811.516 Export-Import Bank/8–1247: Telegram
The Secretary of State to the Ambassador in China (Stuart)
1009. For Agricultural, Commercial Attaches from Eximbank. China has requested $200 million Eximbank credit23 to cover estimated raw cotton deficit of 500 thousand bales last half this year and 580 thousand bales 9 months next year.
Application states average of 4 million spindles now operating and consuming 200 thousand bales monthly. Estimates for next year 10 percent higher. Stock of cotton carried over from last year 900 thousand bales; UNRRA agreed to supply 200 thousand bales this year; 350 thousand bales obtained by direct purchase and domestic crop estimated to provide additional 1 million 50 thousand bales this year. Three month stock of about 600 thousand bales must be maintained to ensure continuous operation. For next year domestic supplies available to mills estimated 1 million 930 thousand bales which with 600 thousand carry over from this year would total 2 million 530 thousand bales prospectively available while requirements are 2 million 640 thousand bales plus necessary stockpile of 660 thousand bales.
China proposes 4 year credit with repayment of principal over last 2½ years during which Chinese Govt would earmark for export a portion of cotton textile production sufficient to provide foreign exchange to carry and repay loan. Exports stated already resumed but extraordinary demand in China and below-normal production permits only small quantities to be exported in immediate future. [Page 1178] Chinese estimate sum required to meet interest and principal in third year of credit would be produced by export of about 276 thousand bales cotton yarn or about 7½ percent Chinese prewar output.
Eximbank requests information from Agricultural and Commercial Attachés on present and prospective cotton situation in China including information on domestic crop and whether domestic cotton actually reaching mills in substantial and increasing volume; amount of exports and whether made by other than govt agencies; whether increased exportation cannot now be undertaken by govt and private mills to produce exchange for servicing 15 to 24 month credit in a reasonable amount and perhaps also to finance future purchases raw cotton and whether stipulation for export of sufficient part of production to service a credit could be policed effectively by any existing Chinese Govt agency or responsible millowners association. [Eximbank.]
From Dept Eximbank’s attention has been invited to previous cotton estimates submitted by ConGen Shanghai which differ radically from Chinese figures but reassessment situation desired.
Sent Nanking Depts 1009 repeated to Shanghai Depts 1354.
- Letter from the Chinese Ambassador to the President and Chairman of the Board of Directors of the Export-Import Bank of Washington, July 31, not printed.↩