CO129-571-15 Sino-Japanese War- manufacture and import of aircraft to China 18-1-1938 - 5-1-1939 — Page 52

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3. An immediate reply to the first question

was sent by telegram (No. 112), the substance of

which was that there is no objection to the setting

up of a factory in Hong Kong, but that for the

duration of the Sino-Japanese conflict no permission

can

to export aircraft to either China or Japan ged

be granted. A despatch on the general points

raised in the Governor's despatch was also promised

in that telegram.

4. This matter of the general question was

then referred to the Air Ministry and the Board of

Trade. The Air Ministry's reply (No. 126) is

largely coloured by questions of strategy and, as

Mr. Rogers points out in his minute of 16.11., they

treat the matter as though the proposal were to

establish a Government aircraft factory in British

territory in the Far East. The Board of Trade in

their reply (No. 131) take the line that the only

point with which they are concerned is the desirability

of ensuring that, so far as possible, orders for

industrial plant and aircraft components should be

placed in this country, and that consequently it is

immaterial, so far as U.K. trade interests are

concerned, whether the factory is established in

Hong Kong or Burma. But clearly the question to

be considered is whether the factory should be

established in Hong Kong. The Board of Trade do,

however, suggest that it would be premature to attempt

to reach a decision at this juncture as to the

eventual establishment of a factory at Hong Kong.

It seems to me that this consideration is not really

of much weight, since the establishment of a factory

must in almost any circumstances contribute to the

economic development of the Colony. In the rest of

their