Comments on the Report Concerning British Reactions to Our Cancellation of Export Contracts [I]
(February 19, 1959)

Comrades Enlai and Chen Yi[2]:
Why has this policy been adopted, and is it beneficial? Please investigate the matter and inform me. I look forward to your reply.
Mao Zedong
February 19

[I]
The report, sent by the Commercial Counsellor of the Chinese Mission in the United Kingdom to the Ministry of Foreign Trade and the Ministry of Foreign Affairs on February 14, 1959, states that the Shanghai Native Produce Company had concluded a transaction with a British firm for approximately 2,000 tons of frost yellow cotton. Recently, the company cancelled the contract on the grounds that the government had not issued an export licence, an incident that has drawn widespread attention and comment from various circles in Britain. In external contacts, our Mission generally does not provide explicit explanations for issues similar to the above, nor does it emphasize transport problems. On occasion, it appropriately points out that the development of trade must be premised on political friendship. For some clients, every effort is made to persuade them to accept the partial cancellation of contracts. We believe that if the extent of contract repudiation becomes too broad in the future, it will have an adverse political effect on us. We therefore suggest that domestic companies should, as far as possible, narrow the range of products and the scope of clients affected by non-fulfilment of contracts. When delivery is truly impossible, negotiations should be initiated with the other party to seek a resolution. An attitude of disregard will only foster antagonism on the other side, leading them to take actions detrimental to us.

[2]
Chen Yi was then Vice Premier of the State Council and Minister of Foreign Affairs.