893.51/8–945: Telegram
The Ambassador in China (Hurley) to the Secretary of State
[Received August 13—10:30 p.m.]
1313. Embassy is reliably informed that the Executive Yuan has declined to approve the arrangement of foreign loans (guaranteed by the Chinese Government) by individual Chinese companies. It is understood that Dr. T. V. Soong recently stated in a meeting of the Executive Yuan that the Chinese Government itself will undertake to negotiate a single lump sum loan from each of several foreign countries. Further, that the placing of orders abroad and the distribution and use of the proceeds of such loans within China will also be a matter for the Government’s decision.
Mr. Lu Tso-fu, General Manager, Ming Sung Industrial Company, advises that this reversal of policy was revealed last week when consideration was being given in the Executive Yuan to his company’s [Page 1120] request for formal approval of its financial arrangements with the Canadian Government. Also considered at the same meeting was an application from the Yung Li Chemical Corporation for approval of his loan from the Export-Import Bank, Washington.
With respect to the Ceng Ming Industrial Company, Mr. Lu stated further that the Government proposes itself to make the purchase of vessels for which the proceeds of the Canadian loan were to be used. The Government also intends to retain title to the vessels after their purchase and to lease them to the Ming Sung Company to operate.
Mr. Lu has not yet been officially notified by the Executive Yuan that the action described above has been taken. He has been privately informed by Dr. T. V. Soong’s statement, and he has been asked what his reaction would be if such a plan were carried out.
In conversation with Robertson regarding general economic policies, Dr. Wong Wen-hao10 mentioned the case of Yung Li Chemical Corporation whose arrangements with Export-Import Bank for a 16 million dollar loan failed to receive the approval of Dr. T. V. Soong, the latter’s position being that he preferred to negotiate an over-all loan from the United States Government.
Leading Chinese industrialists are working for a development of post-war trade on a free enterprise basis. It goes without saying that Dr. T. V. Soong’s action, if carried through, would strike a body blow against private investment and trade in the coming years.
Please inform Treasury, Export-Import Bank, and Commerce.
- Vice President of the Chinese Executive Yuan and Minister for Economic Affairs.↩