The British Embassy to the Department of State 5

Continuation of paper on China attached to Sir Oliver Franks’s letter of 5th January, 1949, to Mr. Lovett.6

Possibilities of Counter-action

Certain measures for the emergency evacuation of British residents in China have already been taken. The Commanders-in-Chief, Far East, have for some time been considering the military aspects of the problem in relation to Hong Kong and South-East Asia. Action on the civil side is being taken to put Hong Kong into as great a state of preparedness as possible. The Chiefs of Staff have been invited to consider the strategic implications of the China situation in so far as it threatens the colony of Hong Kong. It is, however, desirable to consider what further measures are open to us to safeguard British interests in the Far East.


The only Power which could contribute financial, material or military resources for counter-action against the Chinese Communists in China is the United States. It is not known whether the United States Government is, at this stage, willing to take any additional action under these three headings.

As far as the United Kingdom is concerned, our best hope probably lies in keeping a foot in the door. That is to say that, provided there is not actual danger to life, we should endeavour to stay where we are, to have de facto relations with the Chinese Communists in so far as these are unavoidable, and to investigate the possibilities of continued trade in China. It may be that, in consultation with our friends, we shall have a bargaining counter by virtue of our being able to withhold certain essential imports which China must have if the Chinese Communists do not behave. We might be able to insist as a quid pro quo that the Communists should respect our trading position [Page 822] and our properties in China. This will require further examination, but seems to offer the only possibility of counter-action in the immediate future. If the Chinese Communist administration fails to obtain effective control of the country, it may be possible to take advantage of internal strains as they manifest themselves to maintain and even to improve our position. In order to do this it is essential that we should not abandon our position in China, and we must aim to keep, at any rate, a foot in the door.

South-East Asia

It seems likely that it will fall to the Powers geographically situated in the the region to take their own measures to meet the Communist menace. It is more than ever essential that the most strenuous efforts should be made to clear up the situation in Malaya as soon as possible. Though it is very desirable that the measures taken by the Governments in the area should be co-ordinated, it is very doubtful whether in the present political situation in the region it would be possible to align the various territories publicly together. Burma, for example, would find difficulty in associating with French Indo-China and Indonesia, while the French and the Dutch might be equally reluctant to have such an association. Moreover, the Commonwealth countries primarily concerned, i.e., Australia, New Zealand, India and Pakistan, which all have a vital interest in the peace and prosperity of South-East Asia, would, on present showing, be unwilling to join in any activities involving support of the French and Dutch Governments in this area. It may, therefore, be that the United Kingdom is in the best position to act as the co-ordinating factor, though it would be necessary to consider the political consequences very carefully at each stage.

In these circumstances there might be advantage in our addressing ourselves to all the interested Powers, setting forth our view of the problems likely to arise as a result of Communist successes in China, and consulting with the Powers concerned as to the best method of dealing with the situation. It is desirable, so far as political considerations permit, to ensure that each territory was possessed of police and intelligence services, as well as the requisite legal powers, to deal adequately with any growth of Communist activity, and with these measures in view to arrange for an exchange of information (always provided that this is without risk to our own security) and for frequent consultation. The possibilities of doing this would be considered on receiving the answers to our communications to the various Governments.

  1. Handed on January 11 to the Chief of the Division of Chinese Affairs (Sprouse) by the Counselor of the British Embassy (Graves).
  2. Ante, p. 2.