We shall be glad to confer with you and your advisers about these projects
for a general examination at any time convenient to you, with the hope,
however, that it will be possible for us to submit this material to the Bank
within the next few days.
[Enclosure]
The Chinese Ambassador (Koo) to the
President and Chairman of the Board of Directors of the
Export-Import Bank of Washington (Martin)
Washington, June 27,
1947.
Dear Mr. Martin: On behalf of my Government, I
am submitting the enclosed projects on (a)
Communications, (b) Power, Mining and Industry
and (c) Improvement of Agricultural Economy, to
you with the request that the Export-Import Bank grant credits to
finance the purchase in the United States of materials, equipment and
services required for each project. These projects will aid China’s
economic recovery and will facilitate trade between the United States
and China. They are listed on the attached summary sheet91 together with the amount
required for each of them.
The projects have been selected from a general outline which has been
transmitted to the United States Government. In making the selection,
careful attention has been given to a number of factors, including the
bearing which the completion of the project will have on China’s foreign
trade position, the establishment of a stable economy which in itself
will have a direct effect on China’s trade with other nations, and the
production of revenue by the individual projects, so that the repayment
of the credit advanced to finance its construction can be effectuated
from the project itself and will not be a burden on the general economy
of the nation.
The importance of improving the system of internal communications cannot
be over-emphasized. The Canton–Hankow Railroad and the Chekiang–Kiangsi
Railroad, both of which traverse areas not served adequately by other
means of transportation, are given first priority among the many
railroads in need of rehabilitation. Funds
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for materials for the repair of rolling stock are
also included so that China may get as much use as possible out of its
existing equipment that can be salvaged.
In connection with these projects it should be noted that the passenger
cars China would like to purchase from the War Assets Administration,
with Export-Import Bank assistance, described in a letter to you from
the Chinese Supply Commission of April 30, 1947, will form an economical
substitute for the immediate need for additional passenger cars on the
Chinese railroads, and if we are successful in arranging the purchase of
these cars, the funds required for the Chekiang–Kiangsi Railroad
project, which includes rolling stock, may be reduced accordingly.
The development of the Tangku, Shanghai and Canton harbors holds the key
to the volume and shipping cost of export and import trade of the
northern, central and southern regions of China. These projects are
urgent because they take time to develop and harbors there form the
firstline bottleneck of any modernization of the Chinese economy, where
substantial tonnages will have to flow into and out of China or
coastwise. The Shanghai harbor has suffered badly from the lack of
dredging and proper maintenance during the Japanese occupation and their
capacity has been materially lowered. The high cost of both exports and
imports that have moved in and out of Shanghai since the defeat of Japan
as the result of congestion and delays at that port accentuates the need
for harbor improvements.
The supply of electric power is equally important and urgent. In regions
like Shanghai and Tientsin it has been impossible to utilize all
existing productive industrial equipment because of a shortage of power.
The production of textiles and other essential consumer goods has
suffered for this reason, accentuating the shortage of such goods in
China, forcing prices up, and requiring the importation of supplies
which should be produced domestically. In other centers this lack is as
great, and hinders the establishment of even small new local
industries.
Coal is essential both for power and the railroads as well as for water
transport. The coal mines, when restored and developed, will in addition
provide certain exportable surplus not obtainable otherwise in the Far
East and will, to some extent, reduce the need for Chinese imports of
petroleum products. Similarly the other mining projects listed—antimony,
tungsten and tin, all of which are minerals for export—will provide
China with needed foreign exchange and ease a worldwide short supply of
these products.
Other projects are designed to increase China’s agricultural production
and thus avoid the necessity of importing foodstuffs from
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abroad. The fertilizer
plants are particularly important. We have previously described, in a
letter from the Chinese Supply Commission of April 30, 1947, referring
to a proposed purchase of surplus fertilizer plants from the War Assets
Administration then under discussion but now withdrawn by WAA, the need
for an increased supply of chemical fertilizers and the part it would
play in providing larger supplies of foodstuffs. We also referred there
to the interest shown in this subject by the Sino-American Agricultural
Mission under Dean Hutchinson’s leadership.92 Even if
it were possible for China to obtain sufficient fertilizers from the
world’s present short supply, obviously China could not afford the
foreign exchange that would be necessary.
Like the export metals, the vegetable oils and sugar projects in addition
to providing for China’s own needs, will provide goods for export to
other countries.
The cement industries included in this list of projects will fill a basic
need for this important construction material and reduce the
uneconomical demands of foreign exchange for importing and shipping
large supplies of cement needed for reconstruction work.
The mechanical and electrical industries provide equipment needed for the
industrial development of China. A large part of their product will find
its use in the basic transportation, communication and power industries
as well as direct consumer uses.
Most of these projects have been prepared on the basis of surveys made by
American engineering firms, and it is contemplated in most cases to
engage American technical assistance in the construction of the various
projects and in their initial operation.
In addition to the projects enclosed herewith, others are in the course
of preparation, and in part await the receipt of further technical
information. When in proper shape, they will be submitted to the
Bank.
We should be glad to have the opportunity of discussing these projects
with you in detail and of answering any questions that you may have. The
members of my staff will be available at all times for discussion with
the Bank’s technicians and experts.
I should like to express the hope that, in view of the importance of
these projects to the economic recovery of China and to the well-being
of the Chinese people as well as to the development of trade between
China and the United States, we may have an early and favorable answer
to this request for credits.
I remain,
Sincerely yours,
[File copy not signed.]
