SUBS INN
How do
CORELD TOTAL
ent situation in lione ženst
After pant failures, the morale of the leenl Communiste is
10x low and their leadership has been disrupted by police motion. Thers is a
general rualisation that direct intervention by the Chinees Government in
Peking is not likely to be forthowing. They are uncertain what to do next. They have derived some encouragement from the Chinese ultimatum about notion against the Prose in Fong Kong and from the destruction of our Hebassy in Peking following upon the rejectim of the ultimatum. This has led to mono stopping-up of their activity in the past week, but this ims beon masily
contained.
The terrorist taaties have taken a now and possibly rather serious twist; an assassination campaign against prominent anti-Commniet Chinome may
be in preparation. Already a popular Chinama radio onmantator has been murderod and a Chinese member of the Logislative and Secutive Council ham zumivad a parool banb.
What exa
Ve do not think that Peking Inspirad the actions of the local Communista in Hong Kong or that is has any intention of taking over the Colony. We think, however, that Faking would exploit the situation, if it could, to
eroato a Radno-type situation in which we would continue to exercise norvanl
pelitical control but it would be in a position to dietato all unjor decisions while at the same time continuing to reap substantial economie bone"lts from the Colony.
The Colony's economia valus to China in and romains oozedderabla; but, of course, this consideration may not provell if doctrinaire and revolutionary infiusnoos gain the upper hand in Paking. Nor perhaps would doubts and fearu about American ronotion (which we think in a factor inhibiting a Chingwe taka-ovar) carry any voiɛht anon; the extrose revolutionarios.
GOTIP JITIAL.
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