ABSTRACT
The immediate response of the US to the establishment of the People's Republic of China (PRC) was to oversee the evacuation of Nationalist forces to Taiwan in January 1949 and the establishment there of the Nationalist government under Chiang Kai-shek on I March 1950. President Truman sought to have the policy of NSC 41 relating to trade with China widened and, because Britain was the important commercial connection to China through Hong Kong, Secretary of State Dean Acheson made immediate contact with the British. Ernest Bevin told Acheson that the British were reluctant to ban the exp011 of items on the 1 B list because the Chinese might regard it as a threat to introduce economic sanctions that might in turn jeopardise the trading position of Hong Kong. Bevin was prepared to control items on the I A list exported from Britain, Hong Kong or Singapore conditional upon assurances from France, the Netherlands, Belgium, the Philippines and Japan, then under the control of the Supreme Commander of the Allied Powers (SCAP), that they would do likewise. Bevin made the offer to Acheson that, in conjunction with the Netherlands, they would refrain from signing long-term contracts with China to provide petroleum in excess of normal civilian requirements.! Bevin offered to keep the Americans informed on the movement of I B goods to China and would hold joint consultations 'if it appeared that the flow was excessive or injurious to our common interests'. Acheson did not anticipate much Chinese trade evolving given that the communist government could not acquire sufficient foreign exchange to import more than a very moderate volume of goods."
