CO129-571-15 Sino-Japanese War- manufacture and import of aircraft to China 18-1-1938 - 5-1-1939 — Page 28

A

Sir H.Moore.

I gave you a summary of the discussion at

this conference. The questions at issue are clearly

shewn in Mr Rogers' note of the proceedings and in

the draft letter to F.0. The position is, necessarily,

rather unsatisfactory. All parties would welcome the

establishment of an aeroplane factory in Hong Kong,

preferably under British control. But there is

little prospect that H.M.G. will agree to the

exportation from Hong Kong of completed military

aeroplanes while hostilities between China and Japan

continue; and while such exportation is prohibited

there is little inducement for any capitalist to start

the assembly of aeroplanes in Hong Kong.It would

not be very logical to permit assembly and exportation

from Burma, but the prohibition in H.K. is a matter

of policy and not of international law. Even so, it

is not at all clear that capitalists would want to

establish themselves in Burma, where their distance

from Chines markets would be serious. They might

well prefer to start a factory in H.K. and trust to

conditions permitting export by the time it was

ready to produce aircraft. This would suit us all

right, but would not be quite so useful to the

Air Ministry as a factory less liable to attack in the

event of our being involved in war with Japan.

We can only try to clarify the position as in

draft to F.0.

# Plowell

4.5.38.

rs.

botes. Thanks. som.

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