Foreign Relations of the United States, 1947, The Far East: China, Volume VII

811.503193/2–2047: Telegram

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

Nanking, February 20, 1947—2 p.m.
[Received February 20—6 a.m.]

325. Embassy officer February 19 handed Dr. Kan Nai-kuang, Political Vice Minister for Foreign Affairs, aide-mémoire⁵ containing questions on which Councils seek clarification (reDeptel 178, February 13, 6 p.m.). Dr. Kan, who as former Deputy Secretary General of Supreme National Defense Council was instrumental in drawing up SNDC resolution issued December 1944⁶ regarding economic policies of Chinese Government, stated he would refer question to appropriate authorities with view to giving Embassy appropriate responses.

During course of conversation Dr. Kan said he was fully aware of criticisms of American business interests; that unfortunately American businessmen had adopted a somewhat unrealistic attitude over potentialities of China market; that question was not merely one of economics but also, and primarily, one of politics. He elaborated by stating that American business interests should realize that political situation might develop along one of three lines:

(1). China may be forced to fight a long civil war during which prospects for American business would steadily decline;

(2). National Government at Nanking might be overthrown by Chinese Communists following which there would be no private business for American and other foreign concerns;

(3). National Government, with outside support, might be able to drive back and confine Communists, who now have very definite outside support, to isolated areas, thereby restoring peace and conditions under which foreign trade might develop.

Dr. Kan ignores possibility of fourth possible line of development, namely, inclusion of Communists in National Government with proviso that Communist Army be disbanded, or fifth possibility, namely that of completely liquidating Communists as put forth by some other high Chinese officials.

Question of discrimination in allocation of materials raised in Embassy aide-mémoire. (Reference Tientsin airgram A–l, January 4 to Embassy.⁷) Similar questions also being taken up with Executive Yuan in response to memo enclosed Tientsin’s despatch to Department 43 [42], January 4.⁸

Upon receipt joint memo Embassy will presumably be able to discuss questions in greater detail with Dr. Kan and other Chinese officials.

Stuart

5. Copy transmitted to the Department in despatch No. 516, February 24; not printed.
6. See “Chinese Statement on Postwar Economic Policy,” Foreign Relations, 1945, vol. vii, p. 1332.
7. Not printed.
8. Not printed. The memorandum was prepared by the Tientsin American Chamber of Commerce for the Ambassador in China on December 22, 1946, to describe some of the major problems hampering the reestablishment of American interests in Tientsin in 1946 (123 Stuart).