that it was very wise indeed always to be careful when dealing with Fok
as he was a man with a very unsavoury past and was known even now for
his shady deals. Jay continued at some length giving considerable detail
of the way in which Fok had tricked the N.K.G. into believing that he
was the only person with whom the Chinese would be prepared to deal on
this matter of the sand. Jay said that Mr. Y.K. KAN had great suspicion
of Fok and at the time had nade enquiries of Jay as to the true
position: Jay had reported the situation back to Mr. Kan but apparently
Mr. Kan had been unable to persuade "the authorities" not to deal with
Fok. Jay said that the local communists had found the situation extra-
ordinary and difficult to understand, but in the circumstances, and
typically, had decided that if the H.K.G. were foolish enough to insist
on dealing with Fok then they would take full advantage of him hence
pressure had been brought on Fok to do certain things such as the taking
of a Hong Kong football team to Canton and, rather more seriously,
putting pressure on him to give financial support to the communists in
1967 to the extent of HK$1 million. Jay thought that the communists
would go on taking advantage of this situation just so long as Pok
remained the contractor for the Sand Monopoly. It was Jay's opinion that
when next the H.I.G. considered the renewal of Fōk's agreement, they
should invite others to tender: he had no doubt that there were several
other companies who would prove acceptable to the Chinese. Reverting to
the question of the increase in the price of sand, Jay expressed doubt
as to whether this proposition had been put to Fok by China Resources:
Jay said that a short time ago the suggestion had been made at a fairly
low level that Canton should increase the price of vater supplied to
Hong Kong but that this proposal had been turned down. According to Jay,
the Chinese are very anxious indeed about their supply of foreign
exchange - "you must remember that, although you may be anxious about
the supply of water or sand, they are even more anxious to obtain Hong
Kong dollars from you". It was Jay's opinion that if there had been any
mention at all of a price increase it would most certainly have been
mentioned first by Fok himself and at a very low level:
SECRET
/contd..
SECRET
I enquired as to why Fok should do this and Jay suggested that obviously
he was either intending to split the increase with China Resources or to
obtain further income for the Chinese with the intention of currying
favour. Jay promised to make enquiries about this but said that
undoubtedly, no matter what the position, he would strongly advise that
the H.K.G. should not meekly accept the increase but say to Fok that if
there were to be an increase then he should absorb it as part of the
cost of his own operations.
3.
South China Iron Works Land: I enquired as to the present position on
this matter. anay
Mấy said he expected to be bearing fairly soon from Peking: the
impression he had gained vas that Peking was quite pleased with the
offer made by the H.K.G. this in spite of an attempt by LI Cho-chih to
influence Peking against the proposal. Jay had been given sight of LI's
telegram to Peking in which details had been given of the proposition:
Jay had thought it most misleading for example, LI had said that the
H.I.G, vere offering $15 - $16 per sq.ft. for land which the H.K.G,
would probably sell for three or four times that amount: at Jay's
insistence LI had sent a second telegram giving the exact details passed
to him by Jay and just to make sue of the situation Jay had again sent a
copy of the proposal to Peking direct.
4.
Other matters discussed :-
-
(1) Jay reported that he had recently gone to the North Vietnamese
offices in the Bank of China to pay respects after the death of
President Ho Chi Mini he had been surprised and disgusted at the amount
of Chinese propaganda in the corridors leading to the North Vietnamese
offices. Later he had mentioned this to LI Cho-chih and suggested that
such blatant publicity might have adverse affect on foreigners visiting
the Bank of China: LI had replied that such a possibility had been
considered but it had been decided to proceed in any event - that there
could be no criticism From China of this tremendous display of Chairman
MÃO's Thoughts.
(2) Jay said that he had been a little surprised that recently at the
North Vietnamese 1st September celebrations II Pung had gone out of his
way to be pleasant to Jay and to ask whether from time to time he could
see Jay with a view to obtaining advice on matters generally. Jay did
not think that this vas simply a matter of courtesy on the part of Kei
"he is not that sort of man" but thought that Kai was probably working
to instructions.
