661.9331/8–849: Airgram

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

A–43. Subject: Recent developments in Sinkiang, China.

Successful conclusion of Sino-Soviet negotiations in Tihwa for the resumption of trade and economic cooperation in Sinkiang Province and preparations for the possible withdrawal of part of the Nationalist troops from that Province were reported by the Chinese Maritime Customs’ representative in Tihwa, Mr. Hsiung Ta-lun, to the Inspector [Page 1059]General of the Chinese Maritime Customs, Mr. L. K. Little, in a series of confidential letters from July 15 to July 25, 1949. The gist of Mr. Hsiung’s statements is given in the following paragraphs:

Negotiations for trade resumption and economic cooperation between Sinkiang and Russia progressed so well that by the end of June, 1949, draft agreements on those two matters were almost completed. At this time, however, the Chinese delegates were telegraphically instructed by Central Government at Canton to suspend all discussions pending the receipt of new instructions.

According to a reliable source, the new instructions directed the renewal of talks on the resumption of trade but ordered that negotiations for economic cooperation (dealing mainly with the opening of mines) should be left in abeyance until the Central authorities had made certain basic policy decisions.

Discussions on a trade pact were accordingly resumed and about July 20, 1949, a draft trade agreement was completed for submission to the two Governments. The Soviet representatives announced that, although they had agreed to the draft of the trade pact, they would not sign this agreement until the issues under dispute concerning the opening of mines were settled and unless an agreement for economic cooperation was simultaneously signed.

Later, however, the Soviet delegates abruptly announced their willingness to accede to the conditions insisted upon by the Chinese delegation and requested immediate resumption of negotiations. In view of the Soviets’ concessions, the talks were resumed and a draft agreement on economic cooperation was smoothly completed. The draft agreements on trade resumption and economic cooperation have been forwarded to the respective governments for approval but the Soviet delegates still hold to their declaration that both agreements must be signed at the same time. Further action on these matters will, in any case, be taken in Canton and Moscow—not in Tihwa.

The preceding account of these negotiations is, of course, in direct contradiction to the statement of Mr. George Yeh, Acting Foreign Minister, that he accepted this post only after receiving assurances from General Li Tsung-jen and General Ho Ying-ch’in that General Chang Chih-chung’s attempt to hasten Sino-Soviet trade negotiations in Sinkiang would be resisted and that no further action would be taken thereon during Mr. Yeh’s tenure of office. (Cantel 219, April 15, 1949.)

Moreover, the Foreign Office has consistently denied on several later occasions that these negotiations had been resumed. (Cantel 630, June 22, 1949.)

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Rumors are again rampant in Tihwa that there will soon be local political and military changes and that some Nationalist troops are being withdrawn from Sinkiang.

Although the report of actual troop withdrawals is unconfirmed, it is reliably stated that preparations for the withdrawal of troops are being made by the military. Repairs to highways are being carried out by military and highway authorities, particular attention being given to the highways in southern Sinkiang: From Yu-t’ien to Lo-ch’iang thence to Tun-huang and An-hsi in Kansu Province. Arrangements are also being made to establish military supply stations at the above-mentioned places. This route, when properly repaired, may be used either for the withdrawal of Nationalist troops from southern Sinkiang to the interior or for the retreat of troops from Kansu to Sinkiang.

Insofar as the Ili “rebel” elements are concerned, no prospects are seen for their participation in the Sinkiang Provincial Government in the near future. On the basis of recent exchanges of correspondence between General Chang Chih-chung and the Ili authorities, the latter apparently still consider that the Central Government has been insincere in carrying out the terms of the peace agreement. Moreover, the appointment of Mr. Pao Ehr-han38 as Governor of Sinkiang has not made them more conciliatory, despite their nomination of him for this office.

The heads of the Central Government Administrations in Tihwa meet once a week to discuss the general political and military situation in Sinkiang. Their consensus is that the Province’s condition is most critical. While optimists at present regard steps for the removal of these administrations from Sinkiang as premature, pessimists believe that these agencies will be unable to withdraw when the situation deteriorates further and routes from Sinkiang to the interior of China are cut off.

  1. Also known as Burhan.