Hong Kong and the Cold War: Anglo-American Relations 1949-1957 (Oxford Historical Monographs)

OXFORD HISTORICAL MONOGRAPHS EDITORS R. R. DAVIES

R. J. W. EVANS

J. HARRIS

B. WARD-PERKINS

J. ROBERTSON

R. SERVICE P. A. SLACK

. The Colony of Hong Kong (Source: Peter Wesley-Smith, Unequal Treaty –: China, Great Britain and Hong Kong’s New Territories. Oxford University Press, Hong Kong, , p. xvi)

Hong Kong and the Cold War Anglo-American Relations –

CHI-KWAN MARK

CLARENDON PRESS • OXFORD

3 Great Clarendon Street, Oxford   Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide in Oxford New York Auckland Bangkok Buenos Aires Cape Town Chennai Dar es Salaam Delhi Hong Kong Istanbul Karachi Kolkata Kuala Lumpur Madrid Melbourne Mexico City Mumbai Nairobi São Paulo Shanghai Taipei Tokyo Toronto Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries Published in the United States by Oxford University Press Inc., New York © Chi-kwan Mark  The moral rights of the author have been asserted Database right Oxford University Press (maker) First published  All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this book in any other binding or cover and you must impose this same condition on any acquirer British Library Cataloguing in Publication Data Data available Library of Congress Cataloging in Publication Data Data available ISBN ––– 1 3 5 7 9 10 8 6 4 2 Typeset by Hope Services (Abingdon) Ltd. Printed in Great Britain on acid-free paper by Biddles Ltd., King’s Lynn, Norfolk.

ACKNOWLEDGEMENTS This book has its origin in my D.Phil. dissertation, which I submitted to the University of Oxford in . I owe an especially large debt of gratitude to Professor Rosemary Foot, my supervisor, who taught me the art of history writing. I am also grateful to Dr John Darwin and Dr Peter Lowe who read my dissertation as examiners and gave me valuable comments. Dr Lowe deserves my especial thanks for assisting me in converting the thesis into a more readable book. So do the editorial professionals of the Oxford University Press especially Katie Ryde. In the course of my research, I have also benefited from discussions and correspondence at different stages with Professors Justus Doenecke, Edward Ingram, William Roger Louis, Nancy Bernkopf Tucker, and Allen Whiting. They are, of course, not responsible for any shortcomings that remain in this book. My research was supported by the Swire/Cathay Pacific Scholarship, the Beit Fund, and various research and travel grants from St Antony’s College, the Centre for International Studies, and the Committee for Graduate Studies, for which I am grateful. I wish to thank the following archives and libraries for permission to publish material in this book: the Bodleian Library, Oxford University; the Dwight D. Eisenhower Library; the Gelman Library, George Washington University; the Harry S. Truman Library; the Harvard University Archives; the Lauinger Library, Georgetown University; the Library of Congress; the National Archives and Records Administration; the Operational Archives Branch of the Naval Historical Center; Princeton University Library; the Public Record Office; and the Trustees of the Macmillan family. My thanks are due also to The International History Review for allowing me to reproduce, in slightly different form, my article, ‘A Reward for Good Behaviour in the Cold War: Bargaining over the Defence of Hong Kong, –’, in Chapter  of this book. I use Pinyin for the transliteration of Chinese names and places, except where familiar ones might be confused if changed, such as Chiang Kai-shek and Quemoy and Matsu.

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CONTENTS List of Abbreviations

Introduction

viii



. Hong Kong in British, Chinese, and American Cold War Thinking



. Defending the Indefensible Colony: Anglo–American Exchanges over the Security of Hong Kong



. Meeting the Political Threat: Hong Kong in Britain’s and America’s China Policy



. Containing the Economic Warfare: Hong Kong and Export Controls against China



. Controlling the ‘American diaspora’ in Hong Kong: Intelligence, Covert Action, and Propaganda



Conclusion



Epilogue



Bibliography



Index



LIST OF ABBREVIATIONS ADR ANZUS ARCI BDCC(FE) BoT CA CAB CAT CF CFPF CIA C-I-C,FE CINCPAC CNO CO COCOM COS CRO DAD DDEL DDRS DEFE DF DSR ECOSOC EPAWF FAOHP FEER FO FRUS GCHQ GHQ,FE GU HK HKAR HKC

