TNAG-0032-FCO40-68-Relations-with-China-1968 — Page 234

SECRET

ГОР СОРY

682

CYPHER/CAT A

PRIORITY HONG KONG

TELEGRAM NO 894

SECRET.

TO COMMONWEALTH OFFICE

15 JULY 1968

HW

ADDRESSED COMMONWEALTH OFFICE TELEGRAM NO. 894 DATED 15

JULY REPEATED FOR INFORMATION TO PEKING, AND SAVING TO POLAD SINGAPORE AND WASHINGTON.

HONG KONG AND SHANGHAI BANK : SHANGHAI BRANCH,

SAUNDERS, CHIEF MANAGER OF THE HONG KONG AND SHANGHAI BANK, TOLD ME

ON 8TH JULY THAT HE HAD HAD A CONVERSATION WITH K.C. JAY (EXCHANGE BROKER FOR THE BANK OF CHINA) AT JAY'S REQUEST, IN CONNECTION WITH EARLIER DISCUSSIONS ON THE POSITION OF THE HONG KONG BANK'S SHANGHAI BRANCH. JAY CLAIMED THAT HE HAD RECEIVED A TELEGRAM

FROM CHINA ON CHOU EN LAI'S AUTHORITY TO THE EFFECT THAT IF AN

APPLICATION WERE MADE TO CLOSE THE BANK'S BRANCH IN SHANGHAI IT

WOULD BE CONSIDERED AND IN DUE COURSE APPROVED, BUT IT MIGHT TAKE SOME TIME. CHOU HOPED THAT IF THE APPLICATION TO CLOSE WERE MADE IT

WOULD BE ACCOMPANIED BY AN APPLICATION TO RE-OPEN WHEN CONDITIONS

BECAME MORE FAVOURABLE.

2. SAUNDERS REPLIED THAT JAY COULD INFORM PEKING THAT THE BANK WOULD

MAKE THE APPLICATION TO CLOSE, BUT ASKED FOR TIME TO CONSIDER THE

SUGGESTION ABOUT APPLYING TO RE-OPEN LATER.

3. JAY ADVISED THAT THE APPLICATION SHOULD COME FROM HEAD OFFICE HERE

THROUGH THE SHANGHAI MANAGER TO THE AUTHORITIES IN SHANGHAI AND NOT

THROUGH LONDON AS PREVIOUSLY CONSIDERED.

4. AS JAY HAD EARLIER SAID THAT THE CLOSURE OF THE BRANCH WOULD HAVE

D BE REFERRED TO MAO, IT PRESUMABLY HAS NOW DEEN SO REFERRED. 5. SAUNDERS ENQUIRED INCIDENTALLY WHETHER CHOU EN LAI WAS IN FACT SUFFICIENTLY IN CONTROL OF MATTERS IN CHINA, JAY REPLIED THAT ALTHOUGH HE HAD A GOOD MANY OPPONENTS HIS POSITION WAS SOLIDLY

ESTABLISHED.

CO PASS PRIORITY PEKING.

SIR D. TRENCH

[REPEATED AS REQUESTED]

DEPARTMENTAL DISTRIBUTION

C.0.

H.K. DEPARTMENT

C.F.P.D.

C.T.D.

RESEARCH DEPARTMENT

F.0.

F.E.D.

E.R.D.

SECRET

RECEIVED IN ARCHIVES No. 63 16 JUL1968.

HWAY/2

CEM