CO537-5116 — Page 107

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(3) 96301/9/15

SECRET

Nanking telegram No. 1057 to Foreign Office

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practical form of retaliation now exercisable in the United Kingdom) we might prejudice the chance of continued operation of Reuters (which is still permitted to function at shanghai though no longer in Tientsin) and the North China Daily News, the owners of which incidentally, had been asked to take over the running of Reuters Shanghai agency, and are prepared to consider this proposal.

3. While the position of our official Anformation services (which may be moreover permitted to resume full operation when the Communist Government is eventually recognised) and of the New China News agency are not sufficiently identical to reader the closure of the latter a really appropriate retaliation, a Communist embargo on Reuters or on North China Daily News, would provide us with an unexceptionable pretext for some justifiable retaliation, however, [? grp. omitted] might be available in the form of prohibition or restriction on similar grounds of official propaganda through Chinese Communist films in British territory, particularly in Hong Kong where the problem is in fact actually under consideration as stated in hong Long telegram No. 701 to Secretary of State for the Colonies, in which connexion, I am submitting my views in a separate telegram [g1p. undec.] as regards the utilisation of the services of darris and principal members of British home based staff, they could presumably be temporarily seconded to the Consulate General in various other capacities. Harris for instance, might be useful to His Majesty's Consul-General as a public- relations officer thereby maintaining valuable contacts while ostensibly abanduring the issue and circulation of our publicity material. 1 an of the opinion that factual news of this closure should be give as much publicity as possible, particularly in Shanghai, accompanied by statement that this will put a considerable number of Chinese employees out of work, At the same time Harris should write officially to the authorities who told him to close and inform them that he counts upon them to ensure against unruly disturbances from Chinese staff who have to be paid off as direct result of this official order of the Chinese authorities concerned.

Foreign Office please pass to Washington as my telegram No. 92 and to Paris as my Saving telegram No.46.

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[Repeated to ashington and Saving to Paris].