Annual Departmental Report by Director of Commerce and Industry Treaty between Australia, New Zealand, and the United States Aid Refugee Chinese Intellectuals, Inc. British Defence Coordination Committee, Far East Board of Trade Office of Chinese Affairs Cabinet Civil Air Transport Incorporated Executive Secretariat, Conference Files Central Foreign Policy Files Central Intelligence Agency Commander-in-Chief, Far East Commander-in-Chief of the Pacific Chief of Naval Operations Colonial Office Coordinating Committee British Chiefs of Staff Commonwealth Relations Office Records of the Division of Acquisition and Distribution, Office of Libraries and Intelligence, Special Assistant for Intelligence Dwight D. Eisenhower Library Declassified Documents Reference System Defence Decimal Files Department of State Selected Records Relating to the Korean War United Nations Economic and Social Council Dwight D. Eisenhower Papers as President (Ann Whitman File) Association for Diplomatic Studies, Foreign Affairs Oral History Program Far Eastern Economic Review Foreign Office Foreign Relations of the United States Government Communications Headquarters Government Headquarters, Far East Land Force Lauinger Library, Georgetown University Hong Kong Hong Kong Annual Report Hong Kong Consulate General, Classified General Records

List of Abbreviations HSTL INR IRD JCS JIC MoD NA NCNA NHC NSC NSCP OPC PRC PRO PSF RG RIO SANSAR SEATO SIGINT TP UN UNHCR UNREF USIA USIS USIS HK VOA WHO

ix

Harry S. Truman Library Records of the Bureau of Intelligence and Research (INR) Subject Files Information Research Department Joint Chiefs of Staff Joint Intelligence Committee Ministry of Defence National Archives and Records Administration New China News Agency Operational Archives Branch, Naval Historical Center National Security Council National Security Council Staff Papers Office of Policy Coordination People’s Republic of China Public Record Office President’s Secretary’s Files Record Group Regional Information Office Office of the Special Assistant for National Security Affairs Records Southeast Asia Treaty Organization Signals intelligence Papers of Harry S. Truman United Nations United Nations High Commissioner for Refugees United Nations Refugee Fund United States Information Agency United States Information Service Classified General Records of the United States Information Service Office, Hong Kong Voice of America White House Office

. East Asia after World War II (Source: William R. Keylor, A World of Nations: The International Order Since . Oxford University Press, New York, , )

Introduction At midnight on  June , the United Kingdom restored the sovereignty of Hong Kong to the People’s Republic of China after more than one and a half centuries of British colonial rule. Present at the establishment of the Hong Kong Special Administrative Region was the American Secretary of State, Madeleine K. Albright. But this was not the only occasion when such a high-level US official demonstrated an interest in Hong Kong. Nor was  the only year in the course of its colonial history when the future of Hong Kong was at stake. Forty years ago, in  the British position in Hong Kong appeared to be uncertain, an uncertainty which worried even top decision-makers in Washington. Indeed, since the founding of the People’s Republic in , the fate of Hong Kong had been a subject of discussion, debate, and disagreement between the British and US governments. With the end of the Second World War, the British Labour government began the process of decolonization with the aim of transforming a formal empire into informal zones of influence. In Asia, Britain withdrew from India, Burma, and Ceylon before nationalism got out of control. In Malaya, the British held on until the communist insurgency was brought under control. The British also re-established their colonial rule in Hong Kong immediately after the defeat of Japan. But in a rapidly changing post-colonial, bipolar world, they soon found Hong Kong a colony too valuable to abandon in peace, and yet too peripheral to be worth committing scarce resources to for its survival at war. After , the British were acutely aware of the vulnerability of Hong Kong to China’s external attack and internal subversion. In retrospect, such a threat may have been more potential than real, and more serious for some officials at some times than others. But without the benefit of hindsight, no contemporary official could take for granted Beijing’s peaceful intentions, at a time when China was fighting the United States to a standstill in Korea, waging a proxy war in Indochina, and continuing the unfinished civil war in the Taiwan Strait. It was feared that Hong Kong would be attacked not as an isolated act, but in the event of the spread of hostilities between China and America over Korea, Indochina, or Taiwan. More importantly, the