-
(3) According to Jay, LI Cho-chih is becoming less and less popular with
Peking: Jay believes that it is now unlikely that LI will be promoted to
the senior post in the Ministry of Foreign Trade as was reported some
time ago.
(4) Jay said that a few days previously LI had spoken to him with a view
to Jay raising several points of complaint with the
SECRET
/contd...
B.I.G.
SECRET
Jay claimed that directly LI started off on his list of complaints
(concerning the licensing of teachers, the arrest of NG Yee, etc. etc.)
Jay had said that he was not prepared to pass this message on to me
until such time as he could see from the actions of local communists and
messages from Peking that there was "a real revival of desire" on the
part of the Chinese to improve matters. Jay said that LI had been rather
surprised at this rather tough line which he had adopted, but what LI
did not appreciate at that moment was that he (Jay) had recently been
asked by Peking to report fully on the present situation in Hong Kong,
together with recommendations as to how relation- ships could be
improved: Jay took this to be a sign of confidence in his own position
and an indication that Peking was not entirely satisfied with the way in
which local Hong Kong communists were progressing. Jay said that he had
yet to prepare his full report for Peking but that when he had given
further thought to the matter he would like a further discussion with
me.
5.
Talking generally of Sino/Soviet relations, Jay saw in the visit of the
Russian Premier to Paking an indication that CHOU En-lai and his
noderate group være beginning to gain ascendency: he did not think it
possible that Losygin would have been permitted in Peking if the more
nilitant group of CHIANG Ching and KANG Sheng had complete pover. Jay
said that he had not heard any further information concerning the visit
of CHOU to Canton but assumed that it was still intended that the Prime
Minister should visit the Southern capital soon.
6.
I mentioned to Jay the continuing problems being experienced on the
border and in particular the seriousness of the incursions into British
territory of Chinese vessels. Jay expressed some surprise that this was
still a problem as the last time he had mentioned it to local communists
they had appeared to take the matter seriously - sufficiently so to
report it to Peking. Jay said that certainly it had been his impression
that there had been a period of quiet after he had last forwarded a
complaint. He undertook to raise the matter again, and in particular to
mention it in his "full report" to Peking as being a matter which could
have serious consequences.
7.
Jay said that as of that date he did not believe that the communists had
been given firm instructions as to the way in which the 1st October
anniversary should be celebrated. Locally it had been assumed that
instructions would be similar to those of last year and they were acting
accordingly.
طن
20th September, 1969
c.c. Mr. Murray (P.C.O.
Mr. Denson (Peking)
D.5.1. H.S.G.
E.3.$.
(J. Cater)
SECRET
Mr. Murray
RE: E!V ́ ́D IN
REGILTHYN
24 SEP
WAR Mod is the
the Compliments of the
FEM 33. Political Aliudqr
31/3/
1/9/69
Hong rộng
равера
19 Mor Wilfad
Cam
Mr Wilson
Sef
TSX 4/6819/1
SECRET
10
Political Adviser
Mr. K.C. Jay telephoned me during the morning of Thursday, 28th August
asking whether I could see him fairly urgently: accordingly I arranged
to see him at 2.30 p.m. that afternoon.
2.
-
Jay started the conversation by expressing concern over the wages
dispute at the Fairwear Knitting Factory in San Po Kong. Be had been
aware for a day or two that the communists proposed making political
capital out of the dispute but only that morning (Thursday) he had
learned that two men from the Bank of Chiňa, who had been mainly
responsible for organising the workers at the Artificial Flower Factory
in San Po Kong in 1967, had been sent to help organise the workers at
Fairwear Knitting (Jay promised to give me the names of these two men
within the next day or so). Jay then asked whether the Chartered Bank
had been approached with a view to having then drop their claim against
the factory's assets "after all, $60,000 is such a small sum of money".
