CO129-579-13 Sino-Japanese War- proposal to establish high explosives factory in Hong Kong 20-4-1939 - 21-6-1939 — Page 15

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ordinary munitions to belligerents we might prejudice

our position in the matter of objecting to neutral

embargoes on the export of arms where such embargoes

were likely to hit us.

4. On balance, however, it seemed to us that the

overriding consideration in reaching a decision on the

question put to you by Sir Geoffrey Northcote must be

the very special geographical position of Hong Kong,

which we felt would justify an exceptional departure

from our usual policy, while providing an effective

answer to any criticisms which might be levelled at

us.

5.

In this connexion, it is, I think certain that

as the hinterland of Hong Kong is occupied by the

Japanese forces while the coast of China is "pacifically"

blockaded by the Japanese navy, if explosives were to be

exported from Hong Kong for the use of the Chinese Government, they would either have to be smuggled overland or carried

by...