124.93/5–847: Telegram
The Ambassador in China (Stuart) to the Secretary of State
Nanking, May 8, 1947—11
a.m.
[Received May 8—4:30 a.m.]
[Received May 8—4:30 a.m.]
991. Embassy grateful for Department’s telegram 523, May 2, 5 p.m.51 As regards ship program, Embassy’s idea is that following arrival of Naval Representative, Executive Office should consider military aspects this program and, in conjunction with appropriate officers of Embassy, the financial implications of this program as well as those of advisory groups. There are many aspects to this situation as for example:
- 1.
- It seems important that U. S. should know what its actions will [Page 964] entail, at any rate in U. S. dollar cost to Chinese Government. If Chinese Government unwilling or unable to make available requisite exchange during 5-year period, U. S. Navy will have assumed responsibility for training crews to operate vessels and through lack of essential facilities be unable to carry out its task in a suitable fashion. Question would arise as to whether it would not be desirable to protect our own reputation as well as to assist Chinese to earmark Export-Import Bank facilities to ensure sufficient supply of spare parts, etc.
- 2.
- It is quite likely that Chinese authorities during past year and a half of restricted operations of Army and Naval Advisory Group have evolved other ideas about the character, makeup and activities of the groups which they might put forward when question of activation arises. Furthermore, it is entirely likely that cost to Chinese Government has been greater than they first anticipated and of course China’s economic and financial situation has undoubtedly deteriorated beyond their expectations. No doubt in case of Army Advisory Group Chinese have felt that it should have been acting as the pre-war German Military Mission did in actively assisting in strategic and tactical field operations. If this be so in whole or in part, it behooves us to have more information about impact of our activities than we apparently have now.
- 3.
- As regards the ship program, Embassy’s information is that 271 ships were to be turned over of which 140 have been or are being handed to Maritime Customs, leaving 131 for Chinese Navy plus 8 minesweeper types which were to be turned over to Maritime Customs but are now to go to Chinese Navy. Chinese Navy to date has received 97 ships, and it is planned will obtain under the slow-down program from 4 to 6 sub chasers during remainder of year. On the other hand SCAP52 has notified Chinese Government that it is ready to hand over 57 Japanese ships for which there are no guns and no spare parts. These ships are to be taken to designated ports by Japanese crews and to Japan. The problem of obtaining Chinese crews and spare parts et al. is evident.
- 4.
- Following is estimated cost to Chinese in 1947 of programs
associated with Military and Naval Advisory Groups:
- a.
- CN53 dollar costs. MAG54 $50 billion. NAG $15–20 billion. About half of the CN dollar expenditures for MAG is for construction purposes which therefore is not an ultimate loss to Chinese Government. These estimates subject upward revision because of inflation but indicate order of magnitude involved.
- b.
- U. S. dollar costs. Training program with which NAG associated [Page 965] will run to $6,700,000 chiefly in the form of supplies, equipment, including spare parts for 1947 and for amphibious and small combat vessels, etc., and training of Chinese cadets in America. MAG here has no data on U. S. dollar expenditures incurred by China in connection with group’s program; it indicates that chief items of such expenditure would be training of Chinese aviation cadets in U. S. and purchase of noncombat supplies by Chinese Supply Mission in Washington. Embassy would appreciate Department’s requesting War Department for its information on this point. It would, of course, be glad to receive any other pertinent information available to Department.
Stuart