Introduction

British sense of vulnerability stemmed not only from their assessment of the communist threat, but also from Britain’s imperial decline and America’s Cold War requirements. Given Britain’s limited resources and extensive overseas commitments, the level of garrison in Hong Kong had to be scaled down throughout the s (and beyond). Military strategists and advisors, who had to plan for a worst-case scenario, realized that Hong Kong was indefensible against a large-scale communist attack, and indeed its garrison was inadequate even to delay an enemy’s advance long enough to cover an evacuation. Their realization of Hong Kong’s military weakness thus reinforced the British sensitivities to a communist attack, however remote such a possibility. Added to the British worries was the ‘American threat’ of an indirect kind. With the intensification of the Cold War in Asia, the United States sought allies to contain Communist China and found Hong Kong a useful location for intelligence gathering, export controls, propaganda operations, and even covert action. The British were concerned that too close cooperation with the United States in Hong Kong or elsewhere in Asia would provoke Beijing into causing trouble in the territory, or worse still attacking Hong Kong in the event of a wider Sino-American war. For these reasons, the British were eager to engage US interest in the defence of Hong Kong on the one hand, and to restrain the more belligerent tendencies in America’s China policy on the other. This book will examine how Britain and America dealt with the vulnerability of Hong Kong in the age of decolonization and the Cold War. It will focus on four dimensions of Hong Kong’s vulnerability that had the greatest impact on the Anglo–American relationship: the external defence of Hong Kong; the political consequences for Hong Kong of American–Chinese confrontation; Hong Kong’s economic dependence on the mainland; and US overt and covert operations in the Colony. The year  provides the departure point for this study. It was the time when the Attlee government and the Truman administration, confronted with the twin challenges of the victory of the Chinese Communists on the mainland and the future of Hong Kong, undertook extensive diplomatic consultations and policy coordination over such issues as diplomatic recognition, export controls, and Hong Kong’s defence.  is taken as the concluding point to this book and needs justification. That year, the defence review under the new Macmillan government brought to the forefront the question of Hong Kong’s

Introduction



defensibility, and indeed raised the whole question of the British position in Hong Kong.  was also a year of uncertainty in Anglo–American relations as a result of the Suez crisis the previous year and their disagreement over the China issue. By the end of , as a result of the restoration of the Anglo–American relationship, the two countries had reached a greater degree of understanding on defence planning for Hong Kong, export controls against China, and Chinese representation in the United Nations. This is not to suggest that the British had won over the Americans to their policy preferences or vice versa; nor was the vulnerability of Hong Kong any longer a problem. Nevertheless, this study will show that decision-makers in London and Washington saw Hong Kong not in itself but in the context of Anglo–American relations. Thus,  is chosen as a crucial concluding year in order to demonstrate the extent to which the restoration of the Anglo–American ‘special relationship’ was manifested in perceptions and policies towards Hong Kong. While covering both British and US policies, this study will focus on their dynamic interactions. As such, the level of analysis will be twofold—the bilateral and individual levels of Anglo–American interactions. On the one hand, this study will detail the diplomatic consultations, military discussions, and actual cooperation between the British and US governments, from working level up to the Cabinet, both formally and informally. By concentrating on their bilateral interactions, I seek to find out how and to what extent Britain and the United States influenced each other over issues related to Hong Kong. On the other hand, at the individual or human level, I will explore how officials calculated the other party’s possible reactions, and how such calculations affected their own decision-making. In particular, the conflicts that were waged in the minds of individual officials, between the maintenance of the Anglo–American relationship and the preservation of Hong Kong interests, will be highlighted. By examining the individual level of Anglo–American interactions, we can get some insights into how British and US decision-makers perceived each other as allies, and how much they valued their partnership or could stretch the boundaries of their friendship. In short, the book focuses on the interactive process of policy-making: perceptions, calculations, and expectations of each other’s possible responses will be given as much attention as the actual decisions and policy outcomes. This study, therefore, places Hong Kong at the heart of the Anglo–American relationship in the wider context of the Cold War in



