Foreign Relations of the United States, 1952–1954, China and Japan, Volume XIV, Part 2

493.949/7–3153

No. 674
Memorandum by the Director of the Office of Northeast Asian Affairs (Young) to the Assistant Secretary of State for Far Eastern Affairs (Robertson)

confidential

[Washington,] August 13, 1953.

Subject:

• Tokyo’s Despatch No. 237, July 31, 1953:¹ Notes on Prewar and Potential Trade Between Japan and Communist China.

The following is for your information:

Embassy Tokyo believes that if Japan’s controls on trade with Communist China were relaxed to the levels multilaterally agreed to for the Soviet Union, Japan’s trade with the China mainland would almost certainly surpass that of Japan’s European competitors. The Embassy tentatively estimates that this trade could attain a level of approximately $80 million annually in each direction. This figure is larger than Japan’s 1952 trade with any other single country except Pakistan, which amounted to $82 million. Estimates by Japanese sources of potential trade with China range from “$100 million or less” by conservative businessmen to figures as high as $250 million annually in each direction, put forth by those who “ignore the unique character of Japan’s prewar commerce with China, as well as the significant changes in the Chinese economy under the communists”.

The despatch points out that advocates of increased trade with China have advanced the unrealistically high figure of 25% for China’s share in Japan’s overall prewar trade, adding that Prime Minister Yoshida has recently used the unrealistically low figure of 4.6% for 1934–36 in an effort to minimize the potential importance of future commercial relations with Communist China. The despatch concludes, on the basis of careful examination of the data, that the Chinese mainland’s share of Japan’s total trade, was about 12.5% by value during the 1934–36 period. (In 1952 less than 0.05 percent of Japan’s total export trade was with the China mainland and less than one percent of Japan’s imports came from the China mainland.)

With regard to the discrepancy between Yoshida’s cautious statements on China trade and the outright advocacy expressed by Okano, Minister of International Trade and Industry, the Embassy believes it reasonable to assume that Okano speaks with Yoshida’s consent and that Okano “has been encouraged to voice his opinions, some of which are highly unrealistic, in order that foreign reaction may be assessed, domestic pressures given a voice, and the groundwork laid for future moves toward the relaxation of controls”. The Embassy anticipates early and determined efforts by the Japanese Government to bring about at least a relaxation of its present controls over trade with Communist China.²

The Embassy comments on several factors other than security export controls which are likely to hamper the development of trade between Japan and Communist China: (1) loss of the preferred position that Japan enjoyed in China during the 1930’s; (2) progress toward industrialization in China, with resulting decrease in demand for consumer goods which constituted the bulk of Japan’s exports to China; (3) limited availability of raw materials for export from China to Japan; and (4) the restrictions and complexities inherent in the current system of barter trade.

1. Not printed. (493.949/7–3153)
2. In telegram 437 from Tokyo, Aug. 17, the Embassy reported that the Japanese Government had on Aug. 12 proposed that 20 items be immediately deleted from the embargo list, if the United States concurred, and had simultaneously submitted a list of 80 additional items for ultimate deletion, also with U.S. concurrence. (493.949/8–1753) No formal request by Japan for an end of the bilateral agreement of Sept. 5, 1952, was reported in telegram 437.