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PUBLIC RECORD OFFICE

Reference :-

C.O.882/11

PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE COPYRIGHT PHOTOGRAPH—NOT TO BE REPRODUCED PHOTOGRAPHIC-

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9. In order to keep the goodwill of the people while the troops the in Canton are depleted for the "Northern Expedition," Bolshevists have changed their former policy of violent changes to one of solicitous regard for the welfare of the people.

10. There is no doubt that the Russians are feverishly pushing forward their work of establishing Bolshevism throughout China, Great as they are clever enough to realise that "soon or late Britain and America would give material assistance to China to put her house in order, and to develop her natural resources, and then China will assuredly turn her back on Russia. The Rus- sians want to establish a firm footing in the country before these two nations "become alive to the situation."

The Strike and Boycott.

11. Asked as to whether the boycott and strike would be likely to come to an end at an early date, Fu Peng-sheung replied that, honestly, he could not see any conditions in favour of such a desirable issue. Cheung Kai-shek personally was, and most likely still is, desirous of settling the trouble once for all, but the Bolshevists do not favour a settlement without turning it into a victory over Hongkong. Unfortunately, the merchants in Canton do not seem to be very anxious for a settlement; at least they have not so informed the Government. This is probably due to the fact that while the cost of transportation has gone up since the beginning of the boycott, the volume of their business has increased, so that the loss in the one case has been counter- balanced by the gain in the other. As regards the masses, they are indifferent, because cost of living generally is not higher than what it was before the trouble began. The prices of some com- modities are even lower. But from an economic point of view, cheap prices do not necessarily mean the prosperity of the country. The consumers may get their supplies cheap, but the producers, for want of demand, correspondingly suffer; and in Al- the end there may be a permanent decrease in production. ready many industries in Kuang-tung have suffered on account of the boycott: for instance, the silk trade has declined by 40 per cent.. due principally, though not wholly, to the boycott and the Government have strike. Many thinking people in recognised these economic facts, and are sincerely desirous of bringing the boycott to an end. But the trouble can only be settled by Cheung Kai-shek, with the concurrence of the Rus- sians. At one time the Bolshevists, Chinese and Russian, wanted a settlement: this was when the Russians and Wong Tseng-wai were plotting to remove Cheung (at the end of February last). They wanted to get the trouble out of the way so that they could pay undivided attention to the immediate object in view, and also "the other side." Now prevent Great Britain from assisting that most of the " Rights are out of the way, it is not certain whether the same consideration would weigh with the Russians. However, we can count upon Eugene Ch'ên doing his best to

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terminate the trouble. Several factors favour Eugene: he was not concerned in any way with the origin of the trouble; he be- longs to neither the Right nor the Left; and, above all, being an ambitious man and also not a friend of C. C. Wu, he would most probably like to secure the credit of settling this protracted trouble.

12. When Sun Fo was back in Canton about two months ago, his friends' aim was to get him appointed to be the Minister of Agriculture and Labour, and then try to win the consent of the strikers (not the strike-leaders) to a settlement. The Ministry of Agriculture and Labour was at that time (and unfortunately still is) under the control of the Bolshevists who exercise complete influence over the strike-leaders. The Russians came to know of this intention, and advised Wong Tseng-wai to make an overture to Hongkong to negotiate for a settlement, so as to take the wind out of Sun Fo's sails. When Wong Tseng-wai wrote to the two Chinese members of the Hongkong Legislative Council (in February) there was a good chance of the trouble being settled; and the chance was increased after the informal conference of these two men with Fu Peng-sheung in Macao. On the return of Sir Shou-son Chow and Mr. Kotewall from Macao, the Gover- nor of Hongkong sent a letter to Wong Tseng-wai inviting Fu Peng-sheung to come down for an informal discussion, but unfor- tunately C. C. Wu advised against this course. It was not that C. C. Wu was opposed to a settlement; but as the Communists were closely watching him for the slightest wrong move, his sagacity told him that it would be unwise, from a personal point of view, for Fu to come down; for, if he failed in his mission. he would be strongly blamed, and if he succeeded in effecting a settlement, however satisfactory to the strikers, the Communists This were bound to say that he had conceded far too much. advice of C. C. Wu's against Fu's visit delayed matters some- what, and then the whole chance of a settlement was wrecked by Dr. To Ying-kwan who told Wong Tseng-wai that the two Chinese Members of Council whom Wong invited to Canton to confer with him as an alternative to Fu visiting Hongkong, had not sufficient authority to influence events.

13. There was another time when prospects of a settlement were distinctly good. This was when the merchant delegation came down from Canton. They were received and treated with great courtesy by both the Chinese and English merchants, and by the Government, and a very friendly atmosphere was created at the time. Unfortunately, C. C. Wu, in spite of Fu Peng- sheung's strong protest, advised his Government not to consent to be principals in any negotiation, but only mediators. C. C. Wu had to be very careful in his advice to his Government, be- cause his enemies were on the qui vive to destroy him politically.

14. The Canton Government never expected the trouble to last so long: it thought that, at most, it would end in six months. The strikers and strike-pickets are causing the Government great

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