Secretariat File:
9/3571/49s.
SAVINGRAM.
To; Secretary of State for
the Colonies.
Date:
1 4 JUN 1949
No.
99.
SECRET.
SECRET.
16
(R) British Embassy, Nanking (No.49) Consulate-Gen., Shanghai (No.22) Comm.-Gen., S.E.A. (No. 6) British Embassy, Bangkok (No./) Consul-General, Canton (No. 45) High Comm., Kuala Lumpur (No.2. British Legation, Manila (No.113) G.O.C., Hong Kong.
Copy to D.S.0.
Hong Kong Political Summary for May, 1949.
In
In the early part of the month the aftermath of the "Amethyst" incident and the sweeping Communist advance across the Yangtze into Anhwei, Chekiang and Kiangsi Provinces led to an appreciable lowering of public morale in the Colony. The Communist bogey loomed large and alarmist reports in the United Kingdom and the U.S. press all helped to create a feeling that Hong Kong was in imminent danger of early seizure by the Communists. addition to this the ban on gold dealings imposed in April led to a serious depreciation of the Hong Kong dollar in terms of the U.S. dollar and the pound sterling on the local open market, and this contributed to the lack of confidence about the future of the Colony. Following upon the announcement in Parliament on 5th May that reinforcements were being sent to the Colony, public confidence began to pick-up, and it was further encouraged when a later report from London indicated that the reinforcements were larger than originally announced and that the garrison would total 12,000 instead of the original 6,000. At the same time a more balanced view was taken of the Communist advances and it was realised that two or three months at least would elapse before regular forces could reach the Hong Kong border in any strength. The position at the end of the month there- fore was that the general public was more confident and awaiting the arrival of Communists without excitement.
2.
With the catastrophic decline of the Nationalist fortunes K.M.T. activity in the Colony was at a very low ebb.
The futile antics of the rump Government functioning in Canton were watched with pity, and no Chinese expressed any confidence that the remaining K.M.T. politicians would pull themselves together and unite sufficiently to form a Government capable even of a reasonable delaying action. With the departure of Dr. T.V. Soong and his wife for Europe on May 16th contempt for the old K.M.T. leaders grew.
An increasing number of high K.M.T. officials have continued to arrive in the Colony, and though a number of them have gone on to Canton or Formosa most of them have left their families here. Several of the Chinese Government banks have moved their main staff down to Hong Kong in face of the Communist advance on Shanghai and the head offices of some banks are probably, not officially, but in fact operating from the Colony.
3.
During the month the influx of Chinese into Hong Kong reached a new pitch as the Communists closed in on Shanghai. The figures week by week showed a large increase, as people poured in by 'plane and ship. The total net increase during the month was over 40,000, but in the last week, after Shanghai had fallen, it dwindled to a net increase of only 2,259. It is believed that many of these refugees, having only moderate means, may return to Shanghai