CO537-3705 — Page 78

97

Cypher/OTP

POLITICAL DISTRIBUTION

FROM NANKING TO FOREIGN OFFICE

Sir R. Stevenson No. 98

28th January, 1948.

Repeated to Hong Kong

Canton.

IMMEDIATE LIGHT

D. 9.04 a.m. 28th January, 1948

R. 9.53 a.m. 28th January, 1948

Addressed to Foreign Office telegram No. 98 of 28th January repeated to Hong Kong and Canton (Hong Kong please pass Canton safe hand as my telegram No. 21.)

(3) Canton telegram No. 15 to me and Hong Kong telegram (E) No. 110 to Secretary of State for Colonies (Kowloon City).

I share the Governor's view regarding the two

convicted men. The question of their serving the remainder of their sentences is one on which I consider. we should not (repeat not) give way.

I also agree with the Governor that acceptance by us of the proposal that a house should be built on the area for Chinese representative would be regarded by the Chinese as a victory (the Minister for Foreign Affairs continues to press hard for a solution on these lines). I do not (repeat not) agree that it follows from acceptance of this proposal that the eviction of the squatters was wrong. (The Minister for Foreign Affairs has already publicly expressed the view that action was taken to enhance the health and safety of the majority of the inhabitants - see my telegram No. 1158). Nor do I think we should agree to the payment of any compensation except to those persons who are able to establish valid claims

Moreover I to property there (my telegram No. 49 refers). see no reason why we should not press for the appointment of a Consul-General as part of the arrangement if we accept the proposal.

1

3. There are now only two ways of dealing with jurisdiction issue on which the whole incident hinges. One is by referring it to international arbitration and the other is by shelving it, If we decide to take the first method we must contemplate a period of steadily deteriorating relations with the Chinese Government, the certainty of a multiplication of incidents in connexion with the area engineered by the Kuomintang with a view to strengthening their case, and possibly the raising at the same time of validity of lease of new territorial areas. If we take the second method I am convinced that, owing to the weakness of the present Chinese Government, we can only shelve it on terms which they can represent as some kind of a victory.

0 0 0 0