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(This telegram is of particular secrecy and should be retained by the authorised recipient and not passed on; Cypher/OTP

DIPLOMATIC DISTRIBUTION

FROM · NANKING TO FOREIGN OFFICE

Sir R. Stevenson No. 473

8th June, 1948.

D: 7.20 a;m. 8th June, 1948

R: 9.15 a.m. 8th June, 1948.

Repeated to: Washington

Hong Kong Saving

SECRET LIGHT

Addressed to Foreign Office telegram No. 473 repeated for information to Washington and Saving to Hong Kong.

Senior (gp. undec) United States Embassy told His Majesty's Minister confidentially in case "tip off" might be useful to His Majesty's Government, that during recent lengthy conversation

Mr. William Bullitt had announced to him that on re- turning to the United States he proposed to make public his opinion that smuggling through Hong Kong was largely responsible for the present critical economic condition of China and therefore to press for amendment by Congress of relevant legislation to the effect that amount of financial loss thus resulting to China should be deducted from British quota of United States aid to Europe. Bullitt did not impute connivance or direct responsibility to Hong Kong Government but contenued that this smuggling could be practically eliminated by greater exertions on the part or Hong Kong authorities including more extensive naval patrols which he estimated would represent an additional total cost of £1,000,000 per

annum.

/2.