CO537-4999 — Page 78

Erginal on 54/45/49.

INWARD TELEGRAM.

TO THE SECRETARY OF STATE FOR THE COLONIES.

136.

Cypher (0.T.P.)

EMERGENCY

FROM HONG KONG (Sir A. Grantham)

D→

14th June, 1949.

R. 14th

No.579 TOP SECRET.

*

Addressed to S. of S,

11.25 hrs,

Repeated te Commissioner General as savingran.

50145/44

Your telegram No.707.

If the communiets vere to institute blockade and boycott and instigate internal unrest (it is possible that blockade or boycott might be instituted without concurrent provoking of internal unrest) I consider that with garrison strengthened by reinforcements that are coming we could hold our position here indefinitely.

20

Energency Regulations would be introduced and such action as seemed necessary would be taken under them. They would include such things as mobilisation of Defence Force and Special Constabulary closing the border controlling city approaches strict immigration control registration rationing essential food and fuel supplies etc. In the likely event of unemployment developing with rise in food prices it would be necessary to distribute food at subsidised prices in order to keep the population quiet. This would necessitate importing possibly from without

adequate supplies of meat, flour tinned vegetables and other essentials.

る。

It is impossible to forecast how long this state of affairs would last as it would depend on how long

commnists would be prepared to keep it up.. It would have progressively serious effect on the economy of the Colony as we should lose all our trade with China during the Emergency whilst trade with other parts of the world would also fall off as merchants would be reluctant to send their cargoes to a port where there was civil disturbance. Another probable result of the blockade and boycott would be that many Chinese would leave the Colony whilst trouble lastad though it is possible that communists might refuse to allow Chinese who wish to leave the Colony or whom we wished to push out to enter China. If many Chinese could leave would be a good thing. Upon lifting of the blockade and boycott and cessation of internal unrest economic recovery would probably be rapid.

Liqu

But

Counter blockade by us or China might inconvenienne the communists who would have to look elsewhere for goods they would normally import from here in particular oil. such counter measures would be unavailing if (unless intended) the U.S. Goverment and others with oil joined in denying commodities concerned to the Chinese comunista.

/5.