This Document is the Property of His Britannic Majesty's Government, and should be returned

to the Foreign Office if not required for official use.]

From:

CHINA.

Decypher.

kr. Allen, (Shanghai).

November 7th, 1958.

D. Wireless. November 7th, 1938.

R. 5.0.p.m.

November 7th, 1938.

No. 1601.

-o0o-

67

IMPORTANT.

Canton telegram No. 261 to me repeated to you as No. 129

confirms our worst fears as regards the Japanese determination to

apply the Yangtse precedent to the Pearl River. His Majesty's

Consul-General at Shanghai in his despatch No. 454 of November

1st sent you as his No. 283 has recalled that in March last the

Japanese naval authorities stated that they were mindful of the

interests of foreign shipping on the Yangtse and that the situa-

tion might ease in about three weeks' time (see our telegram No.

439). The present Japanese assurances about the re-opening of

the earl River must clearly be judged in the light of that state-

nent. It seems significant that the Japanese reply referred to

in Tokyo telegram No. 1294 to you apparently gave no assurances about British merchant shipping or trading interests and we feel that if Canton is to be prevented from becoming a second Hanking

so far as British trade is concerned, action should be taken with-

out delay. In this connexion I venture to recall Canton telegram

113 to you in which air. Blunt suggested that our control of Hong- kong puts us in a stronger position in South China than elsewhere for the purpose of bringing pressure to bear on the Japanese. That telegram has no doubt already received your serious attention and there may well be strong objections from Hongkong's point of view to any policy of local retaliation such as Mr. Blunt suggests. But it does seem to offer a possible means of countering the Japanese encroachment on our interest in South China before it is too late.

Addressed to Foreign Office No. 1601 of November 7th; repeated to Commander-in-Chief No. 254, Tokyo No. 1043, Hongkong No. 302, Canton No. 116.

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