He proposed that, if Government found it embarrassing to speak to the
Chartered Bank in these teras, he personally would be pleased to speak
to Mr. David Millar, the acting Manager of the bank. Jay then expressed
the view that if Mr. Peter Grahan, the substantive Hanager, had been
present in Hong Kong, the Chartered Bank would not be pressing the
matter so firmly. I suggested that perhaps Hillar found himself in a
difficult position and probably there vere other creditors involved in
the action so that it would need rather nore than a withdrawal on the
part of the Chartered Bank: Jay said that his information was that the
Chartered Bank vere the main creditors and that if necessary he was
prepared to "tell them" to hold back. I queried this expression and Jay
further explained himself by saying that the Chartered Bank did a great
deal of exchange business through him with the Bank of China. I said
that I would pass his views and proposal on to the H.I.G.
Jay then said that he had something of the "utmost secrecy" to put to
me. Some years ago, when he was still with the Bank of China, Peking had
decided that the Bank of China should not show any interest in
"branching" in Hong Kong this decision had been made on Jay's advice and
had been the policy of the bank ever since. Recently the Bank of China
had suggested to Peking that it would be in their interests if the bank
were able to open branches in Hong Kong. Peking, according to Jay, had
replied to the effect that their previous policy decision must stand:
and yet, said Jay, his contacts in the Bank of China had only that day
informed him of the bank's intention to open a
service branch" in the ground floor of TAK SHUEN HONG in the Western
district. Jay claims that he had inmediately spoken to bank officials
reminding them of Peking's views on this matter but had been told that
the office in western district was not a "branch" in the normal,
accepted sense. Jay seemed quite agitated by this and said that he was
in the process of reporting it to Peking. The need for "atmost secrecy"
was that he feared that any leak on our part could at once be traced
back to him as the decision to open the "service branch" vas known to
very few people. He had already suggested to the Bank of China
3.
GS FT
/contd...
-
SECRET
official that if the bank proposed proceeding with their plan, then the
sooner other communist banks in Hong Kong vere töld of the position the
better: Jay thought that this would be vise of the bank in any event but
of course at the same time it would mean that people other than himself
outside of the Bank of China vere aware of the plans.
4.
I took the opportunity of saying to Jay that there vere two itens which
I should like to discuss with him:-
5.
(1)
(11)
Pig Laans: I passed to Jay the information you had given me that morning
concerning the background to this katter: he noted the position and said
that he would take an early opportunity of informing LI Cho-chih that in
his opinion the Urban Services Department action was quite reasonable
and that certainly laans would be well advised either to pay the
required deposit or give a banker's guarantee.
As requested, I informed Jay that the Police would appreciate rather
more co-operation from the management of the YIEN YIEH and KINCHENG
Banks - not that the management had been unco-operative but the Police
would be grateful for more direct contact with bank employees vhen
enquiries were being made. I said that the Police were putting a very
big effort into the enquiries and that I was aware that a squad of some
20 officers vas being employed full time on this. Jay said that he had
picked up some rather interesting information on the robbery: he had
received a message from Peking to the effect that they strongly
suspected that the KINCHENG Bank robbery was "an inside job" apparently
not necessarily an employee of the bank itself but somebody from
communist banking circles. In the circumstances, Peking thought it would
be highly embarrassing if local communists were to continue to criticise
the Hong Kong Police for lack of action only for it later to be revealed
that the person responsible vas a member of the communist banking
fraternity. Jay said that he expected a similar message would be passed
to LI Cho- chih within the next day or two.
As a follow up to the discussion of Police action and communist banks,
Jay said that in a recent conversation with POON Ching-hon (Deputy
Superintendent of the Bank of China) he had been told that the campaign
to win over some of the Police was "hotting up". I asked him what
precisely be meant by this and he replied that the campaign with the
Police was virtually a permanent one: that the communists were
constantly probing, trying to find weakness and attempting to win over
the Police to their point of viev. I was a little sceptical about this
and goaded Jay a little by saying that I thought this surely must be
utter nonsense: he replied rather heatedly that it was far from nonsense
and that already there were signs that the communists were being
successful. He said that, for example, with the announcement of the
anti- corruption bill, the communists had been in touch with many Police
/contd....
