CO129-553-5 Japanese activities in Macao and Canton 31-1-1935 - 22-11-1935 — Page 118

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12. Once the Japanese became established at Macao, they

would have a valuable stepping-off place for the expansion

of commercial activities in South China. There are distinct

signs that efforts are being made to establish Japanese

interests in Central and Southern China in those areas in

which hitherto British interests have been predominant.

successful Japanese activities in this area would almost

certainly react unfavourably on the economic position of

Hong Kong.

Any

13.

In this connection the active interest which Japan

is taking in proposals for the creation of an inland port at

Honam Island is not without significance. In January,

1935, Japanese agents approached the Canton authorities

with an offer of several million dollars for the whole

The Chinese authorities are anxious to refuse

site.

this offer, however, and have invited British interests

in Hong Kong to take up what amounts to a mortgage of an

essential part of the property. Any establishment of

Japanese vested interests in the vicinity of Canton would

have very serious effects on British trade and on

security in Hong Kong, possibly even greater than could

arise out of the Japanese occupation of Macao.

our

14. The extension of Japanese influence in the area

of Southern or Central China would be bound to react

adversely on our interests in every respect and is, there-

fore, extremely undesirable. In particular, since

Japanese political influence goes hand in hand with

Japanese commercial activity, the local Chinese, if

subservient to Japan, would not be in a position to

offer us that assistance which a friendly neutral could.

Political considerations.

15. It is realised that British policy in the Far East

aims at friendly relations both with China and Japan,

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