Foreign Relations of the United States, 1948, The Far East: China, Volume VII

861.20293/12–2048: Airgram

The Consul General at Shanghai (Cabot) to the Secretary of State

Shanghai, December 20, 1948.
[Received January 3, 1949—3:58 p. m.]

A–1098. Reference the Consulate General’s confidential despatch No. 1042 of December 20, 1948,⁵⁵ reporting (1) apparently reliable information concerning the recent arrival in Shanghai of 55 new Soviet agents with special training including proficiency in English and Chinese; (2) other developments also suggestive of a newly launched drive to expand Soviet strength and action in local Russian, foreign (especially American and British) and Chinese circles; (3) mounting panic among local White Russians in the face of an apparently imminent Communist-dominated regime which, they fear, will be preceded by a period of terrorism by Soviet agents.

The following information has been obtained firsthand from one of the largest American firms operating in China, whose plants include large installations at Shanghai (closer identification is withheld for obvious reasons):

1. As is well known, Soviet Russians are already placed in many key engineering posts in local foreign firms (including the American firm under reference).

2. During the past few weeks at least two Russians in the employ of the firm under reference who are members of the Soviet Citizens Association have been active spreading pro-Chinese Communist propaganda among the firm’s employees. Three Chinese separately reported having separately overheard one of them lecturing on the beauties of the expected new regime. Both have also been making rather obvious efforts during recent months to cultivate two of the American employees, inviting them frequently to the Soviet Club and Soviet homes in Shanghai.

3. During the past 2 to 3 months and particularly in the last 3 weeks constant pressure has been exerted to have the firm hire more Soviet citizens. This pressure has appeared in the form of numerous insistent applications by Soviet citizens and also apparently in the form of intimidation. One trusted veteran Russian employee of the firm who has been a Soviet citizen for some years, who occupies a post giving him virtual control of the plants’ most vital machinery, and who of late has seemed to be torn between loyalty to the firm and his Communist ideology, was recently overheard in a conversation with two Soviet citizens seeking jobs in the plant. The latter were vehemently pressing him to get them such jobs; and, when he stated it was not in his power to comply at the present time “though he might be able to do something later on”, they were heard to mention the name of some Russian woman (evidently a local Soviet power) who, they warned, “would not be at all pleased!” The employee in question is evidently under extreme Soviet pressure and is greatly worried. Some time ago he requested assistance from the Soviet Consulate for some members of his immediate family who are in Chinese Communist territory and was rudely rebuffed when he admitted that these relatives had not taken out Soviet papers when he did. It seems likely, therefore, that he fears Soviet retaliation on those members of his family, who are still in that area.

4. The source “knows” that (as we have gathered from reports from other quarters) the above-mentioned cases are by no means the only instances of recent attempts by Soviet citizens to force themselves into employment by important local firms. In the above connection may also be mentioned reports of believed reliability reaching the Consulate General from different sources to the effect that Soviet agents have been endeavoring to enlist the services of Russian detectives who before the war worked for the former International Settlement and French Concession governments.

It would seem unlikely, from the standpoint of both Soviet and Chinese Communist interests, that developments such as those described above and in our cited despatch presage a conspicuous overt assumption by Soviet agencies of high level guidance of a Communist regime which might soon come into power; and possibly some of the pressure on local firms may merely reflect the feeling of individual Soviet citizens that now is their opportunity to bully their way into employment. Taken as a whole, however, the evidence suggests that Soviet agents are intensively pushing recently organized propaganda and other preparations correlated with the Communists’ plans and calendar of action, and that their objectives may include the following:

(1) Assisting the Communists in their reported well-laid plans for taking over utilities and key industries;

(2) Placing American and other foreign firms directly under Soviet surveillance and at Soviet mercy;

(3) Ensuring a ground-floor Soviet position in the new set-up;

(4) Making the Chinese Communists as dependent as possible on Soviet technical help;

(5) Utilizing the confused period of the turnover to liquidate or abduct leading anti-Soviet Russians.

Cabot

55. Vol. viii , “International Refugee Organization”.