EORET
officers
SECRET
3
and suggested to then that, if they were to switch their bank accounts
and deposits to communist banks, the banks would guarantee complete
security. I asked how this could be done and Jay replied that firstly
the banks vere confident that the Police would not force their way into
the banks demanding to see books, and secondly that the Police accounts
would be kept in "safe accounts", which apparently is something similar
to the Swiss numbered accounts system. Jay said that the communists had
already had some success in this move and that they were now considering
tempting members of the Police still further with the offer of very low
interest loans.
6.
ne.
Referring back to discussions over the past few weeks, I reminded Jay
that on several occasions he had spoken rather mysteriously about "big
news" from Peking which would surprise
I asked whether he had any further information on this. Jay said that he
had but was reluctant to say anything because as yet there was no firm
information or evidence and he had no wish to mislead me. After further
pressure he said that the "stirring events" be had mentioned previously
were to do with a change of leadership. I said that I found it very
difficult to believe that Chairman MAO could be deposed: Jay looked
blankly at me for a while and then said that of course there could be no
question of the Chairman being deposed: that whilst he lived MAO would
be Chairman - what he was referring to was the "real leadership" of the
Chinese Government. I enquired as to who were the main contenders: Jay
said that there were several groups with differing points of view and
not just purists and revisionists: that the military were now taking à
very active part in the discussions and had been expressing very serious
concern over the state of the country. I asked whether CHOU En- lai and
LIN Biao were the main actors on the stage at the moment: Jay said of
course CHOU was always important but LIN Piao vas little more than "a
cypher" "only one of four Field Generals, and not the most important of
those". Jay said that senior people dealing with economics, trade and
industry were virtually "on strike" "sitting on their hands" and
demanding that positive decisions be taken on the future of China which
would enable them to proceed with economic planning. Jay said that
increasingly the views expressed from Paking were to the effect that
matters could not continue as they vere: that decisions had to be made
soon which would enable proper direction to be given to the Chinese
economy. I asked how such change in leadership could show itself,
particularly bearing in mind his comment that MAO's position as Chairman
was unassailable: that Madam CHIANG Ching was MAO's wife and it was
important at this stage presumably for China to show a solid front to
the outside world, jay said that in his opinion indications that the
struggle had been resolved would be the announcement of appointments to
certain key posts: later, if, say, the moderates, or as he preferred to
think of then "the realists" were successful, we should find that the
more militant leaders like Madan CHIAHG Ching and KANG Sheng would be
demoted in the hierarchy.
باتات
(J. Cater)
30h August, 1969.
c.c.
Mr. Marray (London)
D.S.B.
Mr. Denson (Peking)
H.S.G.
$.5.5.
SECRET
(Mimalay
Finante and Unt femer)
Mr. #17 ford
SECRET
Reference
FEHA 3/30/2
19
We know very little about Chen Yi's activities at present. The Rumanian,
Erbassy in Peking was advised to address its Invitations to Chen Yi as
Minister of Foreign Affairs so we assume that he is still the titular
holder of the office. Li Heen-Nien has been attending functions in the
He position of Minister of Foreign Affairs. headed the Chinese
delegation to Ho's funeral in Hanoi.
2.
Chen Yi's last recorded appearance was on 19 May when he was described
as Vice Chairman of the Military Affairs Committee, a post which he held
before the Cultural Revolution but which we thought was largely
honorific. During the Cultural Revolution Chen Yi was reported as saying
that he would like to leave the Ministry of Foreign Affairs and pick up
his military career again.
3. Jay'a remark that Lin Piao is having trouble with Chen Yi may not
therefore be as odd as it sounds if he is indeed playing an active role
in the Military Affairs Committee. Presumably he would represent the
point of view of the "pragmatists" with which he has been associated in
the past and could well be used by Chou En-lai as his link-man in
relations with senior military officers. This would be consistent with
the pattem which seems to be emerging in China at the moment of an
alliance between Chou En-lai and senior military officers in the Central
Committee as reflected in the tough line the army are taking with
dissidents in order to impose law and order and the prominent role which
Chou and his supporters appear to have played in the talks with Kosygin
in Peking on 11 September. A good deal of what Jay says on the general
struggle for power in Peking would seem to me to be speculative but his
sources would seem to endorse the trend I have mentioned above.
Jazy
(C. Wilson)
Far Eastern Department
18 September 1969
Thank
you.
