CHINESE COMMUNIST PLANS FOR BARTER TRADE BETWEEN HONG KONG AND THE LIBERATED AREAS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00457R002900030008-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: December 14, 2016
• Document Release Date: March 21, 2001
• Sequence Number: 8
• Publication Date: June 27, 1949
• Content Type: REPORT

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CLASSIFICATION (a ;d.I ~CO: T.KOL - U .a. Oi't 1CIALS ONLY
CENTRAL INTELLIGENCE AGENCY
INFORMATION REPORT
COUNTRY Hong, Kong/Chizaa/Korea
SUBJECT Chinese Communist Plans for
Barter Trade 1JOtwreen Hong-Kong
25X1A
REPORT NO.
CD NO.
DATE DISTR.
27 June 1949
NO. CF PAGES
7
PLACE ailIS REP .IV.rt, r QA NO. OF ENCLS.
ORT I $ NOT TO
25X1A T RTR YEo BELOW
ACQUIRED R~rrs I TTt rffI H T e,.
STATES
OR
DATE OF INFO. See below
,
? O~-Q THE t:GRIERS SUPPLEMENT TO
OF Tfilf tfN(TEp 9T?,1TE;
THE EXPRESS REPORT NO.
25X1X
The following report is a translation of notes made by an unknown person
on the subject of barter trade between Hong Kong and ports in 1a anchuriaa
and Korea. Internal evidence indicates that it was prepared in the
letter part of 1948, Land at least in part after 1.8 December 1948.. The
form of the original text, as it was received in translation, has been
retained, and no attempt has been, made to edit ambiguous passages,
Details Highlighting the bartering rstez between Bong Kor,& the
Liberated Areas.
A. Explanation:
1. The liberated areas here are three ports, including one in North
Korea, Dairen and Antung.
2. All ooamaoditiee handled under this system must be absolutely free
from any contraband goods.
3. The bartering system should not be carried out in such a way as
to encourage smuggling.
4. Assurance is given that all transactions will yield a reasonable
and profitable return of two-fold the original capital invested.
5. The Government of North Korea and the Chinese Communist (CCP)
Trade Bureau are the two authorized business agencies representing
competent sources to transact business coming from the Colony..
6. Aspect of political cone ctions as well as matters relating to
items (B) and (C) must be specified by explanation,
B, Outline of Advantagesa
1. If the object of this trade is only high profits, then; comparatively,
the business returns from South Korea are less promising than those
from .North. Korea, Dairen?s prospects are bettor than North Korea?s9
the impor?tangeoNrVa
roes the promise of Dairen? These are
ITA
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a few of the facts gathered from vessels which have made eleven
chartered voyages to these ports, as recorded in Hong Kong by the
authorities concerned up to the 18th of this month and during the
current year.
2. If, apart from the prospect of realizing excessive profits, one has
still other aims in view with regard to this trade, it will be most
necessary to look for accessible and suitable opportunities to
negotiate with the CCP authoritative business agencies for the
monopolization of the barter with Antung, and to secure the leading
right to carry on trade between that port and Hong Kong; as well as
the leading right for Great Britain and the United States to transact
business direct with the port. (Dairen is suspected of Russian
involvement; so also North Korea of its indirect connections.)
3.
The capital and time required for a voyage to Antung is the same as
for a trip to North Korea, but the profit realized at Antung is
twice that obtained from North Korea.
4.
The Yalu River is frozen and will not be open to
ice is melted in the coming spring, and with the
closed to shipping, all commodities in northeast
navigation until the
Gulf of Chihli
China will have no
outlets other -than to provide the port ofAntung Antung for outward
consumption. Therefore there is no doubt that Antung will be a very
flourishing commercial port and will offer many fine trade
opportunities to net higher incomes in the near future:,
5~ There will be a free flow of trade between Hong Kong and Japan in
the coming spring, and as a result of the fact that the wary
vigilance of America toward Russian activities in Dairen is apt to
be intensified in the future, the trade outlook in North and South
Korea will not present a promising picture and will actually decline
in commercial importance. This is not the case with Antung, The
above factors will have no effects whatsoever on the port, and in all
respects the decline in importance of the above ports will further
enhance its business boom. Bven if the CCF suffered defeatism and
retreated beyond the Great Nall of China, Antung? s commercial
activities would in no way decrease and it might even double in
importance. This port cannot be deemed the life line supply of the
CCP, but rather a harbor for the busy entry and exit of vessels for
trade and commerce.
