CO537-3715 — Page 20

Sect. File 1170/47s.

SAVINGRAM.

To the Secretary of State for the Colonies.

From the Governor of Hong Kong. Date: 21st December, 1948.

54

Repeated to: British Embassy,

NANKING (NO. 68. ) British Consulate-General,

CANTON (No. 85. I Commissioner-General,

S.E.h. (No. 33. ) G. O. C.. Horg Kore

No.: 114.

SECRET.

The following is a Political Report for Hong Kong for the two weeks ending December 13th, 1948.

Reports continue of secret negotiations between the Chinese Communist Party and the various "Democratic" groups represented in Hong Kong with a view to the formation of a Coalition Government in China. A further party of ten Democratic leaders are believed to have left secretly for North China around the end of November. Professor Kuo Mo-jo, the wellknown writer, who claims to be The Party included non-party, and Ma Hsu-lun of the Democracy Promotion Association. They will presumably join General Tsai Ting-kai and others who left Hong Kong several months ago and are believed to have arrived in Harbin.

*

2.

Marshal Li Chai-sum and his friends continue to release numerous statements to the Press denouncing American actions in China, with the intention, presumably, of buildin up their own importance in order to improve their prospects

lding of inclusion in a Coalition Government with the Communists. In an interview with a Fronch News Agency correspondent on the 8th December which was reported at length in the pro- Communist Hwa Shiang Pao, the Marshal reiterated his political views on the future of China. He reaffirmed his belief that a Coalition Government would be formed, from which the K.M.T. would be oxcluded. He repeated his naive belief that the Communists would co-operate sincerely with other parties in a Coalition Government, but when asked if he was aware of the experience of non-Communist parties in Coalition Governments in Eastern European states, he remarked that he had "no knowledge of the exact conditions in those countries". He made a dangerously vague statement that the new Government in China would protect foreign interests, provided "that they do not represent special privileges obtained through the unequal treaties with China". He said that policy towards Hong Kong would depend upon the attitude of His Majesty's Government towards the new Chinese Government, but that in any case it was toc early new to raise the Hong Kong issue, as the new Government would have a large number of pressing problems to tackle. Finally he stated that Chinese officials who change sides now and proved by their deeds that they were opposed to the Nanking Government might be welcomed into the new Government, but that any officials who did so out of pure opportunism would not be accepted.

3.

General Lung Yun, former Governor of Yunnan,

who since 1945 has been kept under honourable surveillance by Chiang Kai-shek in the capital while enjoying a nominal official position, arrived in Hong Kong on December 10th after what appears to have been a clandestine flight from Nanking. He has already called on Marshal Li Chai-sum, and is reported to have sent in his resignation from his official posts. He may well be the first of the many high offici al s to desort the sinking K.M.T. ship. In this connection the Left Wing "Won Wei Pao" a formor Shanghai newspaper now published in Hong Kong, carried an article recently listing the various high Nanking officials who owned houses in Hong

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