SECRET
Shanghai telegram No. 694 to Foreign Office
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view that the blockade can have an early and decisive effect on the political situation. Chinese economy was already in desperate straits without the blockade. They see no reason to doubt that the Communist military machine will remain in military control for years.
5. As regards dong Long the committee fears the point made by Mr. Alexander has been forgotten, namely that the future of the colonies is linked by friendly relations with the Government of China. Seen from here the emphasis seems to be increasingly on the military aspect and the impression derived is that His Majesty's Government is resigned to a clash over Hong Kong.
• these circumstances the committee wish me to say:
In
(a) the British business community is by and large willing to remain here and to continue its efforts to reach a modus vivendi with the new régime, but they need a definite reassurance that His Majesty's Government still desire and consider it safe for them to do so.
(b) the establishment of communications with Hong Kong is vitally urgent and that in the committee's view the Nationalists will not agree to any arrangement which would be a real help to the British. They ask whether His Majesty's Government is prepared to re-establish communications without huomintang approval.
(c) they hope it may be possible for His Majesty's Government to develop and promulgate a policy which will maintain the British position here without offence to the Americans, committed as they are to evacuation.
6. The Committee ask me to emphasise that a number of managers of trading and industrial concerns in Shanghai have discretion to close down, if necessary, giving first consideration to the safety of their staffs, who of course constitute a large part of the community. They want to hang on but have now reached a point where they must decide not to do so unless they can be assured of support from His Majesty's Government.
Singapore please pass to Commander-in-Chief Far East Station at the request of Assistant Naval Attaché.
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