893.00 Manchuria/6–949: Telegram

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

1246. ReEmbtel 1194, June 4. CCP press and radio have recently thrown new light on Soviet and CCP plans for Manchuria.

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Industrialization China is going to be based on Manchurian industry. To quote from Peiping radio May 6, “although foundation of modern industry was laid in Manchuria by Japs, yet it was on colonial pattern in Jap imperialist system and not suitable for sovereign state and balanced economy. People’s Government must not only restore factories and plants, but also build up modern industry on basis of independent self-supplying economy, thus laying firm foundation for industrialization of China”.
Industrialization of Manchuria (which contained 70% all Chinese industry) will be pushed and perhaps aided substantially by USSR. To quote from somewhat ambiguous March 1949 report of second plenary session present CCP Central Committee, “because of victory of democratic revolution, establishment of people’s democratic republic and leadership of CCP, in addition to aid of powerful anti-imperialist front headed by Soviet Union, tempo of economic construction in China will not be slow but possibly rather fast”.
Current CCP propaganda line that corrupt Kmt (rather than USSR) is responsible for destruction Manchurian industry as well as continuing reports Soviet influence in Manchuria show how tide is running. For instance, Embtel 1152, May 31, to Department96 reported CCP trying negotiate with USSR allow shipment soybeans and kaoliang into North China from Manchuria. Another recent Embassy telegram to Department reported statement Chinese Commie that CCP expects expansion Manchurian industry will be accomplished with Soviet aid and considers Manchuria as separate problem distinct from rest China, Peiping telegram 889, May 25, to Department,97 reported opinion of informed Chinese that ultimate authority over American Consulate General personnel Mukden is exercised by Soviets. All these reports, while as yet unconfirmed, indicate Soviets have changed their minds about having strong Manchurian industrial complex on their border since their rape of area in 1945–46. Best explanation for reversal is that Soviets have now obtained sufficient interest in and control over Manchurian industry for them not be to be worried about its resurrection, but rather to be interested in its successful development.
Emergence CCP as rival authority in Dairen and opening Ying-kow harbor to domestic and foreign shipping last April seem to point up that Soviets and CCP have reached fundamental agreements on Manchuria.

One important fact about administration and reconstruction area is that they are following Soviet pattern. All press and radio reports on subject attest how Chinese Commies have adopted as their own, in Manchuria more than anywhere else, such Soviet tools as: Planned economy, socialist competition, production quotas, heroes Chinese labor, high pressure enthusiasm in press, self-criticism, participation workers in factory management, use trade unions and workers’ organizations as instruments state administration.

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CCP press emphasizes achievement already made in reconstruction Manchurian industry, particularly following branches: Railroads, coal, power, textiles, chemical plants, petroleum refining, steel, non-ferrous metals including gold and silver. While CCP publicity organs never mention Sino-Soviet joint enterprise companies, it is of course known that they administer at least railroads. Pride with which Chinese Commies announce their accomplishments Manchuria presumably reflects to some extent satisfaction with which they regard Soviet participation and advice. Political sympathy between two parties also promises that collaboration sincere.

It may be expected that, with their characteristic greed, Soviets will obtain large earnings from joint enterprise companies and possibly, in future, from control over Dairen entrepôt trade. Presumably these earnings will finance Soviet imports from China, thus materially reducing Soviet exports China with consequently deleterious effect Manchurian economy.

Sent Department 1246, repeated Shanghai 669, OffEmb Canton 516, Moscow 37. Department please pass Peiping in its discretion.98

  1. Not printed; it speculated on possible political implications of agricultural distress in Communist-occupied North China (893.61/5–3149).
  2. Not printed.
  3. Notation: “Not relayed Peiping by Department”.