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After prolonged negotiation (10 neetings over 25 days) it was agreed

that the bridge would be re-opened and an ex gratia oward of come

IX $ 75,000 paid to Chinese farmera who had been unable to cultivate

their fields bocause of the closio; and that the three nolicemen

would be exchanged for five Chinese nationals who had been arrested

for various offences in british territory. The British Inspectos.

hed already escaped after being detained for 30 days and succeeded in

finding his way back to the Colony, The talks demonstrated that the

Chinese were prepared to negotiate on practical problems whogo the

interests of their nationals wore involved. It also demonstrated

that tactically it was unaise to concede Chinese demands too quickly.

After we had done this, the Chinese deliberately delayed proceedings

and put forward sizeable claims for compensation using our desire to

terminate the negotiations as a means of pressure.

Communist Frisoners

8. The Chinese Javo medo it clear that they attech particuler

importance to the release of prisoners arrested in the course of

"confrontation".

At present there are 655 prisoners who have been

sentenced and are serving prison teras.. These include two Tew China

News Agency reporters (the arrest of shon resulted in the detention

of Er, Grey, Reutera correspondent in Pexing), 11 other comunist

journalisto, and 7 so called "patriotic newspaper workers", In

addition there are 52 persons deteined under emergency regulations

who have not been tried mainly because though they are known to have

been inglicated in disturbances adequate evidence is not available

against them.

9.

de have indicated to the Chinese that we should be progared to

/"release

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