Mr.
6-23/9
18%
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Mr. Murray
6/9/69
see morgnid
не
2x 16 Safe.
Mily Welford
176 144 18/9
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the Cantat
With the Compliments of the
Political Adviser
H
Đảng ông
+
- 19/0
1919
ра вигора
TSX 4/68
SECRET
Political Adviser
I arranged to see Mr. K.C. Jay at 3 p.m. on Monday, 1st September,
partly to seek latest advice on the question of pig laans and partly to
pass on comments made by H.E. in respect of the Fairwear Knitting
Factory vage dispute.
-
2. (a) Pig Laans: Jay said that he had now discussed this matter further
with LI Cho-chih and a representative from China Resources and that he
was now quite confident - although of course he could not be absolutely
sure that there would be no serious trouble if Government were either to
insist on payment of the deposit or alternatively to require a banker's
guarantee from the laans. Apparently LI had insisted that, as yet, this
matter had not been raised with him by local communists and that
therefore he could not regard it as being a "serious matter": Jay had
apparently suggested to LI that the H.K.G. proposals vere reasonable and
accordingly LI had accepted this assessment without serious query. The
China Resources representative had tended to say that this was entirely
a matter for NG FỪNG HONG and the laans to decide, but finally and
grudgingly accepted Jay's view that they, China Resources, had a real
interest in ensuring that there was no breakdown in the continued flow
of supplies to Hong Kong.
(b) Fairwear Knitting Factory: There was no need for me specifically to
bring this matter up as Jay, amidst the usual flurry of subject matter
at the beginning of the discussion,jave me the names of the two Bank of
China employees involved in the organisation of the Fairwear factory
workers (please see my previous report). In discussing the dispute in
general terns, I made the point to Jay that it seered to us in the
H.K.G., and to many others who have followed the dispute as reported in
the newspapers, that the communists were scarcely acting in the
interests of the workers by encouraging them not to accept offers of
legal aid: in the long run it seemed certain that the workers would also
appreciate this and feel that they had been misled by the communists.
Jay replied that if I really believed that the communists, and
particularly the two organisers, would be interested So anything other
than stirring up trouble for the authorities "then you are far too nice
a person". Jay said that the communists certainly would not care that in
the long run the workers would regret taking advice from the communists,
but so far as the communists were concerned they would have achieved
their objective if they had persuaded the workers to become anti-
authority even if only for a short while.
3.
Jay then treated me to another long discourse on the situation in China.
It is clear from the frequency with which he talks on this subject, and
the serious manner that he adopts, that he is very concerned indeed. Jay
said once again that the situation in China vas "really bad":" in terms
of lack of decisiveness and determination to provide much-needed
leadership, the situation was probably worse than at any time during the
last 20 years. The situation was very fluid and tending to change almost
from day to day. Information received from Peking
/contd.
SECRET
&
SECRET
I find this hard
be believe. Is there Crory other criteria
Har Cham Yo te shit 1- the act?
Which the
MW
Americans will the v. careful to
avoid
MW
over the week-end cast doubts even on his recent assessment that no
matter who won the power struggle, MAO would remain Chairman. Jay
remains, of course, an admirer of Prime Minister CHOU En-lai and it is
his belief that CHOU and his supporters will triumph: he further
believes that if this were the case then CHOU and his supporters would
retain MAO as a figurehead so as to preserve the illusion of solidarity
in Peking. Jay said that, on the other hand, the various military groups
were beginning to emerge as a single entity and many of the military
were reportedly in favour of deposing MAO. I queried Jay at some length
on this, reminding him that it was not his view only a few days before:
be countered this by saying that he was merely reporting what had been
suggested to him and that the latest information from Peking certainly
did indicate this emergence of the "military group", Part of the
military thinking was, according to Jay, that recent history had shown
that, when effecting a change, unless the top leadership vere seen to be
ousted they could be used as a rallying point at a later date: in this
instance they were referring to LIU Shao-ch'i. Jay confirmed once again
what he had said about LIN Piao: that he was no more than a
"lightweight" in this equation and that in CH'EN Yi he was finding an
increasingly difficult opponent. Jay said that the Naoists, meanwhile -
i.e. the hardliners represented by Hadam CHIANG Ching, KANG Sheng, etc.
were not by any means giving up the struggle: indeed, to his personal
knowledge five out of seven People's Representatives vhon he knew
personally in Kwangtung had recently been sent on a "re-education" or
"rectification" course, probably with the intention of swinging them to
the more extreme Haoist point of view. He thought that this sort of
re-education was occurring elsewhere in China with a view to influencing
the People's Representatives before attempting to call a meeting of the
People's Congress.
