CO129-592-6 Reports on current situation- including weekly intelligence reports 18-9-1945 - 20-12-1945 — Page 86

86

~7~

(ii) LANCURIA is reported to be in a state of upheaval, and persons leaving the area have reported that the Russians cre dismantling factories and private industries for shipment to the UARAINE. A conflict of interests is liable to occur in this area, for while Russian interests in NC URLA is evident, under the CAIRO Declaration of November 1943, KANCHU IA is to be returned to the Chinese Replublic. To deprive it of its industrial capacity would definitely reduce its value to the Chinese, who are desperately short of means of production withwhich to repair their enormous var losses.

(iii) `nti-Chinese activities in SIM have caused the Chinese Foreign Office to instruct the Chinese Embassy in MASHINGTON to lodge a second protest with the Siamese Minister. There are two and a half million Chinese in SI I and they control most of the trade of the country, especially in rice. Before ther the Dianese Government was encouraging iamone participation and sponsoring Si re comp nies to compete with the Chinese because it was considered that the enormous renitt. nces made to CIL were too great a drain on the country's finances. Trado discrimin tion is likely to be a fruitful field for further discord, and unless the Chinese living abroad cone to reg:rd the country of their domicile saving first clein on their loy lty, instead of CTORS tr. de discrimination wouldamper to be the only solution for 14's problem.

Détribution:-

C.-in-C. KONG HONG (1)

Cormofore-in-Chr rge, TONG OTG (3) C.0.0. Land Forces, FONG TONG (1), Kilit ry Administration, KO LOGNA(1)

A.0.C. Air Forces, HONG KONG (1)

Chief Civil affairs Officer, OPG KING (2)

.

Flag Officer, Western arco, British acific Fleet (2) F.O.C., 1st Battle Squadron, British Pacific Fleet (1) Chirman, HONG KONG Joint Intelligence Committee (3) Col. C.. SANSO, Civil Affairs (3)

Lt.Col P.D.DAVEY, Land Forces (5)

S/Ldr. H.E.T. RAEGER, Royal Air Force (3) Capt. A.L.S.READ, GeneralLicis on Officer (2)

Secretary, HONG KONG Joint Intelligence Committee (2)