893.515/2–2846: Telegram
The Consul General at Shanghai (Josselyn) to the Secretary of State
[Received February 28—6:40 p.m.]
328. From Commercial Attaché. Announced new temporary exchange and trade control regulations as already reported from Chungking followed more than a month of skyrocketing prices for gold bars US dollars and commodities (sent to Department; repeated to Chungking as No. 141) which situation together with strikes in numerous industries and services including Chinese Government radio administration and political uncertainties reflected in widespread student demonstrations, brought about well-nigh chaotic conditions in the local economy and in the trade outlook.
The impressive amount of the stabilization fund, the fact that a vast portion of China’s essential needs are being supplied through UNRRA, that the new foreign trade regulation eliminates certain import luxuries and establishes licensing on others and that certain important imports will apparently be financed by foreign loans, makes it clear that the authorities are enabled to introduce and maintain controls which may be highly effective despite the currency inflation and the virtually almost frozen export situation.
The two principal American banks and two leading British banks registered February 27 through the Shanghai office of Ministry of Finance. They anticipate becoming appointed banks under provisions of the new regulation and that import and export exchange will be channeled through them and other appointed banks.
The board functions of the import planning or programing committee create apprehensions among importers of the likelihood that rather tight import trade controls will be applied pending a more [Page 953] normal balancing of China’s foreign trade and payments can [and?] also that affected temporary commodity lists so far published may represent only partially the range of items ultimately to be affected as influenced by experience and success in applying the exchange and trade measures.