CO537-4998 — Page 101

Cony on 54389 Pt.#.

and 54179/49.

Mr. Sidebotham.

Mr. Trafford Smi

+45

**/**! 940028.

Mor

2-57/2.

During a general discussion about the measures to be taken against communism in the Colonies between the Secretary of State and the Foreign Secretary this morning, the conversation turned to the particular question of Hong Kong.

The Secretary of State was invited at the meeting of Cabinet on the 8th March (C.M. (49) 18th Conclusions, Item 2 of which an extract has already been sent to you) to consider further what action might be taken to lessen and counter communist activities in Hong Kong. The Foreign Secretary and the Secretary of State considered however that, in the light of the differences of view among Ministers regarding our political policy in Hong Kong which were revealed in the discussion at Cabinet, the time had come when Ministers should review the whole situation of the Colony, both as regards internal political policy and the defence aspect, in the light of the present and probably future developments in China.

The Secretary of State and the Foreign Secretary but you may also accordingly agreed that there should be discussions

at the official level between the Foreign Office and ourselves with the object of preparing a full analysis of the situation (agreed by the two Departments) on the lines indicated above, which Mr. Bevin would consider on his return from the United States. The Foreign Secretary might then wish to consult the Prime Minister on the matter before taking it to his colleagues generally. The Secretary of State would accordingly be glad if you would make contact with your opposite number in the Foreign Office and set this in motion.

J.C.Morgan 24/3/49

Please put a copy also on 54179.

ML

24/3

I am afraid that I am not clear whether the paper now suggested is intended to supersede the one which the Secretary of State was invited to submit to Cabinet and which, I imagine, you were proposing to prepare and submit when Hong Kong's reply to our Top Secret telegram No. 302 is received. I think it would be preferable for the Secretary of State to put in a separate earlier paper regarding the immediate action which might be taken in the Colony to counter communist activities and to leave the general review to be considered later. Perhaps however you will consult the Foreign Office on this point and submit afterwards for instructions.

I am sending a copy of this minute to Mr. Paskin Mr. Seel and Mr. Trafford Smith; and also to Mr. Rees-Williams in connection with a minute he has sent to the Secretary of State today about the desirability of making a statement regarding our intention to remain in Hong Kong and Malaya.

(Sgd.) N.D. Watson

23.3.1949.