264 Australian Government to Noel-Baker

Your 378. [1] Supplies for Shanghai.

We are anxiously awaiting outcome of your attempts to obtain agreement of Chinese Government and Communist authorities to regular shipments of supplies into Shanghai.

As you are aware, we have taken the view that everything possible should be done to maintain peaceful trade through Chinese ports, particularly Shanghai. We still believe that this offers the only practical means of maintaining normal contact with China and establishing reasonable relationships of a business nature in the future. Our Ambassador at Nanking has confirmed the desperate plight in which British commercial interests in Shanghai are now beginning to find themselves as a result of the Chinese Government's closure of the port [2], and has urged the need for immediate policy decision. We realise that little help can be expected from the United States on this issue, and that attempts to convoy vessels to Shanghai would be dangerous. At the same time we consider that the Chinese Government in its present situation should not be allowed indefinitely to maintain what is virtually a blockade while refusing to acknowledge the existence of a state of belligerency.