661.9331/3–149: Telegram

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

494. Received Embtels 453, repeated AmEmb Canton 97, February 23 and 468, repeated AmEmb Canton 103, February 25. President Li has made following points for Ambassador’s information: Sinkiang pact by no means concluded. Under pact Soviets would promise finance supply technical assistance mining tungsten, oil, other minerals. Two countries would divide various enterprises so that when Chinese chairman of board, Russian would be manager and vice versa. Li’s opinion presently that treaty relations with USSR re Sinkiang are preferable to uncontrolled exploitation.

Latter opinion jibes with that held by Chang Chih-chung (Embtel 453) and reinforces our impression that Soviets will control mining companies in view very weak technical and managerial representation Chinese interests Sinkiang, a condition reflected in past effective control Hami-Ata airline by Soviets. Li’s remarks seem to give lie to Chang’s denials to press that pact would include any significant provisions re mineral exploitation. Chang seems continue publicly to minimize international implications of agreement and slough off US fears as merely misunderstanding of Sinkiang politics.

Sent Department, repeated AmEmb Canton 121.