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I must say that I find this account of the Kuomintang's activities and position in Hong Kong somewhat disturbing. A copy of the despatch and its enclosures should certainly go to the Foreign Office and I think that we should also ask the Governor now for his views on the suggestion in paragraph 18 of the report for taking steps with a view to confining the Kuomintang's influence, so far as possible, to its proper sphere, and whether he has any other steps to suggest with this object object in view, which seems to me to be both urgent and important.

I agree with Miss Ruston that the influential position which the Kuomintang has succeeded in obtaining in Hong Kong constitutes a further argument in favour of a re-assuring declaration concerning our future intentions in respect of the Colony. This is under consideration separately, and I have made a note of the Kuomintang argument. But I think that this report also has an important bearing on the constitutional question. Unless some effective steps can be taken to reduce the power and influence of the Kuomintang in Hong Kong, it seems to me that in any attempt to introduce an elected Municipal Council we shall be completely at the mercy of the Kuomintang. If, for their own political reasons, they wish to make trouble, then I think that the introduction of a Municipal Council to an apathetic or apprehensive population which has had no previous experience of elections will provide this organisation with all the material they need.

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