2.
119
The Secretary of State will no doubt be aware
that arms consigned from this country to the Far
East Aviation Company, Hong Kong, as the ultimate
consignees are licensed without such strict enquiry
as is made in the case of arms consigned to a
foreign country, and in such cases the Colony should
be responsible for control of re-export.
This Government has from the time the regulations regarding
the importation of arms were promulgated by the Chinese Government most scrupulously discharged the responsibility
mentioned in the Board's letter so far as concerns arms
imported into Hong Kong as stock and subsequently sold to
customers in China, that is to say, in every case the firms concerned have been and will be required to produce an
authorization from the Central Government of China. It is
only in the case of arms ordered in China from some territory
beyond Hong Kong, whether British or foreign, and passing
through Hong Kong in transit from that territory to the
customer in China that this Government has not concerned itself
with the authorization of the Central Government of China.
The reasons for this attitude lie in the Barcelona Convention
on Freedom of Transit and are fully explained in the third Sparagraph of my confidential despatch of the 17th May, 1933.
3.
It may be that the Far-East Aviation Company have created their own difficulties by reporting their stock machines
as being destined not for Hong Kong but for China, but I must
repeat that British Aircraft manufacturers are already at a
disadvantage in their struggle with American manufacturers for
the China market owing to the close liaison which the latter
have secured with the Nanking Government, and urge that all
possible facilities may be given to the former for making use
of