693.0031/5–1149: Telegram
The Consul General at Shanghai ( Cabot ) to the Secretary of State
[Received May 12—8:49 a. m.]
1605. Consulate General [at] Shanghai in cordial agreement general policies outlined Deptel 265 to Peiping, repeated Shanghai 875, May 8, 2 p. m., but feels SCAP should interpret term capital goods broadly include most items US positive list,73 especially critical items such as copper wire, diamond dies, etc. We believe SCAP should explain Communist agents Tokyo trade policies at present primarily concerned with problems short supply, end use and end users as justification reference Communist inquiries by SCAP to Consulate Generals North China which are interested in following trade developments [Page 984] closely and will cooperate by supplying end use and WTD74 information to facilitate screening.
Recent end use inquiries received here from Commerce have had beneficial trade effects here and up North as manifestation our surveillance over potential trade with Communist areas, in which we expect inclusion near future, even though unaccompanied by obvious restrictions.
For present we believe policy outlined Deptel cited preferable to adoption restrictive procedures applicable Eastern Europe, also should elicit highly desirable British collaboration more readily.
As phase Japanese-Communist trade problem, exploration reestablishment direct telecommunications circuits Japan–North [China] might be now timely in view suspension Shanghai, Tientsin traffic, completely isolating North China. This connection Department might inform SCAP re early November telecommunications inquiry sent Mukden.
Sent Department 1605; repeated Nanking 884; Canton 436; Peiping 147; Taipei 111 for Merchant. Peiping please pass Tientsin.