CONTINUING PRC PURCHASES OF AMERICAN GRAIN

• Document Type: CREST
• Collection: Library of Congress
• Document Number (FOIA) /ESDN (CREST): LOC-HAK-37-2-11-6
• Release Decision: RIFLIM
• Original Classification: S
• Document Page Count: 2
• Document Creation Date: January 11, 2017
• Document Release Date: December 20, 2012
• Sequence Number: 11
• Publication Date: July 27, 1973
• Content Type: MEMO

No Objection to Declassification in Full 2012/12/20: LOC-HAK-37-2-11-6
MEMORANDUM
NATIONAL SECURITY COUNCYL
SECRET
State Dept., NSC,
review completed
MEMORANDUM FOR:
FROM:
SUBJECT:
MR. KISSINGER
ACTION
July 27, 1973
CHARLES A. COOPER
RICHARD H. SOLOMON , ,,
Continuing PRC Purchases of American Grain
The Chinese continue to make substantial purchases of American food
grains that hold the prospect of severely straining our export capabilities.
To date they have contracted for nearly 5. 5 million tons of wheat and
corn for delivery in this fiscal year. In past years, the PRC has ceased
purchasing in late May, and reentered the market after the fall harvest.
During this June and July, however, they have contracted for an additional
1. 6 million tons of grain for immediate delivery. In addition, they
contiinuc 4o. a ake ?n, is pur ch'a ce..' of I. 5, c ot:t on.; and have contracted
r
for nearly a million tons of soybeans--where the PRC has long been an
exporter of this product.
The CIA estimates that these purchases do not represent "panic buying'
in the face of agricultural difficulties at home, despite many indications
of official PRC concern about the agricultural situation. Rather, they
seem to be an indication of shrewd purchasing at favorable terms in
advance of either late summer pressure on the grain market, which would
drive up prices, or in anticipation of the imposition of export controls by
the USG. China's current harvest situation appears to be rather good, but
shortfalls in the Szechwan wheat crop or the autumn corn harvest could
change the picture, requiring substantial additional buying. PRC Liaison
Office Chief Huang Chen affirmed to Secretary Butz in late June that the
PRC had made substantial purchases of food grains from the U. S. in the
first half of this year. He added that his country might need to buy even
more in the second half. Butz asked Huang for an estimate of their total.
import requirements for the 1973-74 year, and the Ambassador said he
would ask Peking for such an estimate. None has' been received to date.
Given the pressures we are under, once again we face the question of
whether or not to request restraints on the part of the Chinese in the
matter of further grain. purchases. Such restraint may well be in their
own interest since there remains a real likelihood that export controls
SECRET GDS
- No Objection to Declassification in Full 2012/12/20: LOC-HAK-37-2-11-6
 No Objection to Declassification in Full 2012/12/20: LOC-HAK-37-2-11-6
49 a
SECRET 2
will be imposed which would interfere with delivery of grain already
purchased. However, this question is but one of a range of economic
issues that must soon be confronted in our dealings with the PRC
(textile purchases being another), and it is our preference that we deal
with them in a comprehensive manner rather than on a piecemeal basis.
We are now preparing a package approach for your consideration. In
addition, given current uncertainties in our relations with Peking, and
indications that Premier Chou may be under some political pressure,
we are reluctant to take actions which would call into question the value
for China of our growing relationship.
For these reasons, we request that Secretary Butz (rather than you)
send a formal request to the PRC, via their Liaison Office, requesting
the information on Chinese import requirements for the 1973-74 crop
season which Huaii-; Chen indicated he would seek from Peking. Such
a note would not request restraints on PRC purchases at this time, but
it would indicate to Chinese authorities in a direct way that we are
concerned about pressure on our grain export market. Assuming the
Chinese provide such information, it would help us formulate a package
approach to dealing with a range of economic issues which you might
take up with Chinese leaders during your next trip.
Recommendation:
That you authorize Secretary Butz to send a formal request to the PRC
Liaison Office requesting information on Chinese import requirements.
Approve Disapprove
SECRET
No Objection to Declassification in Full 2012/12/20: LOC-HAK-37-2-11-6