CO537-3705 — Page 67

Government internally, In all the circumstances conclusions in paragraph one seem to be right, but if despite the importance of the abovo general policy factor and the reasone for the conclusions indicated in paragraph one, you still feel that the local situation demands some action, I shall of course be very ready to consider the matter further,

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Obviously it is most important to achieve a solution of the Chinese claim to jurisdiction within the Walled City which will prevent this claim being used as a pretext for further incidents in the future. In this connection, as you Ere opposed to Chinese Govermente suggestion that area should be turned into a public garden containing Office of Commissioner for Foreign Affairs, it is agreed that this suggestion should not be accepted.

Before: however, suggestion in paragraph two of your telegram No. 115 is put to Chinese Government 1t is desirable that decision should be taken on proposal made by Consul-General, Canton referred to in paragraph 1 that ares should be made available to Chinese Government for use as a Consulate-General, This is under consideration in light of views in your telogram No. 110.

(Copies sent to Foreign Office for transmission to Wanking).