In commenting
on the Russian/Chinese border problems, Jay gave it as his personal view
that, in view of the opposition now building up against the Maoists in
Peking, "America could save MAO America is his only chance". Asked for
further explanation, Jay said that if it were seen by Peking that the
United States were putting support behind the Russians, then this could
well have the effect of rallying the various dissident groups in Peking
behind MAO,
4 September, 1969
C.C.
Mr. Murray (P.C.O.
Hr. Denson
PEKING
D.8.B.
1.8.0.
E...S.
св
(J. Cater)
Mr. Murray
18
岖
349
अ
fusti-2/4
No Contin Mr Jay D.R.q
With the Compliments REIVED IN
р
ભાવ
RˇG! ́TRYN TO
Political Adviser-5 SEP 1969
Hong Kong
26/8
FEH 31
TSX 4/68
MG.
4/9
Political Adviser
SECRET
I contacted Mr. K.C. Jay on the morning of Saturday, 16th August in
order to discuss further with him various points:-
(1) Canadian immigration papers I informed Jay that clearly there had
been no delay whatsoever in the handling of his papers by Special
Branch: that 8.8. had dealt with the matter within some three days and
it was now back in the hands of the Canadian authorities. Jay appeared
pleased to learn this information but gave no indication whatever that
he had received the information about the delay from the Canadians or
any idea as to when final approval would be received.
(2) Payment of deposits at Government Abattoir - I asked Jay whether he
had any further information on this subject or any advice to give. Jay
said that he had not had an opportunity of raising the matter again with
China Resources but would certainly make a point of doing so within the
next few days. He said that the impression he had gained before was that
they had tended to treat the matter rather lightheartedly but he hoped
that what he had said on that occasion would have given them food for
thought and that they would be a little more responsible next time he
met them. He repeated that, in view of the shortage of pig supplies in
China, it would not upset the Chinese, and particularly the local
communists, if, as a result of a confrontation on the issue of deposits,
there were a temporary stoppage in supplies of pigs to Bong Kong. I
asked whether any such move would in fact only be a temporary one and
Jay replied quite heatedly that obviously it would only be a temporary
stoppage as in the long run China would wish to maximize her foreign
exchange earnings in Hong Kong and that in any event if it came to a
stoppage and was seen by Paking as being the result of local communist
action in Hong Kong, there would certainly be criticisa by Peking. Jay
said that recent information from South China indicated that the Chinese
authorities were becoming increasingly concerned about the food supply
situation and that many communes had now reversed earlier decisions and
were actively encouraging peasants to start their own private vegetable
plots and to raise pigs and poultry.
(3)
7
South China Iron Works I enquired of Jay the present position: he said
that he had reported the matter to Peking and had received a reply to
the effect that, whilst the amount ($HK.7} m.) proposed was not as large
as hoped for, nevertheless it was an encouraging sign that the H.I.G.
was prepared to consider their problems in this way. Jay said that he
had yet to speak to LI Cho-chih, through whom the formal negotiations
would have to take place: he had not yet spoken to LI partly because LI
had only returned to Hong Kong from a visit to Canton and Peking the
previous week-end and partly for tactical reasons. Jay explained these
tactics as being simply that, now it was known in Peking that an offer
had been made by the H.K.G., the Bank of China Headquarters there would
seen be putting pressure on LI to report the position: this would mean
that LI would be forced to go to Jay to enquire about the situation, and
Jay thought that this would put him in a rather stronger position from a
bargaining point of view than if he contacted LI direct, perhaps giving
the impression that he was responding to the pressure of two weeks ago.
