No. 54
Memorandum by the Secretary of State to the President1

personal and confidential


  • British Trade with Communist China through Hong Kong

I have looked into the matter of British trade with Communist China through Hong Kong, which you raised in your memorandum of September 18.

The best information available to us indicates that the actual cargo tonnage of exports from Hong Kong to Communist China is much smaller than the figures mentioned to you. The attached summary2 includes the essential figures.

U.S. intelligence estimates based almost entirely on a joint US–UK study3 of this very problem indicate that the volume of exports from Hong Kong to Communist China decreased from 444,000 [Page 110] long tons in the first half of 1951 to 170,000 tons in the second half of 1951, and further declined to only 147,000 tons in the first half of 1952. The total of non-Communist exports, excluding those carried by craft of less than 1,000 tons, averaged less than 50,000 tons a month during the first half of 1952. This is only a small fraction of the 900,000 tons a month (400,000 through Hong Kong and 500,000 other) referred to in your memorandum. It is possible that the discrepancy between these figures and the ones you cite arises from a confusion of annual and monthly figures.

The discrepancy might also be explained in part by a possible confusion between the registered gross tonnage capacity of ships engaged in the China trade, and actual cargo transported. Many ships in the China trade do not carry full cargoes inbound to Communist China. The total tonnage of UK vessels (over 1000 tons) arriving in Chinese Communist ports for the first half of 1951 was 356,000; for the second half of 1951 was 289,000; and for the first half of 1952 was 436,000. Total tonnage of all non-Communist ships over 1,000 tons engaged in the trade with Communist China for the same periods was as follows: 1,213,000; 643,000; and 793,000. While a regrettable increase in British tonnage is shown for the first half of 1952, the total is still far short of the figure quoted to you. Furthermore, since many ships travel in ballast, the gross tonnage figures are not very useful in arriving at an estimate of the cargo carried.

A somewhat similar allegation which we could not document got us into a rather embarrassing situation with the Prime Minister when he was here last winter. So far as we are aware, there was no commitment from him to cut the traffic further, after we failed to support our charges in full.

In any event, the British participation in this trade seems not to be as extensive as charged. In addition, it should be noted that the figures on tons of cargo shipped do not, of course, indicate the strategic or non-strategic composition of such cargo. Probably little of the Hong Kong cargo was in the clearly strategic category. Since June 25, 1951 the Hong Kong Government has enforced a ban on the shipment of a long list of strategic and semi-strategic goods to Communist China. This ban has made the Hong Kong trade with Communist China much less objectionable to us than formerly.

Although as a result of a series of negotiations over the last few years we have received a higher degree of cooperation from the British in the control of strategic exports, there is admittedly room for improvement in British measures of economic restriction against Communist China. We would like to see additional items added to their list of banned exports; we would like to see a closer control of cargo for Communist China transiting Hong Kong on [Page 111] through bills of lading; and we would like to see a substantial reduction in British shipping to Communist China, which would cover British-owned vessels chartered to non-British interests, as well as British-operated vessels. However, before we press for a further sharp cut in British trade with Communist China, we shall need to decide what reply we are to make to inevitable questions about how Hong Kong is to exist without appreciable China trade.

The present moment does not seem opportune for an approach at the highest level. Some of the facts are still in dispute. A joint US–UK intelligence study on the statistics of British trade with Communist China is now going on in London. It would seem advisable to await the outcome of this study, which should result in an agreed US–UK evaluation of the present situation and furnish more current figures recognized by the British as valid.

Dean Acheson
  1. At a meeting with the President on Sept. 25, Acheson gave him this memorandum and discussed it with him. Acheson’s memorandum of the conversation states that the President decided it would not be wise for him to raise the matter with Churchill unless that seemed desirable after full development of the facts and discussion through official channels. (Secretary’s Memoranda of Conversation, lot 65 D 238)
  2. The summary, not printed, is not attached to the source text but is filed with a memorandum of Sept. 25 from Allison to Acheson. (493.46G9/9–2552)
  3. See footnote 4, Document 3.