693.9431/4–3049: Telegram

The Consul General at Peiping (Clubb) to the Secretary of State

732. ReContel 723, April 28.48 Informed by US representative Far Eastern Trading Company just back from Tientsin that he also has [Page 975] been in touch, with Ministry Industry and Commerce and has been commissioned by them try work to rearrange trade between North China and Japan on system either barter [or] linked trade or both. Project envisages employ private US firm make arrangements and his firm interested. Has been in touch his New York office but negotiations now hampered by break international cable North China.

He confirms regime wants export salt, coal, soy beans, and particularly soy cake of which he estimates 10 to 20 tons now available Tientsin. Coal could be exported large quantities. Local authorities want in return besides machine parts, indicated Conreftel, radio and telecommunications equipment, paper, railroad materials such as frogs, switches, locomotive parts, ties, copper wire.

He said re last named item he had been invited bid for supply 3,000 tons but had been underbid by Tientsin dealer who apparently calculated [he] would be apply [able supply?] cargo by taking advantage remittance rates but who now caught by changed rates. Reported further Communists state they could obtain copper wire from Japan at $600 ton c.i.f.49 Taku if SCAP50 approval forthcoming.

Source reports available figures indicate only $200,000 foreign trade thus far through Tientsin but that Communists avid foster that trade particularly with Japan. Authorities say they assured shipping would be available and source assumes they may be able obtain sufficient tramp bottoms carry out such trade.

Source desirous know whether Department and SCAP would in principle approve [and] facilitate such trade. Source wishes obtain trade his firm and so of course undesirous publicity be given his firm’s interest.

Chinese contact mentioned Conreftel has sought meeting with me and scheduled see him tomorrow. Will report soon developments.

ReContel 356, March 5,51 invite attention fact that present developments offers made to order instrument exercise leverage against Chinese Communists purposes pry them from Soviet camp. Recent developments re Berlin and particularly fourth of slogans issued by Soviet Communist Party for May Day will probably constitute considerable shock Chinese Communist leaders. Economic difficulties of handling industrial plant North China and problem Manchuria can only be increased if drought brings real famine, Contel 729, April 29 [30].52 Suggest Soviets may already have discovered that difficulties of bolstering up tottering Chinese economy are more than they desire shoulder present circumstances.

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In circumstances recommend most strongly I be authorized convey to Communists in response to any such approach regarding trade with Japan simple reply that SCAP and US Government would be ready to give sympathetic consideration to matter such trade at such time as Chinese Communists extend US Consular establishments in Communist-controlled areas usual facilities,54 including particularly contact with local authorities for their functioning as set forth in joint Consular note April 13, Contel 410, April 19 [21,]55 and accorded to American diplomatic establishments respect and privileges due it in accord with international law and courtesy as stated in letter to General Chu Teh56 April 27, Contel 730, April 28.56a

Regarding campaign against so-called American imperialism as carried on by official CCP57 agencies, which creates atmosphere hardly conducive to fostering better relations whether commercial or political, observe that CCP will probably for present at least still take its line from Moscow. It might tentatively be inferred that Moscow line is on verge adjustment and CCP would follow along [apparent omission] Nationalist China, but whether this true or not consider it would be undesirable take up question propaganda as yet and it had better be let develop Nationalist China for time being I think and be attended to only later.

Since all indications are that time is ripe for action, respectfully recommend matter be given early attention. Believe this especially desirable view position Consulate Mukden. Reiterate firm belief that this opportunity insert opening wedge between Communist China and USSR should be promptly, fully exploited.

Nothing should be given without adequate return.

Please pass Nanking 462, Canton 88, Shanghai 494, Tientsin 39.

  1. Not printed.
  2. Cost, insurance, and freight.
  3. Supreme Commander, Allied Powers in Japan.
  4. Not printed.
  5. For correspondence on United States consular establishments in Communist areas, see vol. viii, “Problems of United States Consulates in areas occupied by the Chinese Communists”.
  6. See telegram No. 658, April 21, 7 p. m., from the Consul General at Peiping, vol. viii, “Problems of United States Consulates in areas occupied by the Chinese Communists”, chapter II.
  7. Not printed, but see telegram No. 611, April 14 from the Consul General at Peiping, ibid.
  8. Commander in Chief of Chinese Communist armies.
  9. Vol. viii, “The Embassy in China after occupation of Nanking by Chinese Communists”, chapter I.
  10. Chinese Communist Party.