C. Outline of Procedures:
1. All manners of procedure and kinds of commodities involved in the
barter will be agreed upon by both parties concerned before any
steps can be taken to ship the cargoes out of the Colony.
2. All commodities to be shipped for barter must be legally passed
through customs, and authorizations must be granted for them before
they leave Hong Kong. Likewise, all goods carried in return for the
Colony must be cleared by the Chinese Customs authorities either at
Chau Nam Pol or Sun Yea Chant in North Korea, and the proper duties
paid according to the standing tariff before sailing, with no
snuggling or evading of duties, and the ship must conform to lawful
rules of navigation.
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3. All vessels, upon arrival at Chou Nam Po, Tai Tung3 or Yuen Shau4,
will immediately be directed by the CCP Trade Bureau to Antung for
the loading or unloading of all cargoes.
4. Aside from barter (with reference to items listed under Section (G))
there is also a transportation contract system, whereby goods are
processed and transported to a desired destination for consignors, as
itemized in section W.
5. If any formal negotiation is desired, representatives of the CCP
business agencies will be in a competent position to carry this out
to facilitate the trapaction of business. Formal barter is
responsible for by agencies of the Hong Kong banks.
D.
Items of Export:
1.
2.
3..
4.
5.
6.
7.
6.
9.
10.
Raw rubber - type number 4 and number 5.
Zinc oxide.
Used rubber tires.
Cotton yarn.
New jeeps and 1' ton, 3-ton or 5-ton trucks.
Medicine.
Gum rubber (Elephant Brand).
Gunny sacks (or jute bags).
50-gallon empty gasoline drums.
Automobile oil.
E.
Items of Import:
1.
Yellow beans.
8.
Ginseng.
2.
Bristles (dressed or undressed).
9.
Lumber
3.
Bean oil.
10.
Copper and iron.
4.
Oil in kinds.
11.
Vermicelli.
5.
Bean cakes.
12.
Medicinal herbs.
6.
Peanut oil.
13.
Furs.
7.
Deer horns.
14.
Antelope horns.
F. Ratio under the Barter S stem:
1. 1 ton of raw rubber (type number 4) equals 6 tons of soya beans.
2. 1 ton of raw rubber (type number 5) equals 5 tons of soya beans.
3. 50 tons of gum rubber equal 55 oases or 1 set of bristles.
4. The exchange of other ocsmmodities can be made according to the ratio
or current prices prevailing in the Colony.
G. Methods Regulating Shipment of Own QArr i Chartered Bottoms:
a. Payments:
The following payments of capital will be necessitated for the lease
of a vessel of 3,000 to 3,500 tonnage to ship personally owned cargoes
to the-liberated areas under the barter system:
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1. Payment of one month's rent for the
chartered vessel -------------------------------- $180,000.005
(due to current
unpromising outlook
for shipping, some
vessels can even be
chartered at a
Monthly rate of
$120,000.00.)
2?
].00) (type number 4)
100) tons raw rubber (type number 5)
4180,000.00
3.
50 tons gum rubber --------------a_-__----__-----
490,,000.00
4.
4 4ow jeeps
428,000?00
436,000 00
6.
100 bales-cotton yarn ---------------------------
4135,000.00
7.
20 tons medicine --------------------------------
080,000.00
8.
100,000 pieces gunny sacks (or jute bags)
4180,000.00
9.
1,000 empty gasoline drums -----------------------
$10,000.00
Approximate total
$900,000..00
b. Receipts:
If the above amount is invested, a return of the following approximate
value will be realized:
3 sets of bristles --------- --------------------
200 tons peanut oil (at 42,200 per ton) ---------
10,000 tons yellow beans ( at $480.00 per ton) __
200 pairs doer horns (at x800.OO per pair) ------
500 tons been cakes (at 4250.00 per ton)
6, 20,000 piculs vermicelli (at 4100.00 per picul) -
$600,000.00
4400,000.00
4480,000.00
4160,000.00
0125,000,00
f 200 , 000 , 00
Approximate total 2F,O00,000._00
H. h:ethods Governing Transportation Contracts:
A. Payments :
1. The cost of leasing a vessel of
about 2,000 tons for one month ------------------ $40,000.00
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2.
Estimated cost for fuel consumption; food and
expenses for members of the crew --------------------
0,000.00
3.
Salaries for crew v---------------.-------- -_---_---._:
44,000.00
494,000.00
4.
