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HONG KONG TELEGRAM NO. 387 TO FOREIGN OFFICE

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WIS

ON THIS OCCASION NOT TO PURSUE THIS FURTHER ON THE LINES

OF MY TELEGRAM 344. CONTACT THOUGHT THE SUGGESTION WORTHY OF LATER

CONSIDERATION.

CV) CONTACT CLAIMED THAT WHEN LI HAD FIRST APPROACHED HIM ON THIS

MATTER, LI HAD BEEN MOST ANXIOUS THAT TALKS SHOULD SOON BE

STARTED BUT THAT AT LI'S SECOND MEETING WITH CONTACT LI HAD STRESSED

THAT THERE WAS NO GREAT NEED TO HURRY. LI APPARENTLY EXPLAINED

HIS EARLIER ENTHUSIASM BY SAYING THAT ORIGINALLY THE HOPE WAS

THAT SOME BRITISH BUSINESSMEN MIGHT BE INVITED, AS A GESTURE, TO

ATTEND THE CANTON SPRING TRADE FAIR AFTER MEANINGFUL TALKS IN HONG

KONG HAD STARTED. (COMMENT. THIS EXPLANATION OF THE ANXIETY THAT

LI IS SUPPOSED TO HAVE SHOWN IS SCARCELY CREDIBLE: IT IS POSSIBLE

THAT LI HIMSELF, OR PERHAPS HIS SUPERIORS IN PEKING, FELT THAT THEY

WERE APPEARING OVER ANXIOUS FOR SOME FORM OF SETTLEMENT AND THERE-

FORE DECIDED TO ADOPT A MORE CASUAL APPROACH).

5. DURING DISCUSSIONS CATER TOOK THE OPPORTUNITY TO STRESS THAT

ANY DISCUSSIONS WOULD BE TWO-WAY AND THAT WE WOULD HAVE REQUESTS

OF OUR OWN TO PUT FORWARD INCLUDING SUCH AS:-

(1) AN UNDERTAKING TO GET THE LOCAL COMMUNIST PRESS UNDER

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PROPER CONTROL, OPERATING WITHIN THE LAW AND ESCHEWING ALL SUBVERSIVE

ACTIVITY:

(11) PROPER TREATMENT OF ALL BRITISH NATIONALS IN CHINA:

111) THE EMPLOYMENT IN NCNA OF MODERATE PEOPLE WHO COULD BE

RELIED UPON TO REPORT ACCURATELY UPON EVENTS IN HONG KONG.

CONTACT FULLY ACCEPTED THE REASONING BEHIND (111) AND HIMSELF

STRESSED THAT SOMETHING SHOULD BE DONE TO IMPROVE THE LEADERSHIP

IN THE NCNA. HE FELT IT WOULD BE QUITE FATAL TO ALLOW THE DISCUSSIONS

TO GET INTO THEIR HANDS.

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THE POSITION NOW IS THAT THE CONTACT WILL BE REPORTING BACK TO

LI CHOH-CHIH. CONTACT STATED THAT HE WOULD PREFER TO SAY NO MORE

THAN THAT HE HAD HAD AN UNOFFICIAL GENERAL DISCUSSION WITH CATER

/ WHO HAD

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