893.50/4–2747: Telegram
The Ambassador in China (Stuart) to the Secretary of State
[Received April 27—1:05 a.m.]
907. Embassy’s discreetly ascertained info is to the effect that Chinese Government intends in near future to present through Chinese Ambassador in Washington considered analysis of China’s economic and financial situation and need for American assistance prepared in the main by Chang Kia-ngau, O. K. Yui, Wong Wen-hao and Wang Shih-chieh. To assist in this S. C. Wang, head of the supply mission in Washington, is coming to Nanking. This document, besides indicating the projects to accomplish which American financial assistance will be required, also will touch on the political importance of a stable China and in terms of the world scene. It will no doubt show in somber colors the immediate economic and financial prospect and in bright colors the longer range picture if adequate [Page 1108] assistance is forthcoming. It will set forth not only a series of projects having to do with (a) transportation, (b) power development, (c) mining schemes, (d) industrial and agricultural innovations, but also the problem of making use of Jap reparation equipment. (Re third paragraph Deptel 445, April 17, 5 [6] p.m.,51 repeated Moscow as 924, April 14, 8 p.m.)
Some of the Chinese officials concerned—and this includes the Generalissimo—greatly favor commodity loans in order that foreign exchange be saved on necessary imports and because these would produce CN on being sold to fabricators. It will no doubt be argued that such loans would have a deflationary effect and that the ensuing CN would be available for use for expenditure on construction and installation of Jap reparation equipment and American equipment supplied under other loans. Of course, it cannot do both. Whether or not commodity as well as special project loans will be applied for under ExImBank procedure is still a subject of debate, one noted disadvantage of such procedure being the fact that repayment of commodity loans would fall due within 3 to 5 years. For this reason it may be that the Chinese request will merely delineate China’s needs and not suggest the means for meeting them, but on this point the advice of S. Y. Wong52 may prove decisive.
It is also quite possible that the request may touch on military assistance. It has not escaped the Chinese that large proportions of the Greco-Turkish loans are to be allocated for such purposes; also that in the case of Greece it was testified that an important part of the funds would be made available for local expenditure.