CO129-571-15 Sino-Japanese War- manufacture and import of aircraft to China 18-1-1938 - 5-1-1939 — Page 164

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of the Air Marshal who had recently visited Hong Kong was

in favour of the project.

Mr. Fitzmaurice pointed out that there were really

two separate questions.

(1) The advantages of setting up a factory.

(2) The question of whether, if the factory were set

up, it could be permitted to export aeroplanes to China and

Japan during the present hostilities.

Mr. Bigg asked if the Cabinet decision applied to

aeroplanes exported from Britisn territory to private firms

in China, as he understood that the decision was taken upon

a project of Madame Chang Kai Shek's to set up an assembling

plant under the control of the Chinese Government in Hong

Kong territory. Mr. Henderson said that there was no legal

obligation upon Hong Kong not to export aeroplanes to eitner

of the belligerents during the present struggle since a legal

state of war did not exist, but that it was felt here that

it would be dangerous to do so. The Cabinet decision as

embodied in the telegram sent to H. M. Chargé d'Affaires at NANKING.

Bhang covered all aircraft (except ambulance aircraft),

since all could be used for military purposes to some extent.

Mr. Fitzmaurice asked whether the factory, if it

were set up, could supply markets other than China or Japan,

and Mr. Bigg replied that there might possibly be some market

in either the Netherlands East Indies or Australia, but that

he thought it unlikely that there would be any considerable

sale to either.

Mr. Cowell asked whether we could assume that as

long as the present hostilities continued no permission would

be granted for the export of aircraft from Hong Kong to either

of the belligerents. Mr. Henderson replied that the reasons

which led to the present decision being taken still existed.

Mr. Bigg