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the blow it might strike at public confidence Hong Kong. Since May your reports have indicated that the position of the Government vis-a-vis the
local communists has improved. We should be grateful to know whether, provided the sequence
of events discussed in our telegram under reference were to materialise, and thus give hope for some improvement in our relations with China
and subject also to the point in paragraph 3 below, you would still see the same force in the objections to an early release of Hspeh and Lo, or whether you would then be prepared to consider an act of clemency in their respect. In November
+
in any case a decision will have to be taken about the remission of Hsueh's sentence. entence.
Even if
Mr. Grey had not been released by then, there would appear to be strong arguments in favour of letting Hsueh out with full remission. There is possibly therefore something/to be said for ́trying to make some use of him as a bargaining
counter while we can.
3. There would of course be the problem of ensuring that any act of clemency on your part covering Hsueh and Lo one would in fact achieve the desired result of Mr. Grey's release. Unfortunately it seems unlikely that we could obtain any firm undertaking from the Chinese. If we were to ask the Charge d'Affaires in Peking to put the proposition to the Chinese that Hsueh and Lo be released immediately in Hong Kong in return for the release of Mr. Grey, the most that we could expect would be some vague form of words indicating that they might be prepared to consider this; but it is almost certain they would not be prepared to go further. We imagine that, like us, you would be reluctant to use NCNA in Hong Kong to probe Chinese intentions, particularly when members of their own staff were directly involved. The covert channeis which have been tried in the past, whatever the besults they might yield in the long term, are-
/ unlikely....
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