CO129-553-5 Japanese activities in Macao and Canton 31-1-1935 - 22-11-1935 — Page 73

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but it does not seem likely that the Japanese would take

this action merely to spite Hongkong in a commercial way.

The commercial proposals are possibly a pretext for a military

object. south of Formosa the Japanese have no suitable place

from which they could operate. Hongkong is obviously out

of the question and they therefore turn their eyes to the

weak oolony of Macao over which, by means of strong commercial

penetration, they could gain sufficient hold to engage in

quasi-military activities.

With their establishment in Macao

it is reasonable to suppose that the Japanese could put

pressure on South China to ensure that "friendship" with

China which they are so keen on establishing.

8.

This is all rather speculative but appears to be

fair deduction from the facts (a) That the Japanese are

scheming to get a footing into Macao, (b) That the Macao

Authorities fear that eventually the Japanese would take over

control of the colony and (c) that the Kacao Authorities want

us to take some action to prevent Japanese control. It

most likely that if we assist Macao in any way

Bay

by taking up the waterworks – the Portuguese would take that

as being a willingness to assist them against Japanese

aggression in general and that they would then offer a stiff

front to the Japanese and refuse all their proposals.

The effect on us of the fulfilment of the Japanese

scheme would, therefore, appear to be (a) diversion of some

of Hongkong's entrepot trade aad (b) potential political

exbarrassment.

(sgd.)

HONGZONG.

13th March, 1935.

To His Excellency The Governor,

HNGKUNG.

G.C. Pelham.

H. M. Trade Commissioner and Commercial Secretary.