Introduction

Asia.1 It aims to complement the existing scholarship on Hong Kong, Britain, America, and China which concentrates mainly, if not exclusively, on either one of the following aspects: US policy towards Hong Kong;2 Hong Kong in Sino–British relations;3 and British colonial policy towards Communist and Nationalist activities in Hong Kong.4 Moreover, it will provide new information on a number of hitherto unexplored issues, while throwing new light on familiar events. It is 1 For the extensive scholarship on Anglo–American relations with reference to China (but not specifically Hong Kong), see Roderick MacFarquhar, ‘The China Problem in Anglo–American Relations’, in William Roger Louis and Hedley Bull (eds.), The ‘Special Relationship’: Anglo–American Relations since  (Oxford, ), –; Edwin W. Martin, Divided Counsel: The Anglo–American Response to Communist Victory in China (Lexington, Ky., ); Rosemary Foot, ‘The Search for a Modus Vivendi: Anglo–American Relations and China Policy in the Eisenhower Era’, in Warren Cohen and Akira Iriye (eds.), The Great Powers in East Asia, – (New York, ), –; James T. H. Tang, ‘Alliance under Stress: Anglo–American Relations and East Asia, –’, in R. O’Neill and B. Heuser (eds.), Securing Peace in Europe, –: Thoughts for the Post-Cold War Era (London, ), –; Peter Lowe, ‘Challenge and Readjustment: Anglo–American Exchanges over East Asia, –’, in T. G. Fraser and Peter Lowe (eds.), Conflict and Amity in East Asia: Essays in Honour of Ian Nish (London, ), –; Anita Inder Singh, The Limits of British Influence: South Asia and the Anglo–American Relationship, – (London, ); Qiang Zhai, The Dragon, the Lion, and the Eagle: Chinese–British–American Relations, – (Kent, Oh., ); Steven Hugh Lee, Outposts of Empire: Korea, Vietnam and the Origins of the Cold War in Asia, – (Liverpool, ); Lanxin Xiang, Recasting the Imperial Far East: Britain and America in China, – (New York, ); and Victor S. Kaufman, Confronting Communism: U.S. and British Policies toward China (Columbia, Mo., ). 2 Nancy Bernkopf Tucker, Taiwan, Hong Kong, and the United States, –: Uncertain Friendships (New York, ); Johannes Richard Lombardo, ‘United States’ Foreign Policy towards the British Crown Colony of Hong Kong during the Early Cold War Period, –’, Ph.D. thesis, University of Hong Kong, ; and Yu Qun and Cheng Shuwei, ‘Meiguo de Xianggang Zhengre (–)’ [‘The Hong Kong Policy of the United States (–)’], Lishi Yanjiu [Historical Research] / (), –. 3 Brian Porter, Britain and the Rise of Communist China: A Study of British Attitudes – (London, ); Robert Boardman, Britain and the People’s Republic of China – (London, ); James Tuck-hong Tang, Britain’s Encounter with Revolutionary China, – (New York, ); Ming K. Chan (ed.), Precarious Balance: Hong Kong between China and Britain (Hong Kong, ); Zhong-ping Feng, The British Government’s China Policy – (Keele, ); Michael Yahuda, Hong Kong: China’s Challenge (London, ); Aron Shai, The Fate of British and French Firms in China – (London, ); David Clayton, Imperialism Revisited: Political and Economic Relations between Britain and China, – (London, ); Peter Lowe, Containing the Cold War in East Asia: British Policies towards Japan, China and Korea, – (Manchester, ). 4 Steve Yui-sang Tsang, Democracy Shelved: Great Britain, China, and Attempts at Constitutional Reform in Hong Kong, – (Hong Kong, ); idem, ‘Target Zhou Enlai: The “Kashmir Princess” Incident of ’, China Quarterly,  (Sept. ), –; idem, ‘Strategy for Survival: The Cold War and Hong Kong’s Policy towards Kuomintang and Chinese Communist Activities in the s’, The Journal of Imperial and Commonwealth History, / (May ), –.

