Your telegram No.62 [1] is complete confirmation of our views
here.

2. As regards your query in paragraph 3 and your paragraph 4 I
think that there is some confusion between (a) seeking relations,
and (b) encouraging Communist efforts to secure them. We are
against (a) because we think that it will encourage the Communists
to try and seek concessions in return for recognition. We are in
favour of (b) for the reasons you state in paragraph 4 and do not
support any 'holding back' or 'standoffishness'. We have
emphasized to the United States Embassy that there can be no
question of holding back British private interests.

3. Your paragraph 5. The Civil Authority will not as yet accept
telegrams in cypher.

Until they will I am confined to very restricted use of overworked
United Kingdom Embassy wireless link. Hence we have to use agreed
statements when possible and be satisfied with brief comment.

[matter omitted]