The important question for Western traders w a s : where would the bulk of China's import needs come from? Many commentators dismissed the notion that the Soviet Union would be the chief supplier and argued that, despite the apparent ideological affinity, Russia's own wartime
devastation and immense postwar reconstruction needs meant that any assistance to China would be minimal - as Mao himself had envisaged in
o o
1944. 'Help from the USSR will not be large enough by a long way,' predicted the influential Far Eastern Economic Review.29 The British and American Governments were so convinced that China would be forced to turn to the West that they envisaged trade - and more particularly the threat of its withdrawal - as a bargaining weapon: the British to secure
moderate treatment for their commercial interests in China30 and the Americans to obtain an improvement in 'Communist manners and policy towards Americans.'3
Since the Communists were giving few specific indications of their future attitude towards the Western business presence, there was only one possible course of action: await the takeover. The 'wait and see'
policy, as it became known, was adopted - with varying degrees of
enthusiasm - by the majority of Western business interests. The British, with the greatest stake in China, took the lead in deciding to remain.
'What alternative did we have? We couldn't just abandon our invest ments,' maintained Hubert Collar (a representative of Imperial Chemical Industries in Shanghai and later the Secretary of the China Association) , even with the benefit of hindsight over thirty years later.32 In the House of Commons on 9 December 1948, Foreign Secretary Ernest Bevin paid tribute to the 'steadfast manner' in which the British in China were
'facing the difficult situation ... confronting them.'33 The Shanghai British Chamber of Commerce was less interested in high-sounding rhetoric than in practical assurances of protection for its interests and put forward a proposal, subsequently rejected by the Government, that the British seek the cooperation of the American and French Governments in formulating a joint scheme for the protection of at least Shanghai's foreign-owned public utilities, including power, water works, gas, telephone and tramways. 3t+
American businessmen had less to gain economically and more to fear personally by remaining in China. With capital investments totalling only about one-third of the British amount, their attention was focussed on their $360 million annual trade with China. But even if the optimism
about future trade was justified, the United States would have to compete with European countries who were already supplying an increasing propor tion of Chinese imports as their postwar recovery gained momentum and who did not suffer the stigma of having supported the Nationalists.35 Faced with vociferous anti-American statements from Communist-controlled
territory and widespread anti-American demonstrations in Nationalist areas, many American companies initially considered withdrawing from China.
The differing responses of British and American businessmen were also related to the support - or lack of support - they received from their respective governments. Although British merchants had a long tradition of complaining (through the Shanghai and Tianjin British Chambers of Commerce and the London-based China Association) that the British Government was not doing all it could to further their interests, they enjoyed the basic support of their Government.38 A Foreign Office memorandum on the China question, forwarded to the State Department on 5 January 1949, stated that the British Government intended officially to encourace British interests to carry on in China.37 Indeed, the hope of obtaining improved treatment for British investments, together with a sizeable share of China's foreign trade, was to be a major reason for Britain becoming the first non-communist Western government to recognize the People's Republic in January 1950,38 to the annoyance of the US Government which consistently maintained that commercial interests were secondary to the 'far greater and graver issues' of the possible
Communist domination not only of China but of the remainder of Asia as well.39
This policy of subordinating commercial to political interests caused the US Government to exhibit somewhat contradictory attitudes towards American businessmen in China and created friction between the two groups. On the one hand, the US Government - while urging the general evacuation of Americans in early November - did not think it desirable that representatives of 'important interests' (whether business, religious or education) should leave China, although it would not
officially advise them to remain since this would necessitate 'assuming partial responsibility for any untoward effects resulting from such advice.'48 But the US Government's policy towards China gave American businessmen good reasons for being reluctant to stay in the country. First, they were unsure of whether their Government would even permit
them to continue trading with China. The influential journal Business Week expressed strong doubts that trade with China would be countenanced41 and there were rumours — denied by the State Department — that the
Government had approached oil companies in the United States about a possible embargo on Communist-held areas of China.4^ Such rumours hardly encouraged companies such as Caltex and Standard Oil to maintain their representation in China. Second, American businessmen feared 'very rough treatment at the hands of the Communists because of their Government's continued support for the near-defeated Nationalists.43 They accused the US Government of failing to adjust its policies to political realities.
'In view of [the] Government debacle in Manchuria and Government defeats elsewhere, it is too late for such aid to be effective,' they complained in December 1948.44 With arms and ammunition continuing to arrive for the Nationalists in US Navy ships as late as November and December, many expressed reluctance to await the takeover unless they had official assurances of protection, or at least of special consideration should last-minute evacuation prove necessary. For example, officials of the Shanghai Power Company warned that, wüthout such assurances, they were prepared to abandon their entire operation, threatening the breakdown of Shanghai's light and power supply.45
The US Government was unsympathetic. Acting Secretary of State, Robert Lovett, authorized the Shanghai Consul-General verbally to assure American businessmen (as well as heads of missionary and educational organizations) only that they would be given identical consideration to consular staff. At the same time, he reminded businessmen that they, like missionaries, had 'long recognized that there are certain risks incident to their profession not shared by persons [in] similar
professions. So far as the Shanghai Power Company was concerned, he merely warned that the departure of key employees of the company, even at the last moment, would seriously jeopardize the predominant American interest in the company.45 The editor of the Shanghai Evening Post and Mercury, Randall Gould (who was also a director of the American Chamber of Commerce in Shanghai), later compared the situation of American
businessmen with the 'much more solidly united positions of Shanghai British organizations and their home government' and lamented their inability to make their views heard in Washington and New York.4”7
If an unsympathetic government and the prospects of falling prey to the Communists' anti-American hostility militated against the
retention of an American business presence in China, commercial rivalry finally prompted many Americans to stay. In one of his many attempts to persuade the US Government to take a more consistent attitude towards its businessmen in China, Shanghai Consul-General Cabot reminded the State Department that it would 'not be to the national interest to abandon positions held by Americans.... It is evident that some of the other
foreigners in Shanghai are hoping that they may benefit....'1+5 Those 'other foreigners' were basically the British, who were only too aware of the head start they had over the Americans because of their Government's relative aloofness from the Nationalist-Communist confrontation.
Nor did British businessmen have much sympathy for their American competitors. Although the British Consul-General, Robert Urquhart, constantly attempted to play down the dissension between the two groups, he admitted that some British 'smaller men, remembering how the Americans have tried to grasp as much of the China trade as they could, will be keen to grab back.'1+5 British businessmen, as well as diplomats, confessed that they had little time, in particular, for the post-war newcomers to the China trading scene, regarding them as fly-by-nighters who sought quick profits wherever they went, panicked at the first sign of trouble, and ruthlessly abandoned their obligations.50 'This is not the British way of doing things,' commented a British Shell representa tive in Shanghai. 'We prefer to ... stand our ground and face develop ments with equanimity and calm.'51