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in its foreign exchange position.
On the other hand,
whilst the colony can find alternative sources of supply, these apart from the local farmers and pig-raisers, cannot be tapped at short notice. Consequently there will be a shortage of some types
of foodstuffs over the next few days resulting in a rise in price of such food as is available, There are reserves of most essential foods in the colony, however, and no more inconvenience should be experienced than during the period of a prolonged typhoon,
4.
There has been continued talk in communist organisations throughout the week of a mass funeral procession but there is still no evidence that the communist leadership wish this to take place.
A number of memorial services for workers who have died in the confrontation have taken place inside individual communist controlled premises throughout the week and it could be that this will be the limit of their endeavours in this direction, at least for the time being. Meanwhile, the bodies of the workers are still in the Government mortuary.
5.
There have been further indications from reliable sources that the local communist leadership believe that, to a large extent, they will have to rely on their own efforts to achieve success in the confrontation. This appears to be borne out by Chou En Lai's speech and the latest C.P.G. protest Note both of which were strongly worded but contained no new threats. The resuscitation by the C.P.G. of the original demands indicate that it is not prepared to allow the confrontation to die and this protest Note will undoubtedly encourage local communists to continue their struggle but its aim may have been to bring the dispute on to the normal diplomatic network and thus incidentally to indicate to the contending parties in Hong Kong that it is basically a matter for London and Peking to settle. It is notable in any case that, contrary to the pattern in Macao, no new demands have yet been added to the original five.
(Passed as requested with advance copies to
Foreign Office (F.E. Dept.) and Commonwealth
Secretary's Private Office.)
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