893.61321/8–2647: Telegram
The Consul General at Shanghai (Davis) to the Secretary of State
[Received August 26—11 a.m.]
2060. Inform Commerce and Agriculture. There are at present about 4 million standing spindles in China excluding Manchuria, Present number of spindles in condition to operate calculated at 3,400,000. Present average full time operating capacity all China only about 3,100,000 because of power shortages; in Shanghai due to lack of power-producing equipment, in Tientsin and Tsingtao lack of coal. ReDeptel 1354, August 12,31 paragraph 2. Shanghai mills still working at reduced capacity in conformity with scheduled and non-scheduled shutdown operation plan alternated from time to time according to power producing capacity and other consumer demands on existing generating capacity. Cotton mills shutdown in Shanghai due to power producing capacity and other consumer demands on existing generating capacity. Cotton mills shutdown in Shanghai due to power shortage commenced in June 1946 and have continued since that date as reported ConGen airgrams A–754, October 2, 1946, and A–601, August 13, 1947.32
It is estimated that by July 31, 1948, contingent on availability of power, China will be able to operate about 4 million spindles but an increase beyond this number assuming sufficient power available is [Page 1181] dependent upon more rapid deliveries of new machinery at present very slow. Average spindle operation for crop year ending July 31, 1947, spindles 3,500,000 as per ConGentel 2000 August 18.33 Requirements of 2,640,000 bales imply an average operation 5,280,000 spindles during 1948 which is not possible.
Re paragraph 4, our opinion accurate analysis export possibilities requires further study. Preliminary survey indicates there should be good market for Chinese piece goods provided China can export at competitive prices. Export of large quantities of yarn debatable as sources here indicate demand other Far Eastern markets mainly for piece goods. Total yarn export 1946 bales 782 piece goods yards 182162. Exports 1947 January–May inclusive yarn bales 5859 piece goods yards 507250.
Government now apparently making belated effort to promote export of cotton products in view of necessity to obtain foreign exchange; also because of mill pressure to introduce Chinese products in Far Eastern markets before Jap exporters are in position to make real competition.
Re paragraph 2 re movement domestic crop to mills, extensive research by this office supported by data important Chinese sources substantiative [of] figure of 800,000 bales available to mills 1946–47 crop. (ReConGentel 2000, August 18.) Of this quantity moderate part still up country but collected and moving in volume to mill centers. 1,933,000 bales is approximately the figure estimated by this office for entire 1947 domestic crop of which it is estimated that 1,100,000 bales will be available for mills consumption. Latter figure also included in balance sheet submitted ConGentel 2000 August 18, is believed fairly optimistic and contingent upon no further deterioration of transportation facilities to mill centers. However if present unsettled conditions in China should show significant improvement in the next season our estimate of 1,100,000 bales could be increased moderately owing to some domestic stocks becoming available now believed held up country from previous crops. There is now great incentive for mills to purchase Chinese cotton even though it is higher priced than imported as the products of Chinese cotton are not subject to possible additional JDC [Government] control other than price ceilings.
Sent Department, repeated Nanking 1483.