CO129-588-23 China- British extra-territorial rights- negotiations with China 28-3-1942 - 27-11-1942 — Page 29

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to the draft which the U.K. Government submitted to them an Article regarding the termination of the Kowloon Lease Convention of 1898. I discuss this particular question at greater length below, but it is worth noting here that one, and probably the clearest, way of meeting the Chinese request without parting company with our co-negotiators, the U.S. Government, would be to follow the line which they have suggested in answering the Chinese request for a new Article 1.

The remaining alterations made by the Chinese in the American draft are not of particular Colonial Office interest. In brief they are that the U.S., in the clauses providing for the rendition of the extra-territorial settlement at Peiping, Shanghai and Amoy, shall not ask for the recognition of any "legitimate rights" in such areas which are not consonant with the law and regulations of the Republic of China. The Chinese have added similarly a stipulation that any rights in respect of titles to regard property in China possessed by nationals or the Government of the U.S., shall be, on the rendition of the settlements subjected to Chinese law and regulations regarding taxation, national defence etc. and that no such rights or titles may be alienated to third parties, either Government or individuals, without the express consent of the Government of China.

They have also suggested the omission of "the carrying on of commerce" from the list of matters in which the two parties would agree to give national treatment, suggesting that this should be left over for the Treaty of Commerce.

The Chinese have also suggested that the scope of the clause about Consular appointments should be restricted. The original draft presented by both ourselves and the Americans granted permission for Consuls to be appointed to reside in places open to Consular officers of any foreign country. The Chinese propose that this should be restricted to towns agreed upon between the two parties. We were ready to give up any rights which we had in the past to restrict the freedom of the Chinese in appointing Consuls in Colonial areas, but if the Chinese will not agree to complete freedom on either side, so much the better for us qua Colonial Office. The Chinese have also added notes suggesting that the coastal trade and inland navigation rights at present enjoyed by us shall be included in the abrogation of extra- territorial rights.

There remains the Chinese demand to us for the inclusion in the Treaty of a clause providing for the termination of the Kowloon Lease Convention of 1898 (Treaty series No. 16 of 1898). The Ambassador at Chungking has already expressed to the Chinese the regret that they have raised this question which goes beyond the original offer on the part of H. M. G. to relinquish extra-territoriality.

The Chinese have played their cards very well on this. They have not, as Sir John Brenan has frequently suggested in the past, claimed that the Kowloon Lease territories were "extra-territorial". They have thereby avoided a weak argument of law, but have based their claim on what they regard as principles of equality and reciprocity. Normally they

would