HC Deb 03 May 1944 vol 399 cc1324-7
The Secretary of State for Foreign Affairs (Mr. Eden)

I rise with your permission, Mr. Speaker, and the leave of the House, to make a brief statement on the China loan agreement which was signed yesterday, as I wish to give the information to the House before it is made public.

A formal agreement was signed yesterday on the subject of the loan by His Majesty's Government to China of up to £50,000,000. Under the terms of the agreement, which carries out the offer made by His Majesty's Government to the Chinese Government some time ago, up to £50,000,000 will be available for the financing of goods and services required by China in the sterling area for purposes arising out of the war. A second agreement, covering the provision of arms, munitions and military equipment on Lend-Lease terms by the United Kingdom to China, was signed at the same time. Pending the signature of the agreements, the cost of goods and services required by China from the sterling area for war purposes has been met from earlier British credits, and munitions have been provided on lend-lease terms in anticipation of the present agreement. The limit of our assistance to China remains, as always, one of transport and not one of finance.

I am sure that the House will share my satisfaction that those agreements have now been concluded and that in this as in other ways we have made manifest our desire to give all the help to China that lies within our power.

Miss Ward

While expressing satisfaction at the signing of these agreements, may I ask whether there is any improvement in the air transport position in order that China may take as much advantage as possible of the terms of the agreements?

Mr. Eden

The hon. Lady will be aware that there is a large supply of goods by that route, but I cannot give the exact figures, because the information is secret.

Mr. Austin Hopkinson

What is the security for this loan?

Mr. Eden

This is the result of an agreement arrived at with the Chinese some time ago, to enable them to obtain goods in the sterling area for the prosecution of the war.

Mr. Hopkinson

That is not a reply to my question. What security have the Chinese Government offered?

Mr. Eden

The security is the agreement to which we have come, which is entirely in accordance with similar arrangements with our Allies.

Mr. A. Edwards

What kind of things are purchased out of the Aid-to-China Fund, that would not be obtainable under this arrangement?

Mr. Eden

I shall be grateful if my hon. Friend will put that question down.

Mr. Edwards

Are there any things available to China under the arrangements just announced, which would not be available under the Aid-to-China Fund?

Mr. Eden

I would have thought not, but I should like to have notice of that question. The object of this arrangement is to make available certain supplies to China which she needs from the sterling area, but of course it is not exclusive.

Sir Irving Albery

May I ask whether on the present occasion, as on the former, the United States are making any similar loan to China?

Mr. Eden

Yes, Sir. What happened was that the original loan furnished by the United States was made some time ago. Our proposal took some time to negotiate and has now been concluded. The American loan was considerably larger than our own.

Mr. Gallacher

In negotiating this loan was anything said about lifting the blockade in the Communist area and supplying arms to the Communist armies, which are among the best in China?

Mr. Eden

No, Sir; this was an arrangement between ourselves and the Chinese Government. We did not seek to interfere with Chinese internal affairs.

Mr. Astor

Could the Foreign Secretary explain how this arrangement differs from the ordinary operation of Lend-Lease and Mutual Aid between Allies?

Mr. Eden

If my hon. Friend will put a question down I will give him a detailed answer. The financial agreement is complicated, but it is in accordance with the precedents we have followed.

Mr. Pritt

Has the right hon. Gentleman at least secured from the Chinese Government an undertaking that the arms we supply under this arrangement will not be used against the ill-armed and courageous Communist armies?

Mr. Eden

At the present moment Chinese divisions are in action alongside our own in the Burma fighting. I would not dream of postulating such a demand to any Government, whose armies are fighting alongside our own.

Mr. Pritt

Is not the right hon. Gentleman aware that Chinese Communist armies in China are being blockaded by the Chinese Government and deprived of arms and threatened with the use of arms against them?

Mr. Eden

I have no desire to add anything to what I have said. We are dealing here with the Government of China, who is our Ally, and I am not prepared to enter into Chinese internal affairs.