COMMUNIST TRADE THROUGH HONG KONG

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00810A002700500005-2
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 2
• Document Creation Date: December 15, 2016
• Document Release Date: October 22, 2003
• Sequence Number: 5
• Publication Date: October 28, 1953
• Content Type: REPORT

Approved For Release 2003/11/21 : CIA-RDP80-0081OA0027OP4Q00 5'0
CENTRAL INTELLIGENCE AGENCY
INFORMATION REPORT
CONFIDENTIAL
This Document contains information affecting the Na-
tional Defense of the United States, within the mean-
ing of. Title 18, Sections 793 and 794, of the U.S. Code, as
amended. Its transmission or revelation of its contents
to or receipt by an unauthorized person is prohibited
by law. The reproduction of this form Is prohibited.
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COUNTRY Hong Kong/China/North Korea/Indonesia
SUBJECT Communist Trade through Hong Kong
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REPORT NO.
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DATE DISTR. 28 October 1953
NO. OF PAGES
REQUIREMENT NO.
REFERENCES
THE SOURCE EVALUATIONS IN THIS REPORT ARE DEFINITIVE.
THE APPRAISAL OF CONTENT IS TENTATIVE.
(FOR KEY SEE REVERSE)
Barter Trade through Hainan
.1. From 1 March to 30 June 1953 the Modis Companyrepresenting Indonesian
merchants, carried on with the Chinese Communists a barter trade involving
each month an average of 2,000 ounces of quinine2, 100 tons of tin blocks,
and 20 tons of raw rubber, which were consigned to the Supplies Distribution
and Transport Bureau of the Chinese Communist government3. In exchange the
Modis Company received mainly silk products, cloth and beans from Communist
China. This trade was conducted at Haiktou (N 20-03, E 110-20), Hainan
Island, during the last 10 days of each month, and was expected to continue.
North Korean Procurement in Hong Kong
2. In early August North Korean buyers in Hong Kong were primarily interested
in purchasing large quantities of newsprint in reels and wood-free printing
paper, for delivery to North Korea.
Chinese Communist Control of Tientsin Exports
3. In early July the Chinese Communist Fcr eign Trade Bureau ordered that export
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(Note: Washington Distribution Indicated By "X"; Field Distribution By "#".)
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permits would be issued only for shipments which inaluded:::40 percent of "goods
in lesser demand." As a rule, native products from Tientsin could be sold in
Hong Kong for a net profit of 15 to 20 percent, but these less popular goods
could be sold only at a loss, which in some cases amounted to 30 percent of
the original cost. Thin loss was made up by Tientsin import-export merchants
through the importation of hardware and industrial supplies and equipment, which
could be sold in Tientsin at a profit of about 20 percent.
4. In late July and early August 1953 Vardar and Company (4850/1129/3152/5887),
room 708, China Building, Queen's Road Central, Hong Kong, was selling metals
of German manufacture to Communist China. The firm, which was exporting from
China native products such as wood oil and vegetable oil, claimed excellent
mainland contacts and frequently sent staff members to Shanghai for business
consultations. However, they had suffered a loss of HK 450,000 on penicillin
shipments to Communist China, and had been unable to move three shipments of
VKF brand German ball-bearings out of Macao to the Chinese mainland.
5. The Eurasia Mercantile Company, Hong Kong4,.was organized by WU Yao-ohang
(0702/5069/4545), in association with some Germans he had contacted through
German-naturalized American citizens5, for the purpose of assuring a supply
of antibiotics after the imposition of the United States "Paris Group" trade
oontrols.6 The firm was trading principally in antibiotics and penicillin
of German origin in August 1953. WU also owned the Y. C. WOO Company, South
China Morning Post- Building, third floor, which was associated with the
Eurasia Mercantile Company and was an.'agent of the F. Eli Lilly International
Corporation of Indianapolis.' The Lilly agency was obtained by WU immediately
after the end of World War II. Once the EurasiaMercantile Company was r
organized, WU, a Cantonese graduate of Shanghai University, went.to the United
States on a visitor's visa, and in August 1953 had no intention of leaving the
United States. '.WIT travels on a ,Chinese Nationalist passport.
25X11. 1Comment. The location of the Modis Company wa's not given.
25X12. Comment. The shortage of quinine in China has made it necessary
for Chinese Communist hospitals to'use Paludrine in treating malaria.
25X1 I (Comment. Paludrine is an anti-malarial of British manufacture
which was synthesized in 1945.
25X13? Comment. Probably the Storage and Transportation Division under
the Ministry of Trade is meant.
25X14. Comment. The Hong Kong' Commercial Year Book, 1951, lists an
Eurasia edicine ompany, 166 Des Voeux Road Central,' managed by
K. L. LIU (LIAO Chien-lu, 1675/0494/0188). The telephone directory for
December 1952,Iists the Eurasia Trading Company, 148 Des Voeux Road
Central, which appears to be a new firm, since it does not appear in the
December 1951 directory. Another American agency has reported an Eurasia
Trading Company, room 410, China Emporium Building, which wasldediling. in
Austrian industrial goods in lat. 1952.
25X15' Cd. ment.,L._Th ;s phrase is confusing. Possibly naturalized
"erioan citizens of German extraction are meant.
25X1 6. Comment. Probably the Coordinating Committee (COCOM) is meant,
which in July 1950 redefined the Soviet Bloc to include Communist China.
and North Korea. However the COCOM controls do not include limitations
on trade in antibiotics,
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CONFIDENTIAL
Approved For Release 2003/11/21 : CIA-RDP80-0081OA002700500005-2