The Acting Secretary of State to the Ambassador in China (Stuart)
1101. Emb should inform Chinese (Urtel 1636, Aug 228) US still prefers see foreign trade transactions in US handled through normal commercial channels, but willing discuss with Chinese both here and in Nanking reasons they believe UTC should be maintained in US; not in position discuss probable functions until basis of need for corporation established. Dept believes there is need for thorough examination of what trading activities Chinese Govt hopes carry on through this and other agencies, and how they intend operate. US Govt aware of course such agency may be desirable for present if it purchases from private suppliers for Govt acct and generally uses private commercial channels. Suggest Emb inform FonOff29 as well as Central Bank, since discussions if desired by Chinese would be held with Chinese Emb here as well as in Nanking. Pls report Chinese reaction.