Sec: File No. 1170/47s
54228/1
SAVINGRAM
RECEIVED
22 SEP 1948
To the Secretary of State for the Colonies. R. British Consut General,
From the Governor, Hong Kong.
Date 14th September 1948
No. 74.
SECRET
ICANULON *(ND. 58. British Embassy,
NANKING (NO. 4/. Comm. General,
SINGAPORE (NO.
G.O.C., HONG KONG.
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2. }
365
Following is a political report for Hong Kong
for the two weeks ending 6th September 1948.
Chinese dissident political groups in Hong Kong have been quiet during the last two weeks. The report of the death of General FENG Yu-hsiang in a fire on board a Soviet ship in the Black Sea has come as a blow to Marshal Li Chai-sum and his K.M.T. Revolutionary Committee friends. Li and Feng had been in correspondence and it seems likely that General Feng's arrival in Communist-controlled China, to which he was presumably bound via the U.S.S.R., would have served to finalise preparations for a Coalition Government comprising the leading members of Chinese dissident parties in Hong Kong.
2.
There is no further news regarding date or meeting place of the proposed Political Consultative Council at which the coalition between anti-K.M.T. parties is to be discussed, and Marshal Li still keeps silence on the subject. The report that a "North China Peoples Govern- ment" had been established in Communist areas in Northe China on August 18th caused some speculation in leftist circles whether this made the Political Consultative Council unnecessary. Left-wing Chinese in Hong Kong however hold that it is only a local Government and that it does not over-shadow the planned multi-party political consultative council, which will prepare the way for a representative National Assembly.
3.
Marshal Li Chai-sum in recent interviews with foreign correspondents has again asserted that he is not doing anything calculated to impair Sino-British relations. The tone of his denunciations of the Chiang Kai-shek regime has however grown consistently shriller in the past year. Enquiries are being pursued which may produce evidence that, contrary to his frequent denials, Marshal Li is in fact seeking to direct anti-Nanking Government military activities of a guerilla mature in South China. Dr. T. V. Soong who visited the Colony for a few days at the end of August again spoke to me of the Marshal's hostile activities and threatened to produce evidence. Until he does so I am unable to consider putting the Marshal under restraint.
4.
The K.M.T. remain quiet, and apart from the usual veiled hostility to this Government revealed in K.M.T. controlled newspapers, there is nothing to report.
5.
Financial opinion in the Colony is that the new currency is unlikely to hold for more than three months, after which inflation will develop and quicken. Hong Kong has so far been spared open attacks by the Chinese Govern- ment in connection with protecting the new currency. There are however signs of a campaign to lessen confidence in the Hong Kong dollar by suggesting that it is overissued. The Chinese are again asking this Government to take steps to control the amount of Chinese currency Notes carried into the Colony by travellers. Agreement on this should be possible. They are also trying to persuade this Govern-
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