(It is estimated that a capital of only 0404000 will
be necessary to turn in to start this business by
paying for the lease of the vessel in advance, as
all freight for order goods is prepaid in full. This
renders it feasible for the ship to make the outward
rand return trips.)
b. ieceipts:
A freighter of 2,000 tonnage can load as maximum not weight of 1,000
tons. The freight charge per ton of cargo is X100,.00, and when a
vessel is leased at least a minimum weight of 600 to 800 tons of
merchandise can be obtained in Hong Kong within a period of five
days, for shipment to the liberated areas for barter,. (On the
return voyage, if the barter happened to be bristles only, the
loading capacity would be limited due to the bulkiness of the
cargo, but if the cargo were yellow boas, the ship could carry.
a maximum load of 1,000 tons.) Calculating only on a minimum
tonnage of 600 tons which the vessel would load for the liberated
areas, at $100.00 per ton the freight amounts to 460,000.00.
2. On the return voyage to Hong Kong with a maximum load of barter
goods, the freight payment will be -------------- lOO,000.00.,
3. A handling charge of 20 percent on the
net profit from the cargo ---------------------- 440,000.00.
4. (Comparing the receipts and payments of each voyage, a profit of
more than 0100,000 will be realized. If several similar journeys
are made by each concern undertaking such transportation it will
in no time earn enough to finance an enterprise of its own, as
referred to in Section (G).)
I he r Li races in Antun rter
Since October of the current year, four ships have been recommended to
barter with Antung, So far, only one has returned to the Colony- and,,
though this was her maiden voyage, the profit realized from the cargo she
brought back was 100 percent,, The following are the four vessels which
sailed to Antung for bartering transactions:
1. SS CEUSBORb, a 580-ton freighter, was chartered by a prominent.
provisions and Seafoods store, Yee Tai Hong, Wing Lok Street, West.?
While the ship was on her way back to Hong Kong she tart a storm and,
being obliged to change course, ran short of fuel. In order to
continue the voyage, the yellow beans which she carried as a part of
her cargo were used for fuel, Because of this use of the beans as
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fuel, she suffered a heavy loss according to the usual calculations
for her entire oargo0 Nevertheless, a not profit of 100 percent was
realized from the voyage when the remainder of her cargo was
disposed of.
2. The 120-ton converted American landing craft, BLUE BIP,A, chartered on
the spur of the moment by Li Yuen Cheung and the merchants of
Northeast China, left her anchorage on 7 November,. sailing from Hong
Kong for Antung. While on her return voyage, she ran into a typhoon,
and as a result her date of arrival was delayed.
3. SS PROSPERO8, a 3,200-ton vessel chartered by representatives of the
To Hsing Trading Company, Ltd., a business establishment in northeast
China, left Hong Kong harbor on 18 December, bound for Antung for t
barter deal. Her arrival is expected soon.
25X1A
1. Methods incorporated in section (G) may be used as a basis for an
initial trial by interesting9 business concerns under the bartering
system.
2. Owners of goods are allowed full freedom of supervision aboard
vessels.
3. The CCP is in urgent need of comiodities from the Colony, as may be
seen from a telegraphic request received yesterday. Details of
their requirements are as yet to glance through.
4. 'there are at present also vessels of other neutral foreign flags
available for lease to carry on the barter business.
5. If there are any misgivings about carrying on a direct barter with
the liberated areas, transactions of this nature can also be made in.
North Korea by contacting the CCP business agencies t'-:1re. However,
the profits will be much smaller about 100 percent than what could be
realized in direct barter with the liberated areas.
6. Those business concerns of long and prominent standing in Hong Kong
can assume a leading role in such transactions in order to encourage
operations.
7. Monopoly of this trade can be taken over by a cooperative.
1. Comment. This is probably Chinnamp ? o.
2. Comment. This is possibly Si.nuiju.
3. Comment. This is probably Tatungkou (124-10, 39-52).
4, Comment. This is possibly Wonsan, Korea.
5. Comment. Presumably Hong Kong currency is meant.
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25X1A 6. Comment. No ship of this name could be identified.
7. Comment. Yea Tai Hong was agent for the SS EASTERtd TRADER,
25X1A British flag, which arrived in Hong Kong from Chafe* in April 1949.
8, Comment. SS PROSPER), Buenvonido Steamship Company, Ltd.,
25X1A Panama Panamanian flag), was reported in April 1949 as having made
one voyage, cargo unknown, between Hong Kong and ports in North Korea.
25X1A 9. Comment., The correct translation is probably "interested
business concerns.
10. Comment. The unexplained blank space in the translation at
25X1 A this point may have been inadvertent.
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