SECRET
/contd.
2.
SECRET
Jay then proceeded to comment at great length on the local situation.
Speaking of local communist tactics for the future, he repeated that he
knew for certain two things:-
(1)
there would be no serious, major trouble in Hong Kong along the lines,
say, of the 1967 disturbances; but
(2) there would definitely be a campaign of "minor
confrontations".
I suggested that if the communists were to proceed with this "pin-prick
campaign" they might well be inviting a similar campaign in
counter-action by the H.K.G. Jay said that he had been giving very
serious thought to this question of counter- action and believed that
there were three "broad possibilities:-
(a)
(b)
(c)
The H.K.G. could take very tough anti-communist action: he felt that the
H,I,G, could probably get away with such firm measures and without
inviting serious reaction from China in the very short term but that in
the long term such militant action could only be to the detriment not
only of China and Chinese communism but also of Hong Kong. He also
suggested that it would not be "British" to take such action.
At the other end of the scale, the H.I.G. could consider holding out the
hand of friendship and attempting to be as friendly and helpful as
possible. Jay felt that, if anything, this would be a worse solution
than (a) as any policy of this type would be misconstrued imediately as
being veakness and could only lead to further demands which undoubtedly
the H.K.G. sooner or later would have to refuse.
Jay felt that the only policy he could advocate was the one he had
advocated so often before a compromise between (a) and (b), i.e. at all
times the H.K.G. must be firm, particularly where matters of law and
order are concerned : "even if you wish to be friendly, do not give
anything unless they give something first" I suggested, as I had done
several times before, that there was really nothing to negotiate,
nothing to give: Jay replied that in these circumstances we should not
try to give anything and equally we should not expect that very much, if
anything, could be given by then.
Whilst discussing the communist "pin-prick campaign", I asked whether it
were really a continuation of what was already happening: Jay seemed
rather surprised at this comment and said that the communist campaign
had scarcely begun as it was still in the preparation stage. Jay said
that he had recently heard a little more about the threatened campaign:
Peking instructions vere to the effect that the opposition to the H.X.G.
must appear to come from "the people". Thus general approval had been
given for proposed activities of trade unions, the mini-van drivers'
"association" and the anti-H.K.G. primary schools campaign which was
reported at a recent discussion. Interestingly, Peking
3.
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/contd...
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had been critical of the proposals to stir up trouble in the New
Territories. According to Jay, Peking, in criticising the plans for the
New Territories, had stressed the need not only for the trouble to
appear to come from the people then- selves but also the importance of
being able to keep such trouble under control: it was the Paking view
that local communists were not likely to attract a great deal of support
from Ney Territories people, and even if they had been able to cause
trouble, Peking thought it unlikely the communists could control it or
even, erhaps, the H.K.G. might not be able to control it; in these
circumstances it was feared that the Nationalist elements in the Nev
Territories could move into the picture and that with this type of
escalation it was possible even that the militia in PO on County might
get out of hand and create serious border incidents.
4.
Referring again to the different policies which China is alleged to have
towards the British Government and the H.K.G., Jay said that in his
opinion the Chinese intended being more friendly towards Britain in the
hope that either:-
5.
(a)
(b)
by so doing, this may persuade the H.K.G. to adopt a better attitude
towards China and local Chinese communists in the expectation that China
would reciprocate;
or
the British Government say consider it important in its own interests to
persuade the H.K.G. to improve its attitudes in the hope of further
friendly gestures being made by the Chinese towards Britain.
In discussing the supply situation in China, Jay suggested that one of
the reasons for the apparent shortage of cement and steel for export was
the need to build fortifications on the Northern border. I asked whether
he thought the recent reported border clashes between China and Russia
could perhaps belittle more than a smoke screen to cover problems being
encountered in calling the People's Congress. Jay immediately refuted
this and said that the trouble between China and Russia vas very serious
and that it was, if anything, more serious than the newspaper reports.
