893.00/8–449: Telegram
The Chargé in China (Clark) to the Secretary of State
[Received August 9—9:41 a. m.]
Cantel 872. Tried out on Malcolm MacDonald, High Commissioner for Southeast Asia, whom I encountered Hong Kong, ideas future policy re China outlined Cantel 829, July 27, repeated Nanking 585, Shanghai 465, Taipei 84. Malcolm thought it interesting approach which might prove profitable but would need lot of thinking through. If such policy were pursued and did in fact result chaotic condition China, Malcolm said situation would have salutary effect Southeast Asia, strengthening determination those wanting resist, putting heart into those hesitating and generally strengthening democratic elements. Prime British consideration at moment is Hong Kong and British business interests. He said Hong Kong community had been buoyed by British determination defend colony, but was extremely depressed over prospects trade with Communists. Feeling thus re Hong Kong was almost as strong, he said, as that Shanghai. Problem, as British saw it, was whether preferable treat Communists with friendship in hopes trade would be permitted over long term or whether that hope was futile and they should immediately take firm stand against Communists, make Hong Kong fortress, and try weather storm. In any event, Hong Kong would be defended, he said. If economic situation caused great unemployment, Chinese not British subjects would be deported.
Malcolm said he hoped Quirino–Chiang Pacific Pact would be “stillborn”. It could not but fail under such parentage. He feels nevertheless there should be some broad concerted action countries Southeast Asia at proper time. He believes there is some hope this regard if trends French Indochina and Indonesia continue. His people Indochina say Bao Dai59 is doing much better than had been expected. If he can continue political success and if French commander can get military reinforcements he has been led believe will be forthcoming [Page 472] from France and if they can have 9 months to 1 year before Communists attack across border from China, Malcolm believes Indochina can be saved. Indonesia seems definitely better, he says, and President’s Point Four program might help there. In Burma anything can happen, but he believes that so long as Thakin Nu60 is in control Communists would not get anywhere there. Although export rice had brought in sufficient current funds Thakin Nu had requested the rice loan from India, Pakistan, Ceylon and UK be held open, which has been done. Malcolm feels Nehru61 is all-important in India. Change of Nehru from anti-West to realization Communism is bad had resulted in his agreement remain Commonwealth, but Malcolm thought Nehru still fascinated by Communism as intellectual theory. If Nehru got killed, Indian situation might develop badly, he says, as Patel62 is no answer, being too old and essentially an organizer who does not hold imagination Indians as does Nehru. In his own Malaya, things are going really quite nicely, he said, and terrorists are being driven further and further into interior and will be eliminated.
Sent Department, repeated Nanking 578, Shanghai 478, Taipei 92, London 3. Pouched to Saigon 2, Rangoon 3, New Delhi unnumbered, Singapore unnumbered, Hong Kong 25.