Your telegram 66. [1]

Paragraph one of my telegram 164 [2] was sent not because I
contemplated early departure but in order that I might have
approval for staff changes which would be necessary when I did
leave and especially for temporary employment of Military Attache
as Consul General Shanghai.

2. All Heads of Missions here have taken it for granted that they
would be withdrawn eventually probably for 'consultation' (see
paragraph 3 British Ambassador's telegram repeated to United
Kingdom Representative Canberra as number nine). 3 Afghan Minister
has, already, orders to leave and the United States Ambassador
contemplates leaving in possibly five or six weeks time. We
British Commonwealth Ambassadors expect to remain until most other
Colleagues have left in order to do all possible to protect our
national interests and to establish contacts with Communist
Regime.

3. Principal reason for such withdrawal is that when the national
Government to which we are accredited ceases to exist 'de facto'
the already slight fiction that we have any status will be at an
end. We will no longer have any claim to privileges of an Embassy
except on the grounds of courtesy and present indications (vide
paragraph 6 below) are that duties may not be lessened by this. It
would be neither dignified nor to the credit of our country to
have representative here in such a position.

4. Moreover our presence here could be an embarrassment to you in
discussions which inevitably will precede recognition of the new
regime, and might be utilised as a means of pressure on you. Such
recognition will of course have to be followed by the accrediting
of Ambassador with all the usual formalities, request for
agreement etc.

5. Another reason for recall is that little can be done here in
Nanking which is already virtually a backwater. No important
Communist personality is here except for Liu Po Cheng, the Mayor,
who declines to have any contact with any of us. Otherwise, there
are only junior officials and everything has apparently to be
referred to Peking. We are not yet allowed to move outside the
city. We hope shortly to be allowed to visit Shanghai but I see no
hope of being allowed to visit, say, Peking to establish direct
contact with the present centre of events.

6. Despite a series of informal approaches, local authorities have
done nothing to grant normal diplomatic privileges, e.g.

communication with you in cypher and by bag etc. They have
declined to license more than a proportion of our cars and refused
all licences to cars of service attaches. There are disturbing
signs that they may intend to refuse diplomatic privileges until
recognition is withdrawn from the Nationalist Government despite
the fact that they have no Government which we could recognise.

Actually when the Nationalist Government leaves Canton and our
representatives do not go with it, it will virtually end 'de
facto' recognition. End of De jure recognition is a matter to be
decided presently by States after consultation and is, I imagine,
involved with the Status of China on U.N. Council etc. We are
trying to persuade them that it is premature to raise such
questions until there is a Communist Government established, which
is unlikely to be until October or later. Very shortly we will
have to press for decision regarding cyphers, etc.

7. Some of us have been making every effort to open relations with
the Communists but most have been fruitless for the Communists
refuse to meet us. There is no [Ministry of Foreign Affairs] [4]
here but only a Bureau, for dealing with foreign nationals,
staffed by junior officials. Our contacts with it friendly but
show no signs of developing beyond purely semi-official basis. I
have had informal talks with friend and ex-official now in
Communist employment. The Secretary, on basis former friendship,
of fluent knowledge of Chinese, has established good relations
with the head of the Bureau. The United States Ambassador sees,
occasionally two or three ex pupils now on the Communist [ranks].

That is the sum total of our contacts after six weeks of effort.

When we can go to Shanghai we may do better.

8. Report in paragraphs 6 and 7 is not encouraging but I do not
give up hope or intend to relax my own efforts or my influence on
others to exert theirs. But your telegram suggests, that from
Canberra things seem much easier than they are in Nanking where,
at the moment, they are not encouraging. I am not depressed yet
but it is disappointing to feel that you think we are exhibiting
neglect and showing lack of realism, effort and initiative.