Introduction



widely recognized that Hong Kong was used as an outpost for intelligence gathering, propaganda, and even covert action by the Americans, the Chinese Communists, and the Nationalists in one way or another.5 But Hong Kong’s roles in US policy and in the Cold War struggle have been somewhat exaggerated.6 In addition, the extent to which British and American officials on the ground cooperated with one another has been largely unexplored.7 Although the British could not avoid involving a ‘neutral’ Hong Kong in the containment of Communist China, neither were the Americans allowed to launch an unrestrained anticommunist crusade in the territory. The Hong Kong government reacted differently to US intelligence and propaganda operations, depending on whether they were ‘overt’ or ‘covert’ in nature. This would affect the extent of Anglo–American cooperation over Hong Kong, both in the field and at headquarters. But what caused the greatest differences and strains between (and within) the British and US governments was the introduction of export controls in Hong Kong, especially during the Korean War period. Most works on export controls against China, however, mention Hong Kong’s role only in passing, and if not, look mainly from the British perspective.8 A better 5 Richard Deacon, The Chinese Secret Service (London, ), –; William M. Leary, Perilous Missions: Civil Air Transport and CIA Covert Operations in Asia (Ala., ); Evan Thomas, The Very Best Men: Four who Dared: The Early Years of the CIA (New York, ); John Prados, President’s Secret Wars: CIA and Pentagon Covert Operations from World War II through the Persian Gulf (Chicago, ); Desmond Ball, ‘Over and Out: Signals Intelligence (Sigint) in Hong Kong’, Intelligence and National Security, :  (July ), –; Johannes R. Lombardo, ‘A Mission of Espionage, Intelligence and Psychological Operations: The American Consulate in Hong Kong, –’, Intelligence and National Security, / (Winter, ), –. 6 e.g., Lombardo has exaggerated the scale of US propaganda activities in Hong Kong by ignoring the strict restrictions imposed by the colonial authorities. Lombardo, ‘A Mission of Espionage, Intelligence and Psychological Operations’ and his Ph.D. thesis. 7 An exception which focuses on Anglo–American intelligence cooperation (but not specifically about Hong Kong) is Richard J. Aldrich, ‘ “The Value of Residual Empire”: Anglo–American Intelligence Co-operation in Asia after ’, in Richard J. Aldrich and Michael F. Hopkins (eds.), Intelligence, Defence and Diplomacy: British Policy in the PostWar World (London, ), –. 8 Yoko Yasuhara, ‘Japan, Communist China, and Export Controls in Asia, –’, Diplomatic History, / (Winter ), –; Qing Simei, ‘The Eisenhower Administration and Changes in Western Embargo Policy Against China, –’, in Cohen and Iriye (eds.), The Great Powers in East Asia, –; Burton I. Kaufman, ‘Eisenhower’s Foreign Economic Policy with Respect to East Asia’, in ibid., –; Wenguang Shao, China, Britain and Businessmen: Political and Commercial Relations, – (London, ); Frank Cain, ‘The US-Led Trade Embargo on China: The Origins of CHINCOM, –’, The Journal of Strategic Studies, / (Dec. ), –; Aaron Forsberg, America and the Japanese Miracle: The Cold War Context of Japan’s Postwar Economic Revival, – (Chapel Hill, NC, ), –.



Introduction

understanding of Hong Kong’s role in the enforcement of these controls has to be set against the backdrop of the twists and turns of the Korean conflict and the Anglo–American relationship.9 Thus, the involvement of Hong Kong in the Cold War gives us a more complex picture than the existing literature has portrayed. This study will argue that Hong Kong became what might be called a ‘reluctant Cold Warrior’, since London wanted to demonstrate Britain’s value as a close ally of America by involving the Colony in the containment of China. But given its vulnerability in the shadow of China, Hong Kong’s role had to be as indirect, discreet, and non-confrontational in nature as possible. The study, moreover, will offer a fresh account of the external defence of Hong Kong by placing it in the context of the British general defence reviews, US military strategy, and Anglo–American diplomacy. Earlier accounts of the subject have tended to treat British and American policies in isolation, and have disagreed on whether there was a US commitment to Hong Kong.10 By taking at face value US policy statements and documents, some scholars have concluded that in  the United States agreed informally to assist in the defence of Hong Kong, a conclusion based on, among other things, a letter from President Eisenhower to Prime Minister Churchill in which the former said that the United States ‘would expect to be with [Britain]’ if Hong Kong was in jeopardy.11 But as this study will show, given the hypothetical nature of the Chinese threat and the conditional character of the American pledges to defend Hong Kong, one can only grasp the full meaning of a US ‘commitment’ by exploring the underlying assumptions of American policy and their calculations of the other party’s

