THIS DOCUMENT IS THE PROPERTY OF HIS BRITANNIC MAJESTY'S GOVERNMENT
30 26
CHINA.
CONFIDENTIAL.
May 18, 1937.
37
SECTION 2.
n
[F 2822/354/10]
(No. 22.) Sir,
1/4/34.
Sir H. Knatchbull-Hugessen to Mr. Eden.—(Received May 18.)
Copy No. 71
Nanking, April 9, 1937. IN my despatch No. 20 of the 9th April, reporting my visit to Hankow and South China, I mentioned that the Mayor of Canton had repeatedly raised the question of closer co-operation between Great Britain and China and particularly between Hong Kong and Kwangtung.
Co-operation is of course the most obvious theme on these occasions, and almost every speech and exchange of courtesies during my tour was full of polite generalisations as to the advantages of closer co-operation between our two countries. At Canton, however, it soon became clear that the mayor, who is a man of considerable vigour and energy, wished to take advantage of my visit to the South to translate these generalisations into more closely defined terms.
or
3. I have the honour to enclose herewith a cutting from the Canton press giving a verbatim report of Mr. Tseng's speech at the dinner given by him in my honour,(') and also a brief summary of my reply.(') It will be seen that Mr. Tseng's references to co-operation were almost embarrassingly direct and indeed exclusive. It was not the co-operation of "friendly Powers" assistance from abroad"-the conventional phrases--that was sought; it was the assistance of our country which was needed and our economic co-operation which was earnestly desired. The speech was delivered with a good deal of emphasis and was warmly applauded. I had not the least doubt that both the speaker and his audience had in the back of their minds, and wanted me to understand, that the co-operation must be exclusive as it was directed against a common adversary. In my reply I was accordingly careful to address myself particularly to this implication in the mayor's speech. While applauding and associating myself with his remarks on the subject of co-operation, I emphasised that such co-operation must be exclusively economic in character, and could not be such as would damage, or be to the disadvantage of any other country. As on many previous occasions, I pointed out that co-operation, as understood by me, would on the contrary be to the advantage of all countries, since all countries stood to benefit by each other's prosperity.
4. In his speech the mayor referred specifically to the scheme for the development of Whampoa port. In previous conversations on this subject I had expressed the purely personal opinion that Hong Kong, Whampoa and Canton should be regarded as three complementary parts of one unit and that prior consultation between Hong Kong and Kwangtung might serve to decide the respective parts which each of the three might most usefully play in the interest of the whole. I had been, however, careful to qualify my remarks with a warning that my suggestion was purely personal and that I was still in ignorance of the views of Hong Kong on this matter. The next day the mayor called on me and said he was much struck by some of my observations. The Chinese Government was about to embark on gigantic schemes of industrial development which could most appropriately be executed by the co-operation of British capital and Chinese labour if only the Hong Kong and Shanghai Bank and British financial houses were not so conservative and unwilling to take the slight risk—which was really no risk at all in the changed conditions of modern China-of lending money on easier terms.
5. This interview, which lasted nearly two hours, was brought to an end by my leaving for a luncheon engagement, and it later appeared as I had suspected that the mayor, carried along by his own loquacity, had never reached the main point of his visit. On the following day his secretary, Colonel Li Fong, (1) Not printed.
[5 s-2]