893.5151/11–949: Telegram
The Consul General at Shanghai (McConaughy) to the Secretary of State
[Received November 9—5:51 a. m.]
4716. Becoming apparent East China trade authorities concerned with question foreign exchange for necessary imports, particularly dollars. Obvious that tough-minded Communist policy will bring stringent controls on quick-turnover, large profit gadgets and luxuries on which Kmt dissipated much Chinese foreign currency reserve but also obvious that as blockade is breached Communists must [Page 971] find means importing necessities to keep economy, particularly Shanghai industry, going and implement vaunted reconstruction plans. Mytel 324943 estimated US $7 million would be earned from Shanghai area at best in second half 1949. Reference telegram also said possible figure as low 2–3 million. Thus far US exports total 1.7 million from Shanghai and 800,000 Tientsin. Many exporters of opinion also that cream has been skimmed. Communists possibly realize that exports cannot hope pay for needed imports. Recent straws are:
- 1)
- News story that US $200 million Chinese capital fled to Hong Kong. Paper suggests this would cover needed imports.
- 2)
- Another paper suggests that overseas remittances if properly channelled will cover needed imports.
- 3)
- Authorities here now permitting purchase of foreign exchange at premium by private importers.
- 4)
- Several attempts made induce importers register goods stranded by blockade for which Kmt had furnished foreign exchange. Paper estimated US $30 million involved but only US $600,000 plus equivalent US $2.4 million other currencies registered this far.
- 5)
- Attempts hold banks responsible payment foreign exchange on L/C when goods not landed Shanghai.