CAB129-45 — Page 156

(c)

(a)

(16)

(c)

(a)

(e)

Page 156 that the effect would be to antagonise the United States still

further against Hong Kong, and jeopardise any chance of a relaxation of the United States embargo on exports to the Colony.

The Secretary of State for the Colonies takes the view that:-

action to detain the tanker which is admittedly Chinese property, would be regarded by the Chinese People's Government as an unfriendly act (going as it would far beyond any such measures as the embargo of goods under Lists I and II, etc.);

that in doing so we should be detaining property in which a

Government whom we have recognised is interested;

that to do so would be to invite reprisals against British shipping in Chinese ports. (No ships of major importance are reported to be there at present, but it would make it far too risky for them to go there in future. There were, however, 20 smaller British ships in Chinese ports in the week ending 27th March and 24 proceeding to or from those ports.);

that reprisals against Hong Kong by the Chinese People's Govern-

ment are probable. These might take the form of cutting off essential food supplies from Hong Kong, which cannot be re- placed, and of stirring up internal unrest in Hong Kong itself. At the best it would be one more "nail in Hong Kong's coffin"; and

that once the vessel leaves Canton (whether it can be towed from

Hong Kong without leaving territorial waters) it should be possible for the Nationalist Government or the United States Navy to intercept her.

The First Lord of the Admiralty and the Minister of Transport support the view of the Secretary of State for the Colonies particularly as regards the dangers of reprisals against Hong Kong and British shipping in Chinese ports.

5.

The Minister of Transport has, in addition to calling attention to the possibility of retaliatory action against British ships in Chinese ports, urged the very serious danger to His Majesty's Government, in view of their very large shipping stake in world trade, of being the first to embark on a policy of high-handed interference with ships, since to do so might set the pattern for similar action not only by Russia and her satellite nations, but also elsewhere, with very far-reaching consequences. Apart from questions of morals it is to our interest, as the leading maritime power, to set an example of rectitude in this matter.

7.

The Governor of Hong Kong has been consulted and has said that "weighing up the certainty of American reactions with their serious con- sequences (which will probably occur in any case) against the lesser certainties of Chinese retaliatory action (but with its far graver conse quences) I should prefer to incur the displeasure of the Americans as the lesser of two evils".

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G.R.