CO537-4998 — Page 47

ANNEX

I

TOP SECRET

THE THREAT TO HONG KONG

Present Situation

A Communist Army group has crossed the Yangtze and in now operating against Shanghai. Two further Communist Army groups, totalling some 700,000 men, are in a position to advance into South China.

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The Chinese Nationalist Army facing this force numbers some 150,000 men but its morale is virtually non-existent and it does not constitute an effective fighting force.

3.

The Chinese Nationalist Government has withdrawn from Nanking and is established at Canton but it has largely ceased to exercise control over its territory or its forces.

Future Developments

In the

It now seems more than ever certain that a Communist regime will be established throughout the Chinese mainland and it may not even be necessary for the Chinese Communist Army to continue military operations to achieve this end. event, however, of the Nationalist Government re-establishing resistance to the Communists in the South, or if the Communists decide that it is necessary to eliminate the British Colony of Hong Kong, we consider that the military possibilities are as follows:

(a)

(b)

Owing to the poor state of the roads and the Communist Army's lack of motor transport, the Communists would rely for their advance mainly upon the Hankow Canton Railway.

Allowing time for the collection of rolling stock, and assuming that the amount of rolling stock on the line is the same as in March 1948 and that the Nationalist Forces have not carried out demolitions, we consider that the maximum rate of movement from the Hankow area to Canton and the vicinity of Hong Kong would be as follows:

50,000 men with stores and guns 100,000 men with stores and guns 200,000 men with stores and guns

• •

10 days 15 days 25 days

Further forces could be added to the above if they were thought to be necessary. Over and above any forces advancing from the Yangtze area, there are in South China some 80,000 Communist Forces, formerly guerrillas, but who are now organised on the same lines as the main Communist Armies.

Likelihood of an Attack on Hong Kong

5.

Any strong Chinese Central Govenment is likely, in the long run, to desire to liquidate the British possession of Hong Kòng. In the early future, however, a stable British regime in Hong Kong may well be considered to be useful to a new Communist

Government as an economic link with the outside world. For some time,

moreover, the Communist Government, coming into power after a proloned civil war, is likely to be occupied with internal affairs. Unless the Communist Government, therefore were to be