846G.79693/1–1548: Telegram

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

99. Reference Embtel 98 of January 15, 6 p.m. to Department, Embassy held lengthy joint discussion of matter with Colonel Tai, Director of CCAA, and Andrew Lin, Director of International Relations Department, Ministry Commerce [Communications]. Essence of discussion was that immediate objective of Ministry Commerce [Communications], which acted without even consulting FonOff, was to remove American carriers, specifically PAA, from lifting Shanghai–Hong Kong traffic as such, even before proposed renegotiation of Sino-US bilateral is undertaken. At first Chinese attempted avoid responsibility for de facto result of action just taken but in course of discussion it was fully admitted that objective was as stated above.

Colonel Tai pointed out that agreement between CNAC and PAA provides that CNAC shall be sole agent for PAA in China, selling its tickets and preparing its manifests. CNAC is Government owned and controlled corporation. Chinese Government, therefore, instructed CNAC it must no longer sell tickets for PAA, knowing full well that PAA would not only violate its agreement with CNAC if it sold its own tickets and prepared its own manifests but also might well face difficulties in arranging with customs to accept PAA manifests. Seems little question this sequence of events deliberately planned by Chinese Government. Furthermore, Embassy learned from Tai and Lin that PAA indicated to Chinese Government that it has little real interest in carrying Shanghai-Hong Kong traffic. They stated further that CCAA and other Departments of Ministry of Commerce [Communications] have pressed PAA to discontinue carriage Hong Kong–Shanghai passengers. Tai stated PAA had asked its home office for permission to discontinue selling tickets for this traffic and that local PAA agents had been informed they might discontinue the service. If latter true, it of course plays into hands of Chinese in this situation.

Tai and Lin several times repeated that in order China should not be forced comply with other agreements entered into by Chinese, such as Dutch and Siamese (wherein provided that if airline of any third nation other than UK carries traffic between Hong Kong and Shanghai, Dutch and Siamese will be permitted to do so) Chinese Government compelled take some action. Embassy pointed out this seemed most unpropitious time for such step and that even if PAA stopped carrying Hong Kong–Shanghai traffic US carriers still [Page 781] possessed right to do so. They agreed, Colonel Tai even going so far as to state that English text of Sino-US agreement unquestionably affords that right. He thought, however, that if PAA discontinued such service, he might convince Dutch and Siamese that no third nation was carrying Hong Kong–Shanghai traffic. Lin especially stressed again and again that if all nations were to carry Hong Kong–Shanghai traffic, Chinese lines, at least on that route, would be “killed”, emphasizing competitive weakness of China’s airlines, especially in international routes like Hong Kong–Shanghai where total demand assertedly not too great. Tai mentioned embarrassment of Chinese Government in giving US unlimited rights on Hong Kong–Shanghai route while limiting British thereon.

Embassy did not know if14 fifth freedom principle15 too vigorously because it is not known here to what extent Department may revise its stand such matters subsequent to outcome international negotiations recently concluded in aviation. Appears to Embassy, however, that while US Government possesses right carry Hong Kong–Shanghai traffic it should definitely not permit Chinese refuse recognize that right or take administrative action which in effect denies that right. When Tai was asked whether PAA could not present its own manifests to customs, he said he did not know, that it was a matter to be taken up with customs. But question and answer were made almost irrelevant and academic by reported action of PAA in agreeing to discontinue the service. Embassy stressed several times re this reported action PAA that question discontinuance PAA carrying Hong Kong and Shanghai local traffic should be settled not between PAA and Chinese Government but between US and Chinese Governments. Appears to Embassy that without cooperation of PAA in this matter (especially now when bilateral agreement may be renegotiated) the principle involved in carriage of fifth freedom traffic is not only being compromised but that those who may be called upon to renegotiate agreement for US may find their position severely weakened and success of negotiations jeopardized.

Sent Department 99; AmConGen Shanghai 44, January 15, 7 p.m.

  1. “According to copy of telegram in Embassy post files, the words “know if” should be corrected to “press”.
  2. Five “freedoms of the air in respect of scheduled international air services” were reciprocally granted; the fifth was as follows: “The privilege to take on passengers, mail and cargo destined for the territory of any other contracting State and the privilege to put down passengers, mail and cargo coming from any such territory.” It was provided that “the undertaking of each contracting State relates only to through services on a route constituting a reasonably direct line out from and back to the homeland of the State whose nationality the aircraft possesses.” See Department of State Conference Series No. 64: International Civil Aviation Conference, Chicago, Illinois, November 1 to December 7, 1944, Final Act and Related Documents (Washington, Government Printing Office, 1945), Appendix IV, p. 91.