893.50 Recovery/6–2648: Telegram
The Ambassador in China (Stuart) to the Secretary of State
[Received June 26—11:01 a.m.]
1156. Reference Embtel 1134 of June 24, noon, and previous. Foreign Office aide-mémoire re Article VIII bilateral received June 26 reads as follows:
“Reference is made to the aide-mémoire of the American Embassy dated June 21, 1948, transmitting the text proposed by the Department of State for article VIII of the bilateral aid agreement now under negotiation.
The Chinese Govt, while recognizing the importance of maintaining appropriate rates of foreign exchange in international commercial relations, is not in a position to agree to the insertion of the proposed article VIII in the bilateral aid agrement on account of the present abnormal currency situation in China.
It is true that China, as a member of the International Monetary Fund, is under obligation to consult the fund before making any rate change. Since, however, the par value of the Chinese currency has not been fixed and since China’s exchange rates are necessarily being constantly adjusted, the fund has recognized, as a matter of practical realism, that prior consultation on the occasion of each change is unfeasible. The fund is content that it be notified of the rates from time to time.
The Chinese Govt is confident that its position in this respect will have the full understanding of the United States Government.”
Sent Department 1156, repeated Shanghai 529.