893.00/6–2749: Telegram
The Consul General at Hong Kong (Hopper) to the Secretary of State
[Received 11:27 a. m.]
380. [Member] … of Legislative Yuan group Li Tsung-jen supporters (mentioned Cantel 378, to Department43), in June 24 interview informed … source their intention meet with Huang Shao-hsiung, Liu Fei and Tung Kuan-hsien about July 1 issue statement on behalf “progressive elements Kmt” offering political cooperation with Communists in forthcoming coalition Government. [Informant] stated group, which now calls itself China Democratic Association, reluctant embark on this course, but sees no other means effectively combat Communist monopoly political power. Also stated would like views American Government on this move and would also like American financial support since funds exhausted and badly need resources continue organizational work. Concluded that group would work for democratic China and preserve present anti-Communist pro-American orientation whether or not American aid received.
Evidence suggests this group may well prove rallying point all anti-Generalissimo and anti-C–C Clique elements of Kmt remaining Nationalist China, with leadership eventually in hands Li Tsung-jen. If so, and given increasingly strong possibility Li may feel forced make peace with Communists, this group would form nucleus his political machine and serve as counterpoint KmtRC of Li Chi-shen who would be his principal rival in coalition government. Presence Liu Fei in Democratic Association activities certainly suggests Communists interested in bargaining with group.