My telegram 168 [1] and immediately preceding 220 [2] and
paragraph 7 of my despatch 19. [3]

2. It seems probable in the near future that
(a) Canton will be occupied by the Communist forces and fugitive
Nationalist Government set up at Chungking.

(b) The provincial Communist Government will be at Peking, and
(c) Soviet and probably Polish and Czecho-Slovak Governments at
once will grant recognition to the new Government.

3. By the end of the month in addition, the United States
Ambassador, Canadian, Siamese, Brazilian and Argentine Ambassadors
will have left and the French and Netherlands Ambassadors will be
on the point of leaving. The United Kingdom Ambassador has
instructions to leave just before the formation of the new
Government and the Indian, Egyptian and Italian Ambassadors and
Portuguese Minister will almost certainly do the same. I assume
that you will wish me to take similar action.

4. Such withdrawal appears to be necessary unless we intend to
give immediate recognition to the new Government. This involves, I
understand, problems regarding China's seat on the Security
Council as well as the withdrawal of de jure recognition from the
Nationalist Government. To remain here would be to be in
embarrassing position outwardly in territory of the Government to
which we had not extended recognition. We would not be at the
capital of the new Government and it is almost certain that we
would not be permitted to go to the new capital prior to
recognition. We would not be in a position to have even informal
relations and might find our activities closely confined and even
be asked to leave with consequent embarrassment to our Government.

5. I suggest, therefore, that as soon as Canton is occupied you
announce that I am being either withdrawn for consultation or
permitted to take leave, at the same time repeating your statement
of June 21st as to future relations with the new Government. [4] I
would then arrange to go to Japan or Hong Kong from where I could
make a short visit to Australia if you approve and then return to
watch the situation in China from close at hand.

6. It would be for the person left in charge of the Embassy to
advise formal recognition when the time came when he would become
Charge d'Affairs and presumably ask for facilities to move the
Embassy to Peking if that was the new capital. He would ask in due
course for Agreement for the new Ambassador.