Many thanks for your letters of 5th July about Hongkong and about
Indo-China. It is useful for us to have these items of information
and background about neighbouring territories on which our regular
sources of information are meagre.

Your letter about Hongkong raises a point on which it might be
just as wen for you to bear in mind the true facts in case any
mistaken impression should grow up in Singapore. You say that the
Commissioner General, in reporting on recent meetings of the
United Kingdom Chiefs of Staff which he attended, has stated that
the decisions of the Chiefs of Staff to prepare for the defence of
Hongkong, and to publicise this to the world, have been favourably
commented on by the Commonwealth Governments and by the United
States Secretary of State. Whether Acheson in fact went so far as
to comment favourably on the plans we cannot be sure; our
understanding has been that he was completely non-committal when
Bevin told him about them. So far as the Australian Government is
concerned, it is hardly true to say that we have commented
favourably. Our line has been rather that too much emphasis and
publicity should not be laid upon the defensibility of Hongkong.

We have recognised that if it comes to a showdown with the
Communists the United Kingdom Government will of course have to
defend Hongkong against attack. But we have urged that the
emphasis should be placed rather on the capacity of Hongkong to
carry on its normal functions of a trade entrepot, and try to
establish its continued usefulness to China under any Government.

This may of course be without effect; the Communists may already
have made up their mind that when they are in a position to do so
they will renounce the 1842 and 1898 treaties and set about
securing the rendition of Hongkong. But we do not think this
possibility should be accepted fatalistically. By all means let
the United Kingdom Government put Hongkong's defences in order in
so far as this is possible. But let it be done without too much
fuss. To publicise the supposed strength of Hongkong is in our
view to irritate the Chinese unnecessarily. We are not much
impressed with the United Kingdom arguments about the virtue of
'negotiating from strength', especially in the case of Hongkong.

A related point arises in the Commissioner General's Political
Summary for May, 1949, where in paragraph 7, page 4, it is said
that 'representatives of the Atlantic powers and of the
Commonwealth countries agreed to follow a common economic policy
towards the Communists', as a result of which no assistance should
be offered spontaneously to the Communists, no advice should be
offered to them in economic matters, and Communist requests should
be dealt with on a practical business basis. The summary does not
specify who these Commonwealth representatives were, and it
accordingly tends to give the impression that all the Commonwealth
Governments have approved of this economic approach to the
Communists. This account is not strictly true; and it would do no
harm to make sure that the Commissioner General and his staff see
this matter in proper perspective. It is true that Officer agreed
with other British Commonwealth representatives at Nanking in
recommending the adoption of this attitude, but the Australian
Government subsequently pointed out to the United Kingdom
Government that the emphasis was wrong and might lead to the
adoption of a standoffish attitude. So far from helping to
establish reasonable working relationships with the Communists, it
would tend to restrict commercial dealings with them and merely
serve to feed their suspicions. We did not dispute that such
commercial dealings should be on a strictly business basis, but
rather deprecated the suggestion of sitting back and waiting to be
approached.

It may be that the Commissioner General is fully aware of the
Government's attitude on these questions. But there is as you know
a tendency in Whitehall to magnify passive acceptance of a course
by Commonwealth countries into active support; and this is a
tendency we have been trying to correct. The Commissioner General
should be left under no impression that we are accepting the
United Kingdom Government's views about China and Hongkong without
question.

This does not mean that we are critical of what the United Kingdom
Ambassador and his Commonwealth colleagues have been trying to do.

I believe myself that they have been making earnest and sincere
efforts to establish a basis of understanding and practical co-
operation with the Communists. I know also that this is not easy;

but I believe it is worth persevering in the attempt.