Moscow, June 28, 1949

Top Secret

The reception took place on June 27 and lasted from 23:00 to 24:00.

Present at the reception were: Comrades Molotov, Malenkov, Mikoyan, Liu Shaoqi — Secretary of the CC CPC, Gao Gang — member of the Politburo of the CC and also Secretary of the CC Bureau and Chairman of the Government of Manchuria, Wang Jiaxiang — member of the CC CPC, Karsky (Shi Zhe) — interpreter, and I.V. Kovalev.

After mutual greetings and handshakes with the delegation, Comrade Stalin asked about the health of Comrade Mao Zedong.

Comrade Liu Shaoqi thanked Comrade Stalin for his attention to Comrade Mao Zedong and presented to him a letter from Comrade Mao Zedong expressing gratitude to Comrade Stalin for the enormous assistance rendered to China by the Soviet Union, and asked Comrade Stalin to receive the delegation.

After this, Comrade Stalin proceeded to discuss the questions raised by the delegation.

1. ON CREDIT. Comrade Stalin said that the CC of the VKP(b) has decided to extend to the CC CPC a credit of 300 million dollars. In this connection, he remarked that such an agreement between two parties was being concluded for the first time in history.

The credit of 300 million dollars at one percent annual interest would be provided to China in the form of equipment, machinery, and various kinds of materials and goods in equal installments of 60 million dollars per year over five years.

Repayment of the credit by China would occur over ten years after full disbursement of the credit. At this point, Comrade Stalin mentioned that Comrade Mao Zedong, in a telegram addressed to him, had expressed the view that 1% annual interest was too low for such a credit and that it should be increased.

Comrade Stalin explained to the delegation that the Soviet Union had extended credits to the countries of Western democracy (the countries of Eastern Europe — Ed.) at 2% annual interest, but only one percent was being charged to China because there, unlike the countries of Western democracy where there is no war and their economies have already recovered, war is ongoing, devastation continues, and therefore China requires greater assistance on more favorable terms.

Then Comrade Stalin said, laughing: Well, if you insist on a higher interest rate, that is your affair; we can accept a higher rate.

Regarding the signing of the credit agreement, Comrade Stalin said that there were two options: the first — to have representatives of the CC of the VKP(b) and the CC CPC sign the agreement; the second — to have authorized representatives of the Soviet government and the government of Manchuria, which already exists, sign it, with the understanding that subsequently, when an all-China democratic coalition government has been created, the agreement would be formalized by treaties between the governments of the Soviet Union and China.

2. ON SPECIALISTS. We will provide specialists, said Comrade Stalin. We are prepared to send the first group you have requested in the very near future. But we need to agree on the terms of their maintenance. We believe that payment may be in the form of food supplies, if you provide them to your own specialists, and should be at the level of the highest pay of your best specialists — no lower, but also no higher. In connection with the fact that our specialists have high salary rates, we will, if necessary, make supplementary payments to them at the expense of the Soviet state.

We ask you, said Comrade Stalin, to report to us about the bad behavior of any of our individual specialists, if there should be any, for as the saying goes: every family has its black sheep; among good ones a bad one may turn up.

Bad behavior would disgrace the honor of the Soviet state, and therefore we will take measures of prevention, education, and, if necessary, punishment.

We will not permit Soviet specialists to look down upon Chinese specialists and the Chinese people or treat them with contempt.

In response to these words of Comrade Stalin, Comrade Liu Shaoqi said that there were foreign specialists in China not connected with the activities of the imperialists and that they received salaries much higher than Chinese specialists. To which Comrade Stalin replied: we, the Soviet state, have our own views and procedures, different from those of capitalist countries, and we wish to adhere to them.

3. ON SENDING SPECIALISTS FOR SHANGHAI. Comrade Stalin said that we have selected 15 specialists and can, at your request, send them at any time. Discuss this and let us know. In general, you should bear in mind that in large cities, and especially in Shanghai, there are many of your own specialists and skilled workers who are capable of rendering you no less, and perhaps greater, assistance than Soviet specialists, and therefore you must draw them into active work.

4. We are also, said Comrade Stalin, prepared to assist you with the demining of the waters near Shanghai, both with specialists, of whom we have many, and with minesweepers.

We could, for example, sell several minesweepers to the government of Manchuria, train Chinese sailors in Dalian, Port Arthur, or Vladivostok in the art of demining, and the Manchurian government — said Comrade Stalin, laughing — could "sell" them to the central government.

5. ON XINJIANG. Comrade Stalin said that the occupation of Xinjiang should not be delayed, because delay could lead to British interference in Xinjiang's affairs. They could activate the Muslims, including Indian Muslims, to continue the civil war against the Communists, which is undesirable, since Xinjiang possesses large reserves of oil and cotton that China urgently needs.

The Chinese population in Xinjiang amounts to no more than 5%; after the occupation of Xinjiang, the percentage of Chinese population should be brought up to 30%, through resettlement of Chinese for the comprehensive development of such a vast and rich region and for strengthening the defense of China's borders.

In general, said Comrade Stalin, in the interests of strengthening China's defense, all border regions should be settled with Chinese.

You, said Comrade Stalin, overestimate the strength of Ma Bufang (commander of the Guomindang group of forces in northwestern China — Ed.); he has cavalry, which is very easy to defeat if you have artillery. If you wish, we will give you 40 fighter planes, which will help crush and scatter this cavalry very quickly.

6. ON THE NAVY. China does not have its own navy, said Comrade Stalin, and immediately added: you seem to already have, through captures from the Guomindang, a certain number of ships?

China must have a navy, and we are prepared to help you create one. Right now, for example, we can raise sunken military and commercial vessels and help repair them.

As for your request to strengthen the defense of Qingdao, we can send our squadron to the port of Qingdao, after the creation of an all-China government, on a visit.

7. Comrade Liu Shaoqi thanked Comrade Stalin for the enormous assistance being rendered at present in all areas of China's life and activities, on exceptionally favorable terms unprecedented in history.

He also emphasized that the CC CPC had drawn up instructions that would be distributed to party organizations on creating such working conditions for Soviet specialists that no one would offend them.

8. Comrade Stalin said that we too would draw up similar instructions for Soviet specialists, so that they too would not offend Chinese specialists.

9. In response to the request of the Chinese comrades to establish air service between Moscow and Beiping, Comrade Stalin said that we are prepared to proceed right now with organizing this air route.

We can help you build an aircraft assembly and repair plant; we can give you fighters of the latest (the word "latest" was crossed out by Stalin — Ed.) types — Czech if you wish, or Russian — so that you can train your own aviation cadres on them.

10. Comrade Stalin agreed to the delegation's request that the Politburo hear their reports on the military-political and economic situation of China and exchange views on a number of vital questions whenever they are ready, in three to four days.

11. Comrade Stalin said that we are prepared to give you comprehensive assistance in studying the state apparatus, industry, and everything else that you desire, but for this purpose it would be necessary to legalize you, calling you a trade delegation from Manchuria.

12. If this suits you, then we will publish a notice in the press that a trade delegation headed by Comrade Gao Gang has arrived in Moscow, and then you will have broad opportunity to inspect everything, including any entertainment establishments.

The Chinese comrades asked to be given the opportunity to respond after they had consulted with Comrade Mao Zedong.

Ledovsky A.M. The USSR and Stalin in China's Destiny. Documents and Testimonies of Participants in Events 1937-1952. Pp. 85-88.

AP RF. F. 45. Op. 1. D. 329. L. 1-7.