CO537-4847 — Page 48

SECRET

XIV.

kely Communist Policies

and Actions.

(a) The Communists will

claim that the new Government of China is entitled to take over all K.M.T. assets.

(b) I connection with their

propaganda against "War Criminals" the COU!!- ists may raise the

question.

K.M.T. ASSETS.

Action by Hong Kong.

Agitation for taking over such assets must be anticipated. There will in fact be several categories of assets to dis- tinguish between:-

i. Large scale assets in the shape of

barks, industrial undertakings, ships, etc., in which Government ownership or interest can be clearly proved.

In many cases, especially organi- sations such as the Government banks, it will be easy to recognise Chinese National ownership, and there will be a good case for allowing the Communists to take over. In any cases of doubt it will be necessary to insist on proper proof of ownership being pro- duced and this may have to be decided by the Courts of Law.

ii. Concealed assets.

K.M.T. Government organisations may have put much money into industrial and business concerns, the money origin- ally being derived from Government

sources.

If

The se cases will be much more difficult, and they will introduce the "Civil War criminal" element. cases are brought to Cuurt there will be opportunity for propaganda making in the Courts against so-called war criminals. This will unfortunately be unavoidable. In clear cut cases where funds can be proved to have originated from Chinese National Government sources there will be a case for returning to the Chinese Communist Government.

iii. Property owned by individuals.

The Communists will certainly seek to get hold of the fortunes of leading figures such as T.V. Soong and others. In these cases it will probably be quite impossible to recognise their claims or any evidence they may produce. It will also be impossible to say what particular bit of property owned by individuals such as T.V. Soong was ac- quired from misused Government funds. It will therefore be necessary to take a firm stand and deny such claims for turning over private individuals' pro- perties.

Requests to enact legislation to deal with "Civil War Criminals" will have to be resisted, since Hong Kong cannot be ex- pected to take sides in a civil war dis-

The circumstances moreover will be pute.

entirely..