661.9331/2–2749: Telegram

The Minister–Counselor of Embassy in China (Clark) to the Secretary of State

[Cantel] 85. Sun Fo insists initiative Sino-Soviet trade talks was taken by Soviets. Although negotiations are being carried on by Liu in Tihwa under direction Chang Chih-chung, no commitments can be [Page 1048]made, Sun said, without Foreign Office approval. (See Cantel 81, February 25, Nanking 78, Tihwa 1, Moscow 1.)

Soviets are seeking a return to the barter arrangements which existed under Hsiung Hsih-hui21 which permitted normal two-way trade across border. Under new arrangements Soviet monopolies would be dealing with individual merchants on Chinese side. At that time Soviets had already drilled and found oil, but had later capped wells as no market available. They are seeking now, Sun said, a revival of not only the right to drill for oil, but also to prospect for and exploit “colored and scarce minerals”.

Soviet discussions did not, he said, envisage joint Sino-Soviet companies for exploitation mineral resources northwest but rather separate Soviet and Chinese corporations which would cooperate with each other in such exploitation. Sun said Chinese interested significance Soviet desire for separate companies and are inquiring further.

Sent Department 85; repeated Nanking 82, Tihwa 2, Moscow 2.

  1. Probably Sheng Shih-tsai, former Governor of Sinkiang.