He gave as his own personal view the possibility that the Russians had
caused incidents on the border in an attempt to lend support to the
anti-MAO groups in Peking the so-called revisionists and followers of
the Russian way. I suggested that this could be a rather dangerous game
to play as the opposite effect might be caused, i.e, consolidation of
the various groups in Peking in the face of Russian aggression. Vhilst
admitting this possibility, Jay suggested that the Russians had
obviously weighed up the position well and nade their play accordingly,
6.
Jay talked at some length on CHOU En-lai's position. He had little new
to add to what he had already said in recent interviews, but for the
first time mentioned problems which CHOU and other moderates were
experiencing because of the aggressive
/contd..
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- Yes When yoom?
militant attitude adopted by YAN Wan-chuen, Once more, Jay repeated the
alleged CHOU comment that Hong Kong "is a minor matter": he thought that
CHOU was unlikely to be particularly helpful towards Hong Kong because
he vas still smarting under the "rebuff" dealt him in November 1968 when
he made specific proposals concerning the swop of Anthony Grey for the
news- workers. Jay also made great play with the so-called loss of face
which he claims the H.K.G. caused CHOU when scarcely any notice was
given of the Board of Review decision on WONG Chak. I explained the
H.K.G. position in forceful teras: Jay claimed that he understood the
position perfectly but that unhappily such understanding could not be
expected from CHOU.
جاتا
21st August, 1969.
(J. Cater)
C.C. Mr. Murray (P.C.0.) Mr. Denson (FEIING)
D.8.B. H.8.0. E.8.8.
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Mr. Murray
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9
With the Compliments of the
Political Adviser
Đảng ông
28/8/69
TSX 4/68
+
Political Adviser
SECRET
At Mr. K.C. Jay's request I saw him at 11 a.m. on Saturday, 23rd August.
2.
Jay started the discussion by saying that he was anxious to obtain more
detail and background information con- cerning the decision to require
pig laans to make a deposit amounting to one month's rent. I explained
the position in so far as I understood it and in the light of
information available to me, but Jay indicated that he would appreciate
more information, He explained this by saying that he had spoken re
ently to LI Cho-chih and to a representative from China Resources: both
had indicated that to date they had not been consulted on this matter
and that in their opinion it was not a subject as yet calling for "high
level decision", Apparently LI and the China Resources representative
had both expressed concern to Jay that the supplies position in China
was not good: they claimed that many of those peasants who had been
involved in pig production or pig raising had either eaten the pigs or
sold them - apparently many were not prepared or able to produce for the
commune. In addition, China and Japan had entered into a trade agreement
in which there had been difficulty over provision of acceptable foreign
exchange to purchase the Japanese capital goods; accordingly, a barter
arrangement had been agreed whereby a substantial quantity of frozen
pork was to be sent to Japan. Jay said that these ship- ments had
recently started and no doubt could be checked through official trade
statistics, He said that he impressed on LI that the reduction in
supplies to Hong Kong was very poor propaganda for China: impression
that this was yet another indication of chaotic conditions in China;
that when the influx of refugees vas taken into account perhaps Western
observers would get an exaggerated idea as to the true situation, Jay
suggested to LI that it was important that full normal supplies of pork
to Hong Kong should be resumed as soon as possible, even if it meant
less supplies for home consumption. Jay stated that LI appeared unhappy
about this proposal, claiming that already there were serious
difficulties in the interior over food supplies: LI said that in some
districts rations had been decreased and, contrary to Former policy,
farmers vere being encouraged to raise pigs privately and not
necessarily officially for the commune. claimed that LI saw the force of
his argument, however, concerning the possibility of poor publicity for
China and under- took to inform Canton of the situation as soon as
possible. feverting to the question of pig laans, Jay said that in his
opinion the delay in imposing the Urban Council ruling had been to
advantage as clearly the communists would think twice about taking
advantage of the situation to cut off supplies temporarily for fear that
it would be only too obvious to the public that it was an excuse to mask
the supplies situation in China. However, at the end of the discussion
with LI, Jay had been asked for his own personal view on the new Urban
Council ruling concerning deposits and in particular whether he thought
Government action to be reasonable or not: in the circumstances Jay
asked whether he could have further information on the background to
this decision in order that he may speak with some