CO129-556-13 Traffic in arms to China 6-1-1936 - 13-1-1937 — Page 87

Copy.

M.02030/36

SECRET

Sir,

ADMIRALTY, S.W.1.

23rd May, 1936.

I am commanded by My Lords Commissioners of

the Admiralty to refer to Admiralty letter M.02030/36

of the 2nd April, forwarding a copy of a report of a

conversation between the Commander-in-Chief, China

Station, and the Marshal of Kwangsi Province, and to

offer, for the information of the Secretary of State

for Foreign Affairs, the following observations on the

'Huchao' system and its effect on the export of British

arms.

2. My Lords desire to associate themselves with

the views and recommendations put forward by the Board

of Trade in their letter No: C.R.T.1152/36 dated 5th

May. In this connection, and as further evidence of

the disregard of the 'Huchao' system by other countries

I am to enclose extracts from a Hong Kong Intelligence

Report, covering the period 19th February to 3rd March,

1936.

Copies of this letter have been sent to the

War Office, Air Ministry, Board of Trade and Colonial

Office.

The Under Secretary of State,

FOREIGN OFFICE,

S.W.1.

I am, etc.,

(Sgd) S. H. PHILLIPS.