CO129-498-3 Canton boycott- prospects of restoring normal conditions 20-12-1925 - 24-12-1925 — Page 7

6.

The chief benefit to be hoped for

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froma settlement is the resumption of normal trade relations between Hongkong and Canton. The boycott has shown that it is possible for Canton to make itself to a certain extent independent of this Colony: and the longer the boycott lasts, the greater is the probability of a permanent loss of trade to Hongkong; for Hongkong cannot make itself independent of Canton. Indeed the reason for the wonderful

growth of Hongkong is to be found in the fact that it

is the best deep-sea port for the commerce of a

Province inhabited by more than 40-million s of Chinese.

There are, however, other ports though none are so

good or so conveniently situated

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and it is not in

the interests of this Colony that trade should be

diverted to them. I am convinced that the prosperity

of Hongkong depends mainly upon the maintenance

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of friendly, and even intimate, relations between this Government and the Government of Kuang-tung; and

the sooner the present sore which is festering and may

become chronic can be healed, the better it will be

for British interests not only in Hongkong but

throughout China.

7.

As regards the proposed payment of

blackmail, I may say that, however repugnant such payment is to British habits of thought, a settlement

on the lines now contemplated is customary in China.

and would not be considered by the Chinese to be unusual. It is the amount to be paid, rather than the fact of payment, which will exercise the minds of Chinese merchants both here and in Canton.

8.

After a full discussion of all these

considerations which I presented to the Executive

Council

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