893.00/12–648: Airgram

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

A–294. We have following comments to make in connection with current discussion of probable treatment to be expected by American businessmen who remain in CCP-occupied China:

[Page 918]

To our knowledge, there is in theoretical writings of Mao Tse-tung95 during at least past year nothing to indicate any desire for foreign businessmen, much less American businessmen, to continue their activities under forthcoming CCP or CCP-dominated govt. As Communists continue to win their victories and to expand their state power, there is no reason to expect their attitude to become more cordial. Mao’s article of December 25, 1947,96 entitled “Present Situation and Our Tasks” stated: “Owing to the backwardness of China’s economy, it will still be necessary to permit the existence for a long period of the capitalist economy represented by the broad petty bourgeoisie and the middle bourgeoisie even after the nationwide victory of the revolution”. However, when viewed in context, this promise of leniency toward free enterprise applies only to Chinese entrepreneurs, not to foreign businessmen. We know of no analogous quotation promising to permit existence of foreign business activity.

A more positive statement is found in Communist North Shensi broadcast of November 21 which contained a veiled threat to foreign business interests. This broadcast, which purported to be the last part of an article written for Singapore newspaper by Hu Yu-chih, Director of the Chinese Democratic League in Malaya, described economic success achieved in liberated areas and hinted at program of autarchy for China in following sentence: “Imperialism has always been conducting commodity aggression against semi-colonial China but today the Liberated Areas people have defeated this imperialist aggression and established a self-sufficient, independent and free national economy”. CCP attitude toward foreign enterprise in China was reflected in another passage of same broadcast which stated that “the Chinese people have also conquered the economic aggression of imperialism”.

From still another viewpoint we are skeptical of future of American business in China. If Marxian political theory lends itself to any predictions it is to those that Marxian state will nationalize industry and set up foreign trade monopoly. We have so far heard out of Manchuria only vague reports of a planned economy, but we do know that it is developing. In confirmation we cite Dairen’s tel Nov. 20 sent Nanking 103, rptd Dept 21697 which quoted Dairen newspaper as stating that in light of unprecedented accomplishments of Soviet industry and liberation of all Manchuria CCP must achieve greater production in Northeast through increased planning along Soviet lines.

[Page 919]

We do predict that economic life in CCP-controlled China during forthcoming period will approximate that of Russia during period of Lenin’s New Economic Policy from 1921 to 1927. But we would like to point out that even during that period foreign business in Russia was very badly treated. Developments in Soviet satellite countries in Eastern Europe during last 3 years provide additional confirmation of fact that American business in Communist countries fares poorly even during transition period from free enterprise to Soviet-type economy.

  1. Chairman of the Central Committee of the Chinese Communist Party (CCP).
  2. For summary, see telegram No. 65, January 9, 6 p.m., from the Ambassador in China, vol. vii, p. 28, and memorandum of January 12 by the Chief of the Division of Chinese Affairs, ibid., p. 30.
  3. Not printed.