on and nature of proposed China program. Chinese also argued that commitments undertaken if this article were accepted would pose grave and perhaps impossible responsibilities for the Government. While sympathizing with Chinese position to certain extent and while recognizing that Nanking cannot be expected to perform really satisfactorily under the sections of this article, believe it should remain as part of agreement and assume Department will concur this view.

11. Article V (b). Propose to delete phrase “throughout China” in first sentence and substitute after “all times” phrase “in and to areas of China where relief operations and activities related thereto are being conducted”. Chinese wish to qualify commitment in second sentence with regard to automobile transportation. Embassy feels for that very reason, it should be retained in present form. Suggest Department concur in modification of first sentence this article and adhere to original wording of second.

12. Article IX. Chinese request deletion in point (3) of phrase “or an excessive amount, (through) outside sources”. Embassy agrees. See paragraph 5, above. Chinese objected strongly on political grounds to inclusion of last sentence this article, particularly without specific enumeration of “other circumstances” which would warrant cessation or alteration of program. Embassy representatives expressed view that such freedom of action on part of U. S. would be insisted upon as basic condition but agreed to transmit to Washington Chinese opinions. Please instruct.

13. Request advice on above soonest in order to permit negotiations to proceed. Department may be interested in knowing that Governor Chang of Central Bank told acting relief adviser on September 7 that Foreign Minister had commented to him along lines set forth paragraphs 1, 2, 4, 5, 7, 10, and 12 above. Doctor Wang Shih-chieh quoted as saying he was particularly anxious for revisions of article I (e), article II (a), (d) and (f), and article IX, thereby confirming extent of Chinese political sensitiveness at present to any conditions which undermine National Government’s prestige. Governor Chang also indicated that Foreign Minister would like to be able to sign relief agreement while he is in United States. In any event, believe prompt consideration of points at issue should be given by Department as it is anticipated that Chinese will accept revised draft along lines indicated above paragraphs.

Sent Department as 1917, repeated Shanghai by courier as 781.

Stuart

72. Supra.
73. Telegram No. 1898, September 11, 1 p.m., not printed; it indicated that there were no substantive obstacles to reasonably early conclusion of an agreement (800.48FRP/9–1147).
74. See footnote 70, p. 1341.
75. Not printed; it reported at length the views on the draft treaty held by Dr. C. M. Li, Deputy Director General of CNRRA (893.48/9–247).
76. Bracketed insertions in this telegram on basis of copy in Embassy files.