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boycott of ships which have called at Hong Kong. In the first instance this will result in delays in cargo bound for China.
(f) A continuation of anti-British propaganda in the local Communist press which has made exaggerated claims about the effects on the economy of Hong Kong of strikes by seamen and other workers, propaganda from China has condemned police action in Hong Kong and one People's Daily article, reporting the arrest of a man in the Kowloon walled city, claimed that this area has always been under Chinese jurisdiction.
(g) Despite disruption of railway services supplies of food have been maintained at a satisfactory level by road and sea.
2. Police action, in some cases assisted by military forces, has continued against Communist organisations, largely as a follow up to reports of the involvement of Communist unions in organising the planting of bombs. These operations have yielded quantities of offensive weapons, inflammatory posters and, in some instances, documents of intelligence interest. The Communist leadership has still not surfaced and overt activities in many left wing organisations have been brought to a standstill. Union members have, in many cases, been instructed to stay at home; employees of Communist film companies have been given indefinite leave; and the detailed schedule of activities planned in the Communist schools for the summer holidays have, to a large extent, been abandoned.
30 Morale in Communist organisations remains very low despite further Chinese donation of funds, This gift arrived at a time when there was increasing evidence that local Communiat funds were getting low. Many of the rank and file feel that China should give more tangible evidence of support than has been forthcoming so far.
LL. 4 Reaction from China to the offensive moves made by Government is still very slight and has been confined to denunciations over the radio, in the press and a perfunctory reference in a long speech by the Acting Chief of Staff of the P.L.A. to the effect that "we must resolutely support the compatriots in Hong Kong in their struggle against the British authorities". This was coupled with the usual reference to liberation of Taiwan. No reference was made of liberation of the Colony, possibly indicating that there has been no change in China's policy of physical non-intervention. It seems likely that the chaotic situation in central China and Canton has distracted attention from the local scene, at least for the time being. Nevertheless, there is still no indication whatsoever that the local Communist leadership intends to abandon its policy of confrontation with the Hong Kong Government.
5. The border situation remains tense, but C.C.A. still seem willing ultimately to exercise their authority effectively. The danger of an incident getting out of hand if firearms are used remains.
(Passed as requested, and as advance copies to F.E. Dept.
(F.0.), Mr. Glover News Dept. (0.0.) and Private
Office for Commonwealth Secretary)
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