893.50 Recovery/4–1048: Telegram

The Acting Secretary of State to the Ambassador in China ( Stuart )

529. Following is summary developments in preparatory work for China Aid Program:

Summary program with dollar breakdown notified you in our 518 April 8.92 Breakdown by quantities follows by cable.93 This program will be made available to Chinese here as basis of a discussion both here and in China. However program has already been used as basis for appropriations justification.
Administrative budget submitted to Budget Bureau by Dept contemplates expenditure $2,000,000 foreign exchange broken down roughly $300,000 headquarters and $1,700,000 overseas, latter being net figure after deduction items that can be financed from local currency. Total positions in administrative budget 46 at headquarters (including people to work on China problems in various functional divisions, China Section of Country Division, as well as office of Special Assistant in Administrator’s office), and 125 positions in field including assistants and clerks. Budget estimate and justifications air mailed.
Work now proceeding on procurement and financing procedures. Present assumption is that with exception wheat all commodities in program will be procured to extent possible through private channels, either by Chinese Govt or by established importers under Chinese Govt licensing controls.
Department recommending that $50 million RFC advance be split pro rata—i. e., 36.5 for economic aid handled through ECA and 13.5 as first installment of $125 million special grant.
Program and procedural problems discussed several times with Pei and members of his mission.
Re rural reconstruction clause see our 494, April 6.
Naturally all plans for ECA operations, here and in China, depend on decisions of or consultation with Administrator for Economic [Page 495] Cooperation. During period until new Administrator selects key staff, Dept continuing perform certain planning and operating functions, in effect as staff work for new Administrator.
Greatly appreciate detailed suggestions your 614 April 6 and Shanghai’s 800 April 9.94

Sent Nanking as 529; repeated Shanghai as 636.

  1. Not printed.
  2. Telegram No. 556, April 14, 6 p.m., not printed.
  3. Latter not printed.