793.94/14835: Telegram
The Chargé in China (Peck) to the Secretary of State
[Received 10:15 a.m.]
215. In the course of a call upon a responsible Chinese official15 on March 27, I asked regarding the present attitude of Germany toward the Sino-Japanese conflict and he said that he felt the German Minister for Foreign Affairs16 was extremely pro-Japanese but that the Minister of Economics17 believed that Germany stood more to gain through relations direct with China than through a victorious Japan. He commented that, of course, this was true because even if Japan obtained any advantage from the war this would not be shared with [Page 662] any other country. I inquired about the rumored negotiations for a renewal of the German-Chinese barter agreement and he said the German Minister of Economics had an emissary in Chungking named Voigt, formerly a businessman in Shanghai, who was pressing more for the carrying out of the terms of the barter agreement negotiated about 3 years ago than for its removal [renewal?] on different terms.
Since hostilities began China has not been carrying out its terms except that under a supplement negotiated a year after the date of signing Germany had granted a cash credit of 100,000,000 marks for the purchase of war supplies and China had about exhausted this credit. He said that although the Chinese Minister of Finance is rather inclined to carry out the original agreement, General Chiang views Germany with disfavor because of Hitler’s action in ordering out the German military advisers and particularly because a time limit was set for their departure under threat of confiscation of their property and deprivation of citizenship which Chiang regarded as humiliating to himself. The Minister said that since the Japanese were making it increasingly difficult to export the Chinese products desired by Germany and to import manufactured goods the barter arrangement was decreasing in value to China even though the Germans were offering as an added inducement to accept Chinese raw materials in payment for war equipment.
He explained that the Germans refused to supply completely manufactured military equipment but only such as was brought to a stage where its assembly could be completed in China. I asked whether any threats were being made and the informant replied that the argument was being used that the assembly [Government?] must do something to support that faction in Germany which preferred close relations with China rather than with Japan or automatically see the dominance of a pro-Japanese party. Recalling the negotiation of the original barter arrangement before the outbreak of hostilities, informant said that even then the Germans had stated frankly that Germany could not be satisfied with current supplies of raw materials but must store up quantities in advance in preparation for war. I inferred that there is little prospect of an early agreement with the German representative. Repeated to Peiping, Shanghai. Peiping send by mail to Tokyo.