846G.79693/1–1548: Telegram

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

98. The following is substance Shanghai’s 65, January 13, 7 p.m.:

“Jose PAA representative here, advised Civil Air Attaché [that] CNAC has been ordered by CCAA cease sale Shanghai–Hong Kong, Hong Kong-Shanghai tickets for account PAA. Understood CCAA acting under instructions R. Li, director Department Civil Aviation and Navigation, Ministry Communications. Appears Chinese Government took this action in endeavor block movement PAA’s traffic Shanghai–Hong Kong prior formal discussions between two Governments re clarification terms bilateral. For Department’s background information, general agency agreement between CNAC, PAA expired latter part 1946. Present arrangement informal and without benefit legal documentation.

Liu, CNAC, at first inclined to request CCAA to reconsider this action with view permitting CNAC continue sale Shanghai–Hong Kong tickets for PAA on informal arrangement. However, appears CNAC must comply with Governmental directive. Jose has informed CNAC this action not taken as result of business arrangement but solely on Government instruction and his belief in violation terms bilateral agreement.”