CONFIDENTIAL

B. U.K./China Relations

The Foreign Secretary sent a message to the Chinese Foreign Minister,

which was delivered on 2 September. Its purpose was to lower the

temperature after the attack on the British Mission in Peking by proposing

discussions on the future of the British and Chinese Missions in Peking

and London. No reply has yet been received.

2.

The initial reaction, at official level, when the message was handed

over, was that an improvement in Anglo-Chinese relations must depend on

our policy in Hong Kong, in particular the acceptance of the Chinese

donands made when the disturbances began in May.

3. The fact that no reply has been received may be encouraging as an

indication that there are doubts in the Chinese leadership about the wisdom

of an outright rejection or a simple re-statement of demands about

Hong Kong. Once compliance with the demands had been made a formal

condition for any improvement in Anglo-Chinese relations it would have been

extremely difficult to make progress, since we could not have complied nor

could the Chinese have backed down.

4. There has been a slight improvement in the position in Peking.

Partial wireless communications have been restored and British couriers

have visited China without incident. It is likely that some repairs to

buildings will be possible though we shall have to pay for then. As regards

staff, there has been no response to requests for exit visas for women and

children or for ten persons requiring medical attention.

children on holiday have, however, boon allowed to leave.

Lovenent on members of the Mission remain very stringent.

5.

Five school-

Restrictions on

Preliminary consideration has been given to the possibility of putting

pressure on the Chinese by curtailing trade or freezing Chinese sterling

balances in London. Both courses prosent greet difficulties and are

unlikely to be effective.

Other possible measures seen equally

CONFIDENTIAL

/unpromising.

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