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77. The Federalist leaders were a more miscellaneous collection, from the altage and powerful Prime Minister of East Inge47 (Ana&8 Agoeng Gde Agoeng) to the playboy Sultan of Pontianak from West Borneo. The talk was less satisfactory than that with the Republicans, since the Federalists had not reached agreement among themselves and were inclined to watch each other and stall. Like the others, they said that the objective was the setting up of the United States of Indonesia. They had no objection to dealing with the Republicans as a Government, but the Republic must be treated on a par with the other States and not given a preferential position. Also, there must be free elections in the Republican area, as elsewhere: the Republicans had as yet no popular mandate. They disliked the revolutionary approach and centralist ten- dencies of the Republicans, but thought a Constituent Assembly could, without difficulty, agree upon a Constitution. They resented foreign interference in Indonesian affairs, and also the fact that they had not been permitted to express their views before the Security Council.
78. As Sir F. Shepherd said, in a telegram sent off at the time, the impression given by their talks was discouraging and disappointing. All parties seem to want, broadly speaking, the same thing; yet no one makes any positive move towards it. The Good Offices Committee (as it then was) had neither the capacity nor the prestige for this in fact its members made a very poor impression on me. And neither Soekarno nor Sjahrir is a Nehru, nor Beel a Mountbatten. Also, the Netherlands Government, unlike His Majesty's Government, are living in another age. The Netherlands diplomatic and consular representatives whom I have seen on this journey are, with one or two exceptions, a poor lot; and they seem to love talking about the days of Queen Victoria.
H.-Bangkok: 1st-4th February, 1949
79. In Siam the teeming tropical life, vegetable and human, seems to reach a climax. Bangkok, too, has a charm of its own as the centre of a river civilisation.
80. Here, from the point of view of British interests, there is a more cheer- ful tale to tell. His Majesty's Ambassador (Sir G. Thompson) gave me an outline on the day of my arrival. He believes that the general approach to the Siamese should be one of friendship and courtesy. Rough measures will not pay. The present Government is well disposed and there have been no real troubles with Siam since the war. British firms are doing well. Contracts are coming our way. 70 per cent. of the cars imported are British. British interests in the import- export trade, in tin and in teak, are on the whole respected. Our information services obtain ample coverage for British news. Our action in India has enhanced our good name and has opened out the prospect of an extension of British influence in South-East Asia. (Sir G. Thompson was only one of several who made this remark to me.) The country is at present prosperous, though this prosperity may not be very firmly based. A record rice shipment is expected this month. It was pointed out to me, however, by a number of informants that there are darker aspects of the situation. The Government is a usurping oligarchy, not popularly based. The country is faction-ridden and both civilian and military elements might cause trouble. There is waste and corruption. And there is the Chinese question, growing Chinese nationalism directed against Siam among other places, acting through the local Chinese communities.
81. The Ambassador does not think that the Siamese are to be counted upon to resist incursion or attack from Communist China. As is their wont, they will bow to the storm and trust to their diplomatic agility to secure their survival, as so often in the past. On the other hand, they could probably deal with an internal outbreak, though they may need arms from abroad. There was little Communism among the Siamese themselves. It was through the Chinese Community that Communism would come. All Sir G. Thompson's colleagues whom I consulted on this point share these views.
82. I asked a number of people, including foreign representatives, what was or would be the reaction of the spread of Communism in China on the Chinese community in Siam. The general view was that the rich Chinese would have primary regard for their own interests and would sit on the fence as long as they couge 4ff7 the Biamese Government took a strong and Communist line, they might support the Government, but that support would be precarious because the
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rich Chinese depended in the last resort on the coolies and other workers and f thes would be under strong Communist influence. There are signs that the spread of Communism in China will bring about a new wave of Chinese nationalism among the Chinese Communists in South-East Asia, and that the Chinese in Siam will take this opportunity to get back at the Siamese in revenge for past slights and oppressions. His Majesty's Ambassador suspects that the Siamese are conscious of this, and that it is this that has recently brought the Siamese Government to collaborate actively with the Malayan authorities against Chinese bandits on the Siamese Malayan frontier.
83. I was entertained to dinner by the Foreign Minister (His Serene High- ness Prince Pride Debyabongs), who was profuse in his asseverations of friendship for Great Britain. I also met, both in his office, and at dinner at the Embassy, the Prime Minister (Marshal Phibun Songgram), whose mild and disarming manner masks a ruthless ambition. At his suggestion, after dinner, we had a long talk with Mr. Norman Young of His Majesty's Treasury (also on a tour of the Far East) and Mr. Doll, Financial Adviser to the Siamese Government about the vexed question of the Siamese gold and compensation claims.
