CO537-3715 — Page 67

Secretariat File

No. 1170/47S

SAVINGRAM

To the Secretary of State for the Colonies.

From the Governor, Hong Kong.

Date 3d March, 1948.

No. 13

SECRET

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Repeated to:

1

Special Commissioner, Singapore (No.5%) H.M. Ambassador, Nanking(No. 10 ́), H.M. Consul-General, Canton (No.26)

542284/48

Following is fortnightly political appreciation for

Hong Kong for the period ending February 23rd, 1948.

1.

Negotiations between H. M. G. and the Chinese Government for an amicable settlement of the Kowloon City question continue. The local Chinese press are taking less interest in and giving less prominence to the affair. Certain elements are, however, keeping the pot simmering, and makeshift huts are being re-erected by squatters in defiance of the Hong Kong Government. The Chinese

Central and Provincial authorities appear to have neither the courage nor the will. to take a firm line and forbid these activities while negotiations continue on a governmental level.

2. Rumours on the resumption of peace talks in China have been received by the Chinese press with scepticism. The Leftist Hwa Shiang Pao attributes the peace reports to the Americans as a move to gain a breathing space for Chiang Kai-shek's regime till more troops can be trained and help from America supplied. The K. M. T. press on the other hand rather naively claims that the Communists have started the peace rumours in order to save them- selves because of their military reverses. Dissident Chinese political elements in Hong Kong, such as the Democratic League and Marshal Li Chai Sum's Kuomintang Revolutionary Committee have not issued any statement on the peace talks rumours. The rather nebulous and unim- portant Liberal Action Committee, of which the moving spirit is Percy Chen, son of the late Eugene Chen, issued a statement on 18th February strongly supporting Dr. Leighton Stuart's message to the Chinese people on the desirability of peace talks. The press, however, reflects general pessimism regarding the military situation in Manchuria, and the prevailing depression is accentuated by the latest collapse of the Chinese dollar in Shanghai.

3. The Chinese press reacted sharply to reports that the Soviets were engineering the establishment of a Government in Northern Korea. This was regarded as a direct threat to the Chinese position in Manchuria, and all the papers took the line that there could be no possibility of recognition.

RECEIVED

11.43.948

CCRAY

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