CO537-4825 — Page 58

NOTE

1. The facts in regard to over-crowding in Hong Kong, etc., as stated in the "Times" article attached, are generally correct. The Governor has recently reported that control over Chinese arriving from all countries other than China has now been instituted. It is quite impracticable, with the means at his dia- posal, for him to control the immigration of Chinese arriving from China, both of account of the length and nature of the land frontier and owing to the un- limited possibilities of landing at various points on the coastline of the Island of Hong Kong and the New Territories by junk and sampan.

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As regards muisting evacuees from Shanghai or other parta of China, Hong Kong has pointed out to His Majesty's representatives at Shanghai and Nanking that Hong Kong cannot be regarded as more than a purely staging area for persons making for destinations elsewhere, as the Colony is already over- crowded and cannot stand any more than a temporary increase in its population. +r We note that the Governor has arrangements in hand not only to accommodate,

temporarily, existing British evacuees from North China under canvas, but has told us that hospital camps could be got going in two or three weeks for Chinese refugees. The Governor states, however, that any idea of housing and feeding a Chinese refugee influx must be firmly discouraged, since its effect would only be to increase such an influx and that, if a large influx starts, he would have to try to close the border.xith military assistance in order to protect the food and water supplies, and the health of the existing population and refugees. In a telegram dated 23rd November on this subject the Governor added that there was no need for alarm at present, though the situation in China had unpleasant possibilities for Hong Kong.

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2. As regards water supplies, it is accepted that the available reservoir capacity is inadequate, and the Governor has submitted proposals for an extension of that capacity by the building of a large new reservoir on the mainland, which is to be financed by a loan of between £4,000,000 to £6,000,000. The Treasury are not willing, at present, to agree to a loan being raised on the London market. It is considered that this project would not be suitable for financing by the Colonial Development Corporation, and the amount is far too large to finance from the remaining resources of the Colonial Development and welfare fund. position has been explained/tong kong in a telegram of the lat November, and he Hongkong has been asked, in view of the obvious undesirability of the Colony being dependent on the New Territories for water supplies to a greater extent than is absolutely avoidable, whether further facilities could not be developed on the Island itself, with a modified scheme on the mainland, although substantially increased expenditure might be involved. A separate communication has been promised on the question of financing, which is now under active consideration.

3. The defence position as we see it is as follows:-

it is accepted that Hong Kong is indefensible in the event of war with a hostile power in occupation of the mainland;

(b) the approved Garrison assumes that (a) is not in the

question;

(e) for defence and to preserve order in the Colony at the present time we have one British Battalion, one Gurkha Battalion, an unreliable Police Force and a Volunteer Force which has not yet come into being (it is hoped to have the Hong Kong Volunteer Defence Force Ordinance, providing for the reconstitution of that Force, enacted very shortly, and it is intended to send a further

Gurkha Battalion from Malaya to Hong Kong in Desember which “W?%3 vrnig "the Garrison up to its full strength again). Hong Kong is also the base of the British Pacific Fleet, and one squadron of R.A.F. flying boats is already stationed there.

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