84. In order to see something of the mainstay of life in South-East Asia, I went to see a rice-mill by the riverside. Here paddy was coming in by boat as it leaves the farms; sampled for quality; dehusked; cleared of the bran; polished; graded for quality, whether for export or home consumption; put up in 240 lb. sacks and carried by coolies down to the river again for despatch. În heat and
In dust and among perspiring humanity the machinery has been chugging away since it was shipped from Glasgow in 1895.
I.-Hong Kong: 4th-8th February, 1949
85. Hong Kong, like Singapore, gives an intense feeling of pride in British achievement. It has made a remarkable recovery in prosperity since the occupa- tion. Its entrepôt trade is about three times the value and about the same in volume as before the war, though statistics are difficult to evaluate since so much of the trade with China passes through illicit channels. Trading, lawful or un- lawful, is in the Chinese bones. Hong Kong is an example to show what can be done in the economic field in this region if law and order prevails, if there is a just and efficient administration, a stable currency, and facilities for the expedi- tious and safe handling of goods. It has re-established and extended its trading connections throughout the Far Eastern area. A good many Shanghai firms are now moving to Hong Kong. So long as there is no rival free port in the area- and there is no prospect of this and so long as political troubles leave it untouched, Hong Kong's commercial future seems secure.
86. In Hong Kong, as in South-East Asia, the thought is all of China. Mr. Sebald, General MacArthur's Political Adviser, asked me in Tokyo whether anyone in South-East Asia was thinking of Japan. I said that most people seemed to have put Japan firmly in the back of their minds as a problem that did not need to be bothered about for the time being: but it might be different in Australia.
87. At the suggestion of the Governor (Sir Alexander Grantham) I made a tour of the New Territories on the mainland, accompanied by Mr. Heathcote- Smith (the Governor's Foreign Service Adviser), the District Commissioner and the Commissioner of Police. We drove round the perimeter along the frontier with China and visited the police posts from which a watch is kept for refugees and smugglers. We also looked at the so-called walled city of Kowloon, a very tumbledown place, the scene of the recent incident.
88. The Governor kindly put us up at Government House (rebuilt by the Japanese and redecorated in exquisite taste by Lady Grantham). We naturally talked about China. The chief danger to Hong Kong would be a united China, whether Koumintang or Communist. So long as China was in turmoil, there was no immediate threat. There had as yet been no appreciable influx of Chinese into Hong Kong as a result of recent troubles, apart from a number of rich men. Since November last the population of Hong Kong had increased by no more than 11,000. There had so far been in South China no large movement of armies or displace- ment of peasants from their homes. As to the future; he thought, a generally held
iew was that the Commuhis would, in the initial stages at ang defe, and
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moderation It was not certain that they would depart from this policy, but it would be prudent to assume that they would. Most people who knew China were reluctant to believe that the Chinese people would be communised on the Soviet Russian model. This did not mean that Mao Tse-Tung and his associates were not Kremlin indoctrinated and directed.
89. He drew a contrast between the Hong Kong Chinese and the Straits Chinese. The former had much closer links with China and were less con- sciously or loyally British subjects. As the Governor of Singapore had told me, many Straits-born Chinese as well as Malays had behaved with great courage and loyalty during the Japanese occupation. One of the chief officials of the Colony told me that in Hong Kong the general Chinese view was that Hong Kong should be returned to China, but not for about forty years, that is to say,
not in my time." If Hong Kong became Chinese, many Hong Kong Chinese would make for the Straits to be under British rule again.
90. The Hong Kong Chamber of Commerce entertained me to lunch and I had talks, then and on other occasions, with leading members of the British Commercial Community. They were rather more optimistic about prospects in China than their Shanghai colleagues proved to be. One of the more cautious said that there were two certainties: first, that Mao Tse-tung and company were Kremlin inspired; secondly, that the mass of the Chinese people were indi- vidualists. What would be the result of the impact? He felt in his bones that in the long run the latter would prevail, and that even in the short run there would be chances for foreign business. Generally, they thought that the decisive factors would be the lack of competent officials; the ineradicable Chinese prone- ness to graft as soon as money passes through their hands; the invincible Chinese determination to carry on private trade, lawful or unlawful; the age-long Chinese spirit of compromise; China's need for foreign trade, foreign assistance, foreign capital, which Russia could not supply; the obstinate refusal of the Chinese to be dominated by foreigners. They agreed that these were long-term considera- tions, but thought that the chances were good enough for us to stay in China and trade so long as we could.
