CAB129-45 — Page 419

Page 419 arrested in December, accused of a "reactionary" attitude. The Chinese press reported inter alia that he had poisoned progressive minded patients. A number of missionary schools, universities, and hospitals have been taken over.

Press

10. When the Communists came into power, Reuters and other foreign news agencies were immediately stopped. They were told to apply for registration, but applications were not considered, pending the establishment of diplomatic relations. British and other foreign journalists were similarly not permitted to receive or send messages. Over the last two years, no British or foreign journalist (other than Communist) has been able to obtain an entry permit into China. The North China News (British newspaper in Shanghai) has just been compelled to throw in its hand after 100 years of publication.

Travel Restrictions

11. Exit and Entry Permits.-There have been considerable difficulties. Entry permits are normally only given to certain business staff replacements and involve Îong delays. Exit permits present particular trouble for the heads of firms. They are not granted if there are financial or labour difficulties outstanding. Out of 25 applications for visas for British Consular and Embassy officials during the last six months only three have been granted.

Police

12. Most foreigners are now visited by the police in their houses once a fortnight or so. Servants are periodically questioned and routine check-ups on activities, visitors and habits are made. The police normally behave quite courteously. Most foreigners in Shanghai and the larger ports have been unmolested.

Censorship

13. All foreign mail is subject to unofficial censorship, but the mail does get through fairly expeditiously.

British Property

14. It is not possible to register any British property in China. Registration forms have been completed and receipts issued in lieu of former title deeds but in no case have new title deeds been issued. The reason given is that " diplomatic relations have not yet been established." With one or two exceptions, it has not been possible to sell property in China; in fact property in China more often than not is a liability rather than an asset. The Chinese have requisitioned without compensation the British Military Compound (part of His Majesty's Embassy) in Peking and His Majesty's Consulates at Amoy and Foochow.

15. Foreign clubs and hospitals have in certain cases been taken over on an arbitrary basis by the Chinese. This applies to the clubs of Canton, Tsingtao and Peking; also to the International Hospital at Shanghai.

Chinese State Obligations

16. The Chinese Government, in marked contrast to its claims to State assets abroad, has so far failed to meet State obligations. For example, the Chinese have failed to meet payments due on Chinese Government Sterling bonds and ignored all communications from the Bank of England as well as from His Majesty's Chargé d'Affaires.

Sino-British Treaty (1943) on Relinquishment of Extra-Territorial Rights

17. The provisions of this Treaty, which are on a basis of reciprocity, furnish the basis of our rights as far as travel, residence and the conduct of business in China are conce

Many of these provisions have been ignored. It is doubtful whether the Chinese Government recognise the validity of the Treaty The basic

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principle in the

Page 430 Council" (published in October 1949) on treaties reads as follows:--

Common Programme of the Chinese People's Police 420 of 587

Consultative

"The Central People's Government of the People's Republic of China shall examine the treaties and agreements concluded between the Kuomintang and foreign Governments and recognise or abrogate, revise and renew them according to their respective contents."

Conclusion

:

18. All this suggests a deliberate and consistent policy of squeezing out by degrees those British-and, indeed, Western-interests which are not of practical use and assistance to the Chinese.

Foreign Office,

May, 1951.

ANNEX A

Kailan Mining Administration

All the Kailan Mining Administration foreign staff (administrative and technical) have now left China. Such claims for compensation as exist will almost certainly have to be written off.

British American Tobacco Company

The British American Tobacco Company have succeeded in getting out most of their foreign staff. In Tsingtao, however, they have so far not been able to persuade the Chinese to take over an almost brand new factory in exchange for exit permits for five of their foreign staff. The Company's stocks and assets in Shanghai are almost exhausted and they are worried about the staff position. The firm's general policy is to get out foreign staff, to write off all assets in China and not to remit any fresh funds from the United Kingdom.

Asiatic Petroleum Company (Shell)

Shell installations and stocks (oil and kerosene) which, since the oil embargo to China in 1950, have been under the virtual control of the authorities, were requisitioned on 29th April.

Godowns and Floating Property of Butterfield and Swire, International Export

Company and Others

All godowns and floating properties of British firms and also of some Chinese firms in both Nanking and Hankow have been requisitioned. This was done with- out prior warning. No compensation is expected. Firms may, in some cases, even be relieved at this development, provided the requisitioning authorities take over their labour and staff commitments.

Shanghai and Hongkew Wharf Company

This Company is a Jardines' interest and its affairs probably provide a classic example for firms in this category. With_assets valued at about £200,000 at the time of Shanghai takeover in 1949, the Company is now insolvent. With very little shipping reaching Shanghai, they have virtually had no income. They cannot sell their property. Staff reduction is not permitted; loans against their property cannot be obtained from Chinese banks. Mr. Lennox, the Shanghai Manager of Jardines, is "responsible" for this Company. He now faces the risk of imprison- ment because of failure to meet wage bills based on an arbitration decision which ignores the fact that the Company is insolvent. For a short while Mr. Lennox was held in custody. He was released when further funds were temporarily raised. But this process obviously cannot go on indefinitely. The Chinese undoubtedly calculate that even if this Company cannot pay, Jardines, who have the main interest in it, can.