811.503193/7–1347: Telegram
The Consul General at Shanghai (Davis) to the Secretary of State
[Received July 13—12:04 a.m.]
1692. Consulate General approached informally by Li Sheng-po, director and assistant general manager of Govt-owned China Textile Industries, Inc., and member of newly formed [Textile] Stabilization Board, to inquire possible conditions under which American capital [Page 1372] could be induced to invest in cotton and woolen textile mills of China Textile Industries, Inc., when put up for sale as private enterprises. Li stated his approach to Consulate General instigated by Liu Shi-ying, Vice Minister of Economic Affairs, acting on behalf Premier Chang Chun with idea of having his Govt approve measures designed to encourage investment of foreign capital.
I pointed out that Premier recognized continued Govt ownership of textile mills would tend to stagnate much needed expansion of industry but if foreign investments are successfully negotiated they would bring necessary foreign credits to China to finance expansion of industry. It was further revealed by Li that Chinese Govt hoped that capacity of industry could be expanded to 6½ million spindles by 1950, approximately 1,300,000 more than 1937 capacity. Within 3 weeks Li stated he would submit to Consulate General at least preliminary details of Govt plan for disposition of mills together with pertinent statistics concerning assets and conditions of some mills.
He freely admitted that mills of Tsingtao as group were best in China, closely followed by those in Tientsin but stated that foreign investment in either of those textile centers because of political unrest could scarcely be anticipated. (ReConGen report 41, July 8, 1946.13)
Consulate General informed Li that following points would no doubt be taken into consideration by American interests contemplating investment in Chinese textile industry:
- 1.
- Could outright control or at least majority interest in plant or group of plants be acquired?
- 2.
- What provision will be made for remission of dividends and debt service?
- 3.
- What guarantees can be offered to maintain operation of mills at full capacity in view of stringent exchange restrictions and import controls?
- 4.
- What assurance can be offered fair assessment and collection of taxes?
Dept suggestions for reply to Li Sheng-po for info of appropriate Chinese authorities will be appreciated.
Sent Dept 1692, repeated Nanking 1237.
- Not printed.↩