91. His Majesty's Consul-General at Canton (Mr. G. F. Tyrrell) and Mr. Cobhill, His Majesty's Ambassador's representative at Canton, came to Hong Kong to see me on Sir R. Stevenson's instructions. I need not record all our conversation. Mr. Tyrrell thought there was substance in the view of the British Community, but did not think there was much comfort to be drawn for British interests. The Chinese, of whatever cast of thought, would always be nationalist and anti-foreign and there was little ground for optimism. On the other hand, there would in the long run be antagonism between Communism and Chinese nationalism. The Chinese nationalists might perhaps acquiesce in Russian domi- nation of Manchuria, but not of North China. For this reason it might well be Soviet policy to aim at getting a firm hold on Manchuria, at securing a Govern- ment in North China friendly to Soviet interests, and not to risk jeopardising these solid results by imprudent adventures in South China. Whatever the Chinese Communists might want to do, he thought that Soviet policy would be to act with caution and by stages.
92. I might record that I paid a call on the veteran Sir Robert Ho Tung (86 years of age by Western computation and 88 by Chinese), frail but still alert, alive to affairs and pleased to exhibit his possessions.
93. The Japanese occupation has left little obvious trace in Hong Kong and South-East Asia. Even in the minds of those Europeans who suffered the rigours and, indeed, horrors of internment, there is less bitterness than one might have expected. It is in the wider field of Asiatic consciousness that the Japanese have left their mark.
J.-Shanghai: 9th-11th February, 1949
94. Shanghai lives under menace and awaits its fate. The third most populous city in the world (about 6 million) has been cut off from most of its hinterland. Much of the rice, raw cotton and oil fuel on which it subsists has been paid for by E.C.A. If these American supplies are cut off the consequences would be disastrous. The Mayor (Mr. K. C. Wu) knows that he is fighting a losing battle big professes determination to playhi poy with the skill he
possesses.
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pl. had
His Majesty' a full programme at Shanghai. His Majesty's Ambassador R. (Sir R. Stevenson) came from Nanking to see me, bringing with him his Canadian, Australian and Indian colleagues, with all of whom I had separate talks. We all lunched together as guests of Admiral Madden in H.M.S. Belfast. I had talks with representatives of the Hong Kong and Shanghai Bank, the British Tobacco Company, Unilevers and other British concerns; with various specialist members of the Consulate-General staff, with Mr. Cyril Rogers, Financial Adviser to the Chinese Government, and with Bishop Houghton of the China Inland Mission. The British Chamber of Commerce entertained me to luncheon and I addressed them. I called on the Mayor (Mr. K. C. Wu) and met him again at dinner, with other Chinese notabilities, at the home of Mr. John Keswick of Jardine, Matheson, the leader of the British Community. I made a tour of the port of Shanghai in the Admiral's launch and visited the British-owned dockyard (which is doing good business), the British-owned Shanghai Waterworks (which is bankrupt), and the wool textile mill of Messrs. Paton and Baldwin, a model factory which is exporting products as far afield as West Africa. Such concerns have difficulty in obtaining foreign currency for the import of raw materials and other neces- sary supplies; and none of them can remit their profits (if any) to London.
96. His Majesty's Ambassador outlined the present situation to me and his recommendations for future policy. These will be familiar to the Department. He could not foresee how a Communist régime would behave to foreign interests. The Kuomintang had behaved scandalously in this respect. For this reason the British community had not definitely made up their minds what to do in the event of the transfer of Shanghai to the Communists. He thought they would stay and rely on their experience and skill to pull them through. Mr. Keswick. expressed similar sentiments to me and even spoke of the British Community as a kind of fifth column which might apply its skill, good name and contacts to develop and encourage the ineradicable Chinese passion for trade, even if the Communists came in. The Ambassador thought that the Kuomintang was finished and that its leaders would return to their home provinces to try for local settlements. He did not believe that the Chinese would ever finally acquiesce in Russian domination of Manchuria. The Russians had not yet broken with the Kuomintang and might perhaps be doubtful of their ability to make a favour- able deal with any new régime. It should not be assumed that the Soviet Govern- ment wanted Mao Tse-tung to sweep the country. They might prefer him to concentrate on North China for the present. This view was expressed to me by several of those I talked with. One of the more thoughtful Chinese whom I met thought that the Communists would try to make sure of the rice-producing area round Shanghai before taking over the city itself. By so doing they could ensure good supplies for a few weeks and give themselves time to negotiate for further supplies from abroad. One of my informants thought that the Com- munists would be no better able than the Kuomintang to maintain a stable currency; that without such a currency there could be no proper Government; and that whatever happened there was certain to be a period, perhaps a long period, of great suffering for the Chinese people, and serious loss for foreign firms.
