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reach Chien Chiang on road to Chungking.
6.
Still no indication of a major move on the part of First/Fifth Field armies from north towards Chungking.
7.
Communist authorities in Canton have now made approach for resumption of through railway services, British section have replied willing to meet at border to discuss. Early resumption likely once financial arrangements have been solved, Some cargo, mainly paper, dyes, bleaching powder and petrol, moving outward, while country produce, livestock and hides, coming inwards. Inward passengers slightly exceed outward owing to conditions in Canton. On 10th November Nationalist aircraft dropped bomb near Sheklung railway brige.
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Nationalist blockade of Canton continues to prevent river steamers operations. Nationalist blockade craft are believed to be re-fuelling from junks just outside British waters. This is difficult to prevent as while export licences are required destinations cannot be guaranteed. Nationalista are adding insult to injury by trying to sell siezed cargoes in Hong Kong. Chinese Government have belatedly announced formal extension 2 ensure order to Amoy and ports south. Shanghai blockade still in force, but two British ships detained for over a week have now been released by Nationalists, with their cargoes, after gaving written undertaking not to return.
"6
C.N.A. and C.A.T.C. defections have led t Chinese Minister ? Foreign Affairs himself visiting Hong ngə Air craft of two companies are grounded (? by omitted) Nationslist suspension of megistration certificates. But personnel reman cccupation of offices and workshops and are refusing to take orders from new Managing Directors appointed by the Nationalists, Former directors have issued orders to them (? from omitted) Peking. It is proposed to avoid involvement of Hong Kong Government in dispute as far as possible. Companies are free to take matter to Court if there is deadlock. Meanwhile Chinese Government are belatedly offering British air lines opportunities for flying to Formosa, Chungking, Kunming and Hainan. Hong Kong Airways are proposing to fly to Taiei and survey flight left 16th November.
Chinese National Resources Commission Foreign Trade Office in Hong Kong defected to the Communists 13th November. They hold stocks of wolfram and other commodities valued at some “(Hong Kong) 20,000,000 Other Nationalist organisations are likely
10.
to follow,
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Above developments and worsening military situation have caused nervousness and pessimism in Kuomintang circles. There are increasing rumours of split between Chiang Kia Shek and Li-Tsung Jen becoming insoluble. Much Kuomintang riff-raff is now seeking refuge in (corrupt group? barges) and action has been taken by police against Kuomintang Blue- shirt agents for possession of arms in the Colony.
12.
Communist-organised Comforting Party has returned from Canton and given fulsome public report about encouraging conditions there, and really democratic life now enjoyed by people. Privately, however, some admit conditions were far from satisfactory. Communist inspired propaganda is being directed against action taken hy Registrar of Societies in refusing registration to a number of Communist influenced organisations. Much capital is also being made out of defection of air lines and National Resources Commission
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