611.939/8–1549: Telegram
The Consul at Shanghai (McConaughy) to the Secretary of State
[Received August 16—9:30 a. m.]
3249. Following summary prospects Shanghai exports to US remainder 1949. [Here follows summary.]
Conclusions: Shanghai export outlook remainder 1949 very poor. Even if blockade end in sight, following factors make it unlikely that Communists will realize much foreign exchange from exports:
- (1)
- Unrealistic exchange rate;
- (2)
- High ratio rice costs to export prices discourages production;
- (3)
- Labor costs increasing inland as well as Shanghai;
- (4)
- Export goods have low priority on internal transport system;
- (5)
- Conditions still unsettled in many producing areas under Communist control;
- (6)
- Numerous parasitical Communist trade regulations hamstring trade;
- (7)
- Many stocks depleted by rush sell-out as Communists advanced south in first half 1949.
Dollar earning outlook very poor. Declared exports to US first half 1949 at Shanghai totaled US dollars 14,455,439, prospects remainder 1949 not over 7,000,000.
However, continued effectiveness Nationalist closing of port make it possible that total Shanghai foreign trade may not equal 2–3 million remainder 1949. Exporters now planning ship through Tientsin which will involve delays, higher transport and extra handling charges which may make exports economically unfeasible. Some exports ordinarily [Page 965] shipped through Shanghai may find outlet through Hong Kong and some may be carried by blockade runners.