97. I only found three people who believed that the Chinese Communists would succeed in establishing a régime of the Russian pattern in China. They were all Kuomintang officials-the Chinese Ambassador in Delhi (Dr. Lo Chia- Luen), the Ambassador in Bangkok (Dr. Hsieh) and the Mayor of Shanghai. They said it was wishful thinking to believe otherwise, and had little confidence in the power of the Chinese people to resist the new and ruthless techniques of the Communists.
98. I had an interesting analysis of the position from the Indian Ambas- sador (Sardar Pannikar) and this may be worth recording. This, he said, was the Chinese revolution, the culmination of a long process. It was a Marxist revolution and would follow a Marxist pattern, but not necessarily on Russian lines. There were three reasons for this. First, Russia had a land-locked economy, while China looked to the sea and depended on foreign trade and had intimate contacts with great Chinese communities overseas. Secondly, the Soviet revolution had been based on the urban proletariat and the leaders had seized the State machine and imposed the régime from above; in China, on the other hand, the revolution was based on peasants' councils, and would establish itself from below. Thirdly, there had been a State bureaucracy in Tsarist Russia, not a very good one, but it did govern the whole country, and the machine was at the disposal
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of the revolutionaries there was no such machine in China to facilitate the assumption of power throughout the country. This fecial Chinese brand of Marxism would have an appeal in Asia as a whole and would probably set the pattern for South-East Asia and perhaps even India. There was no trace of liberalism in it. Except perhaps in India, liberalism had made no impact in Asia. For this reason, Indian Socialism might differ from Chinese and have affinities with the Labour Party, which was rooted on the liberal tradition of the trade unions and nonconformity. The basic problem for Asia was food, not democracy. It was worth noting that Mao Tse-tung was better known and more often quoted in South-East Asia than Stalin. (He instanced a recent statement by Thakin Nu.) Mao Tse-tung had recently said that for the next 30-40 years, a bourgeois-socialist kind of revolution would be best suited to China.
99. In view of the above, he thought that the United Kingdom policy of non- intervention and watchful waiting had been very wise. It was essential to avoid showing hostility to the new régime. Our line should be that we would respect their interests if they would respect ours. Trade and passably good relations should be possible, and our people were right to stay.
100. While I was in Shanghai I heard that the Northern Chinese had put out feelers to Butterfield and Swire and to the British American Tobacco Company for some resumption of trading and industrial operations, and that a barter deal (coal for flour) had been concluded between the Kailan Mining Administration and Shanghai. The Peking branch of the Hong Kong Bank was open and doing business, and in touch by telephone and telegraph with the office in Shanghai. These are possibly straws in the wind.
101. His Majesty's Ambassador told me that in reply to questions from British firms, he said that there could be no objection to the resumption of trade, with the North, but that it was for the firms themselves to assess the risk and take their own decisions. They were in the best position to judge.
102. Mr. Keswick made two main points when I talked to him. The first was the necessity for Anglo-American collaboration in the Far East and South-East Asia, and the marriage of resources and brains. This was as essential as in Europe. The second was that the British community in Shanghai were traders first and foremost, and proud of it. They would stay in Shanghai as long as they could and use every resource of skill and experience to maintain British interests and prestige. They would maintain a united front for this purpose. If they wanted help, they would ask for it, and he thought they deserved it.
103. Within a few weeks of his arrival and although new to China, His Majesty's Consul-General (Mr. R. W. Urquhart) has established himself as the trusted leader of the British Community and of the Consular body in Shanghai. From all sides, I heard the warmest tributes paid to him.
K.-Tokyo: 12th-21st February, 1949
104. The United Kingdom is represented in Japan:-
(1) On the Allied Council, now moribund, by Mr. Patrick Shaw (Australia), who speaks for the Commonwealth. Mr. Shaw was away in Korea and I did not see him, but I had a long talk with his assistant; and Mrs. Shaw kindly gathered some people together to meet me.. I had some talk with the Russian member (General Derevyanko), and the Chinese (General Shang).
(2) In the occupation, by Lieut.-General Robertson (Australia), commanding British Commonwealth Forces, now exclusively Australian. With the reduction of this force to between 2,000 and 3,000 men, General Robertson is over-graded for his job and has now little to do. This somewhat colours his outlook. I saw something of him in Tokyo. (3) Directly vis-à-vis S.C.A.P. (Supreme Commander for the Allied Powers), General Douglas MacArthur, by the United Kingdom Liaison Mission, headed by Sir Alvary Gascoigne, who is generally spoken of as the British Ambassador. Sir A. Gascoigne and his staff have established very cordial relations with S.C.A.P. and his assistants. General MacArthur and others spontaneously spoke to me in the warmest terms