ECONOMIC INFORMATION: SINO-FRENCH RAILROAD NEGOTIATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00457R000300760002-7
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 2
• Document Creation Date: November 9, 2016
• Document Release Date: December 11, 1998
• Sequence Number: 2
• Publication Date: February 26, 1947
• Content Type: IR

Clas
illy IMTELLLCENCE REPORT
AUT.n: ?1 n x`.:_; ._- ?h
Dat e :j A-, aW LLU E E GRO
COUNTRY China
SUBJECT Economic T-nform tion: S French reilroad
Negotiations
!h
ORIGIN
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Director of Cent
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SUPPLEMENT
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25X1 A6a Note: In late 1945 and early 1946 the French in Indo-China were
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faced with the problem of persuading the reluctant Chinese to withdraw their
occupy ng forces from northern o4ChIna. In February 7!946, Clarac, Eiplo--
matic Adviser to the High Commissioner of prance in Indo-Chirac, flew to
Chungking to discuss the subject. He offered a high price, which included
the following inducements: (a) equal privileges for Chinese business in
Indo-Ch ; (b) surrender of extraterritoriality; (a) the giving up of
Fort Bayard; (d) the opening of Haiphong as a free port to Chinese cep
anti (e) joint Si.no -French cooperation on the Haiphong Turman Rail=W.)
1. It is believed that no publicity was over given to these terms in connection
with the wi:thdrrl of Chinese troops. At the time of the agreement (March
1946) it was implied that secret monetary considerations on a handsome scale
were bestowed on Chinese officials and military comers. A French business-
man in Shanghai stated on 10 January 1947 that he believed one such secret
provision may have been a French promise to complete the Ssechuan Railesiy.
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^ 2. Yunnan NaP
In the wake of the Chunking agreement, negotiations were opened concerning the
details of revival and joint operation of the Haiphong-Ywinan Railways, but
little progress was made, They are now completely stalemated, for reasons
which are not clear. The portion of the road in Indo-China is being operated by
the French, but on a somewhat limited scale because of the poor condition
of the road and equipment,
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Notes A report on this railway prepared by the Morrison-Knudsen
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Consullting Group In China, 12 July 1946, icludles the following pertinent
data: 450 kilometers of mainline meter.-gauge track from Chamyi (103-48,
24-38) through Kunming to Piseohai (101.1,, 23-26) is operating on a li}ted
basis. The line from Piaechai to Hokt (103-58s, 22-25) on the Indo-China
frontier (177 kilometer3) was dismantled in 1940.. Damage caused by military
activity along the remainder of the line was comparatively light, affecting
CLASSIFICATION CONF
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RDP82-00457R0.O
document is hereby regraded tE
r ,'TIAL in a cco:danco with the
 25X1X6
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Approved For ReleaseiP82-00457R00030076oon-
CENTRAL DI:L:,l,,iMf';IICG UhOUP
only two steel bridges and ono tunnel, which were blown up. The original
section of 464 kilometers from Iloka to Kunming was built by the Wrench
in 1910, The section from .'uiin ing to CharWi eras constructed durirz the
war with materials from the dismantled section. The "zrrison-Knudsen He-
port gives fairly complete information on the condition of the portion
of the railw r in Chinaso terrtt . It provides no inforrition on the
section of the road in Ii o-China
eahvan Rag?
This railway, between Chuagkin; and Chengtu, was begun before the rear by a
French syndicate. All the w%eliminary engineering vtorrk was completed, one
half the tunnole and grarin,Y were finished, and an unstated a-oimt of ballast
lad been laid c:cwn, llouever, lass than ton percent of the actual construction
of the road had been finished %when operations ;ere suspended because of the
war. ogot!ations for its cam seetion were initiated not long a_o between
the French and the Chinos,. It is estimated thAt .the eonutructi on required
will cost In .,Tench franca 3,,800,000,000. The Chinese :loverrment will issue
fifteen-year notes for tr.,is arao;int, with proper provisions for amortiuation.
These notes will then be guarantied by the i'rerth Govsrnr;ieny and certain
large ''rencla ban1 , and consequently will be rcr.?iseovntable at the Banff ,of 25X1A6a
France, The banks concorrod are the xa