48 Mr J.S. Duncan, Acting High Commissioner in London, to Mr J.A. Lyons, Prime Minister, and to Mr S.M. Bruce, High Commissioner in London (in Australia)
Cablegram 64 (extract) LONDON, 21 March 1939, 12.24a.m.
HIMSELF AND BRUCE
I questioned Inskip  a few days ago in regard to Japanese occupations in the Pacific. In reply to my request for information he expressed the following views: While eighteen months ago occupation of Hainan was regarded as fairly contrary to Empire interests Japanese occupation of South China had altered the situation since they could in any case operate from bases there. Possession of further bases in Hainan did not greatly affect the matter unless occupation permanent. Japanese have, for what it is worth, said occupation temporary. I asked also about Paracel Islands. He said that it was reported from Tokyo some months ago that Japanese contemplated occupation but Admiralty have no information in this connection and indeed the French have recently sent Annamese police to establish occupation. Would be much against Empire interests that Islands should be effectively occupied by the Japanese notwithstanding the difficulty of fortifying them. Islands consist of number of atolls enclosing good anchorage.
Inskip met High Commissioners this afternoon at which meeting some of the above information was supplied. Meeting was merely to convey information.