[Enclosure]
The Chinese Ambassador (Koo) to the
Export-Import Bank of Washington
[Washington,] November 17, 1947.
Gentlemen: This is to acknowledge your letter
of October 23, 1947, communicating the views of the Export-Import Bank
on our
[Page 1222]
application of July
31, 1947, for a cotton credit. The contents of your letter were promptly
transmitted to my Government.
I have now received a reply from my Government giving certain additional
information which I hasten to communicate to you.
On the side of supply of cotton, the third quarter exchange allocation of
$20,000,000 U. S. currency referred to in your letter had indeed been
planned, but it was not possible to put this allocation into effect
because of the stringency of available foreign exchange.
As to supply from domestic crops, which constitute a principal source, it
has been seriously hampered in its movement through transportation
disruptions by the Communists, thereby curtailing the normally available
total and destroying its short term elasticity in supplying the coastal
mills.
On the side of need, attention is invited to the essential necessity of
advance planning for replenishment and maintaining a minimum stockpile,
because the textile industry which is now the pivot of the Chinese
industrial economy must be continually kept at its fullest capacity. The
normal stockpile ranges between 600,000 and 900,000 bales; but 600,000
bales are the minimum.
Timely replenishment from imported cotton takes considerably more time in
China than elsewhere in the Western hemisphere. Four to five months are
normally required for the final delivery of imported cotton, after
foreign exchange financing has been arranged. The necessary financial
arrangement, therefore, has to be made well in advance of the time when
the stockpile would reach an acute minimum.
Regarding cotton consumption in mills, it is possible that the estimate
accepted by the Export-Import Bank was based upon the number of spindles
in operation during a past period when the increase of operating
spindles induced by the progressive improvement in the power supply
situation had not yet taken place. This improvement is expected to
continue, which would further reduce the number of idle spindles.
As regards the other suggestions in your letter, my Government is giving
them further consideration. With reference to the information which the
Export-Import Bank would consider helpful to obtain, I shall be pleased
to forward it to you as soon as it is received.
Sincerely yours,
