SECRET

Hong Kong telegram No. 98 to Commonwealth Office

-3-

ろ。 Despite progress in forming 'revolutionary great

alliances' in Kwangtung Province, travellers continue to

report clashes in the suburbs of Canton City and some

outbreaks of fighting in the rural area.

4.

There is nothing to indicate that the incident following the arrest of a Communist lorry driver was anything other than a spontaneous demonstration by lorry drivers who are normally concentrated in the area. However, it does highlight the fact that, despite the present Communist policy of non- violence, any action by police or any other Government department to enforce the law against Communist supporters can lead to violent reaction from the more militant elements. The attitude of the Communist representatives during the most recent visit to the Labour Department could also portend increasing hostility on the part of such groups. Clearly the protest visit to police headquarters reflects the current drive by local Communist leaders to persuade their followers that they have little to fear from the police and that the unions are regaining their pre-confrontation status.

5. While the stories concerning alleged negotiations in Peking continue to circulate in Communist circles and obviously the account given to the bus workers could have serious repercussions (paragraph 1(d) above) there are indications that they are being discounted by some local Communists.

6. It is too early to assess fully the significance of the return of senior local Communist leaders but it seems unlikely that it will result in any drastic change in confrontation activity, pending the current view by Peking of the situation here.

Commonwealth Office please pass Washington as my telegram No. 13 and Canberra as my telegram No. 6.

Sir D. Trench

[Repeated as requested]

[Copy passed to Cabinet Office]

FILES C.O.

H.K.D.

I.G.D.

F.0.

F.E.P.D.

J.I.P.G.D.

J.I.R.D.

Sir A. Galsworthy

Mr. Hall

P.S. to Lord Shepherd

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F.E.D.

O.L.A.

O.P.A.

Mr.Wilkinson

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