893.00B/8–2549: Telegram

The Consul at Shanghai (McConaughy) to the Secretary of State

3435. Reliable American has informed officer ConGen that he has just been shown text of intra-governmental “report” very recently issued Peiping stating that despite hostile nature of American Government policies, “People’s Government” will follow policy of protecting Americans and further trade with USA. Source twice repeated this [Page 508] information at request ConGen officer who wished thus ensure he got it accurately. Source regretted he could not reveal identity of Chinese who showed him document “in strictest confidence” beyond fact “they” are trusted contacts, nor identity of authorities who signed document beyond fact they were “highest level” (clearly implying Mao Tse-tung was included).

During same talk source mentioned having very recently seen (1) Madame Sun Yat-sen and Madame Chou En-lai (old friends of his) and (2) close high business associate who has just received letter from Chen Shu-tung at Peiping reporting recent talks which Chen had with Mao; and we strongly surmise it was one of these two quarters which showed him document. Thus have every reason believe document did emanate from highest level Peiping authorities and that it was not planted on source unless planting was work of those very authorities.

Source feels that possibilities for “driving wedges” to pry Communists from Kremlin are by no means hopeless; that, however, present American Government policies are not well calculated to achieve results in this direction. He feels that present policies involving in his conception inflexibly negative attitude to Communists, no exploratory steps towards possibility modus vivendi, manner of treatment of blockade, unclarified stand toward [garble] and toward Taiwan serve to push Communists increasingly into subservience Moscow.

(This connection ConGen has received separately from several good sources indications Communists seek following from USA as prerequisite to relations (1) early recognition following formation “government”; (2) abrogation all treaties, agreements with Kmt (possibly only those negotiated since dissolution PCC9); (3) complete withdrawal all US naval military forces from China and Chinese waters including Taiwan. They feel particularly sensitive on Taiwan issue and demand its prompt “restoration” to Chinese, i.e., Communist sovereignty.

Despite obvious debatability source’s conclusions, we consider his views worth reporting not only by reason of his own reputation as keen observer with excellent contacts but also because as suggested in previous telegrams from ConGen, his views believed substantially representative of considerable section of local intelligent American and other foreign opinion.

Sent Department, repeated Nanking 1833, EmbOff Canton. Department pass Peiping 282.

McConaughy
  1. Political Consultative Conference.