761.932/2–2349: Telegram

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

453. ReDeptel 215, of February 15. Sinkiang Governor Burhan announced through Central News Agency February 17 that Province seeking betterment relations with Soviet through resumption trade under terms agreement now under negotiation and will also issue local silver currency.

Original November 1944 draft Sino-Soviet economic cooperation pact Sinkiang, under intermittent discussion past 4 years, reliably reported [to] include provision for:

Sino-Soviet cooperation developing all known mineral resources Sinkiang;
Freedom trade between Sinkiang merchants and Soviet without Chinese Government intervention; Soviet trade representatives to act as sole Soviet agents commercial matters.
Special barter agreement between Sinkiang and Soviet Governments under which indicated amounts specific commodities exchanged in season by two governments.
Freedom Soviet truck caravans traverse Sinkiang for purposes trade free from customs duties, search, (approximately 50 characters garbled) stations connection therewith.

Foreign Office in late 1946 so vehemently condemned unprecedented terms proposed pact in light anticipated agreements other foreign powers that Chang Chih-chung prevailed upon hold conclusion in abeyance. Discouraging outlook Nationalist cause summer 1948 and Chang’s pressure for pact to prevent Sinkiang revolts caused renewal Chinese interest such pact and Soviets found favorably inclined. Draft along above lines by Nationalists offered Soviet Consul [at] Tihwa, October 1948; January 6 Soviet Consulate General, Tihwa, reportedly agreed in principle signature such accord.

What Chang considered bright outlook his own participation negotiated peace excited his long-time wish for conclusion Sinkiang pact to provide international agreement entered into by Nationalists to [Page 1045]which CCP could not vehemently object without compromising CCP position vis-à-vis Soviets and which could be balanced off against other international commitments, namely Sino-American Commercial Treaty. Recent disintegration Chang’s prominence as possible peace delegate accompanied by personal loss enthusiasm favoring immediate conclusion pact, but he, nevertheless, deputized Foreign Commissioner Liu Tse-jung, Secretary General Liu Meng-chuen, and Vice Governor Mohammed Imin negotiate remaining technical details in draft. Channels for conclusion pact additionally lubricated by appointment Burhan [as] Governor who reportedly has facilitated secret trade treaties for four ex-Governors [of] Sinkiang.

Essential distinguish legal phraseology any agreement concluded and actual Soviet economic activities under guise such pact. Chang seems largely discard objections regarding international complications such agreement and to emphasize need via pact maintain minimum Chinese interest and control Sinkiang by meeting economic demands its most diverse people and mollifying Soviet. He apparently would retain at any price China’s legal sovereignty Sinkiang which, he thinks threatened. Foreign Office may be counted on oppose agreement which de jure concedes too much, but in Government’s present position would probably be forced blind [blink?] at penetrating de facto monopolistic activities by Soviets. Understand Soviets now in North Sinkiang mining regions of separatist areas Altai, Hi “cooperating” with Chinese in joint companies wherein Chinese figureheads dominated by Soviet chief engineers.

While term “cooperation on equal basis” or its equivalent may appear text pact, in reality conclusion will mean legal cover for Soviet mining trade monopolies. Furthermore, agreement could be signal for extension revised air agreement along lines old Hami-[Alma] Ata agreement recently denounced by Chinese and which was in effect Soviet monopoly.

One deterrent Soviet side may be reluctance chance estrangement Soviet–CCP relations and surely Soviet will sound out CCP leaders prior signing or else write terms so deftly as not compromise CCP domestic and international position.

In summary, according to Embassy’s best information, contents draft treaty disturbing (even though it might merely serve to regularize de facto position) and if under active negotiations but not yet signed. Ambassador plans discuss subject with both Chang Chih-chung and Li Tsung-jen on their return to Nanking and Embassy will keep Department informed.

Sent Department 453; repeated Canton 97, Tihwa 20, Moscow 17.