CO537-4999 — Page 150

[This telegram is of particular secrecy and should be retained by the authorised recipient and not passed on].

Cypher/TP

DEARTMENTAL DISTRIBUTION.

FROM SHANGHAT TO MORAIGN OPHTON.

His Majesty's Consul

No. 429

D. 11.6 a.m. 7th June 1943

R. 19.45 p.m. 7th June 1949

7th June 1949

ISDIATE

TO SNCKET.

Addressed to anking telegram No. 218 of June 7th repeated for information to Foreign Office.

[

y immediately preceding telegram.

Following is summery.

[Begins].

(118)

Hong Kong is geographically part of China; it has been developed by British enterprise but the Chinese have long pressed for its return and will continue to do so. It is important to the er Test because it stands as a haven of reace and order on the fringe of an area which has for sole years been on the edge of chaos. Its importance to Britain's Far East trade is now greater than its strategic significance. bastion of free trade and democratic principles of international trading its loss would be of great disadvantage to the whole of the Ter Tact.

2. With the advance of the "eople's iberation roy southwards is `ajesty's Government has reinforced the defences of Hong Yong to meet the threat of a hostile China, We think however that too little emphasis has been laid on more important commercial aspect of the problem. The sending of reinforcements to Hong Kong has been given undesirable publicity of a defiant and provocative nature. Te do not entirely accept the view that a potential enery must attempt to overthrow British rule by force of arts or insurrection; we think Hong Kong could be rendered untenable by means of a boycott and internal unrest. This aspect of the problem should be given equal consideration with the military one. It is hoped friendly relations will continue and friction be avoided. Reinforcements are essential but it is important to keep quiet about them. Publicity in Britain and ongong has however given the impression that Britain is spoiling for a fight.

3. It is urged....

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