Reference.........

On the contrary the Chinese have returned promptly some yachtsmen who strayed into Chinese waters around Hong Kong and our fears that a British businessman (Mr. Crowe) might be detained in Peking

before Christmas were not realised. As regards the

chances of British businessmen in Hong Kong attending the Spring Canton Trade Fair, the S.B.T.C. remain optimistic that the ban will be lifted on this

occasion. There are no signs that the Chinese are

discriminating against us commercially. On the contrary our commercial relations both here and in Peking are cordial.

7. The main act of discrimination has been the

curtailment of travel by members of our Mission outside Peking. A comparison of the dates of our representations in December on behalf of British subjects and the dates when applications were first refused suggests that this was a direct act of retaliation signifying Chinese displeasure at the way in which we had deliberately raised the temperature. Mr. Denson also suggests that our recent publicity campaign about the treatment of Mrs. Martin and

Mr. McBain would also have irritated the Chinese.

fact this campaign was a flop and I doubt whether the Chinese would have noted any additional effort above the usual coverage given to this subject in the British press.

In

We are not aware that there has been

any significant foreign news coverage. On the whole, therefore, my assessment of recent events is that relations remain as poor as ever but that it is difficult to argue that there has been a noticeable

deterioration. The Chinese do not want to put the clock back but they seem to have no enthusiasm at the

moment to move forward.

8. Mr. Denson concludes with a number of recommen- dations for future policy.

(a) The chance of the Chinese agreeing to the

confrontation prisoners being "returned to China"

is virtually nil If we raised this with the Chinese again it would be largely for the benefit of relatives and possibly Parliament if we were prepared to announce publicly that we had done so. We would have to decide whether the offer should be made through "Contact" in Hong Kong or diplomatic channels. Timing would also be

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