9 Both Schenk and Zhang did attempt to place Hong Kong’s role in export controls in the wider context of the Korean War, though their discussions are not comprehensive enough. Catherine R. Schenk, Hong Kong as an International Financial Centre: Emergence and Development – (London, ); Shu Guang Zhang, Economic Cold War: America’s Embargo against China and the Sino-Soviet Alliance, – (DC, ). 10 On US policy, see Tucker, Taiwan, Hong Kong, and the United States, –, –; Tsang, ‘Strategy for Survival’, –; and Lombardo, ‘Eisenhower, the British and the Security of Hong Kong’, Diplomacy & Statecraft, / (Nov. ), –. On British policy, see James T. H. Tang, ‘From Empire Defence to Imperial Retreat: Britain’s Postwar China Policy and the Decolonisation of Hong Kong’, Modern Asian Studies, / (), –; Feng, The British Government’s China Policy, –; William Roger Louis, ‘Hong Kong: The Critical Phase, –’, The American Historical Review, / (Oct. ), –. 11 Raffi Gregorian, The British Army, the Gurkhas and Cold War Strategy in the Far East, – (Basingstoke, ), . Also see Lombardo, ‘Eisenhower, the British and the Security of Hong Kong’.

Introduction



possible reactions. Thus, to focus on whether the United States had committed itself, even informally, to Hong Kong has missed the point; what is important is to examine the American perceptions, assumptions, and expectations of Britain’s possible responses, and vice versa. The study will argue that Eisenhower saw the defence of Hong Kong not as a military asset to the United States, but as a diplomatic bargaining chip to obtain British support on such matters as Indochina, offshore islands, and Chinese representation in the United Nations. It was the British factor, not the significance of Hong Kong per se, that mattered to the US President. The book will also suggest that the British Empire in Hong Kong was more vulnerable than it appeared at the time, a vulnerability that culminated in the so-called ‘ Question’. That year, the British position in Hong Kong seemed to be more precarious than at any time since . In addition to the question of Hong Kong’s defensibility in the light of the general defence review, a number of issues also needed to be addressed by British officials and seemingly highlighted the precariousness of the Colony: Chinese and British merchants in Hong Kong could stand the embargoes on China no longer and were pressing for their relaxation; the colonial authorities were calling for international assistance to the ever-increasing Chinese refugees in Hong Kong; and even the closure of the Naval Dockyard in Hong Kong was seen by some Chinese as a sign of Britain’s retreat from Asia. Ironically, there was a gap between high politics and local situation. For all the debates over the defence of Hong Kong in Whitehall, the life of ordinary people in the territory went on as usual. For all the economic hardships as a result of the trade embargoes, from the late s onwards Hong Kong was on the road to becoming an export-oriented manufacturing centre. And for all the heavy drains on its finance, the Hong Kong government, supported by both local and international voluntary agencies, proved to be capable of resettling the tens of thousands of Chinese refugees. Nevertheless, the success story of Hong Kong in later decades should not eclipse the fact that its vulnerability in the Cold War had confronted the British with difficult dilemmas throughout the s. It should also be stressed that the transformation of Hong Kong into an industrial and later financial centre of the world should be attributed not only to such local factors as the availability of cheap labour, Chinese entrepreneurial skills, and the ‘laissez faire’ policy (or myth) of the Hong Kong government, but also to the success of the United Kingdom in minimizing the impact of the Cold War on Hong Kong. This book will add an



Introduction

international dimension to the history of Hong Kong’s transformations, and simultaneously write Hong Kong into the international history of East Asia. By using Hong Kong as a case-study in Anglo–American relations, this book combines Cold War international history, Anglo–American diplomatic history, and British imperial history. In order to highlight the global nature of the Cold War, the latest scholarship has reexamined the roles of small and middle-sized powers, and issues of less significance to the US–Soviet rivalry. There are now fascinating accounts of the role of secondary allies, from pro-Western Norway to the Russian-oriented Finland; Anglo–American policies towards authoritarian regimes, from Franco’s Spain to Sukarno’s Indonesia; and the development of Cold War tensions in remote places, from the North African desert up to the High Himalayas.12 Although Hong Kong was not an autonomous player in the post-war international system, its involvement in the Cold War or otherwise was a recurrent concern for the United States and Britain. This study seeks to uncover the precise role of Hong Kong in the Cold War in Asia, which has hitherto been dismissed or exaggerated. From a wider perspective, as British and US policies towards Hong Kong were centred upon their approaches to China, Hong Kong also provides a useful vantage point through which American–British–Chinese relations in the Cold War can be viewed. In addition, by focusing on the interaction of British and US policies this study will enhance our understanding of the so-called Anglo–American ‘special relationship’. But since Anglo–American relations were built upon many geographical and functional areas, the case of Hong Kong alone will not convincingly show how ‘special’ their relationship was. In this regard, the ideas and concepts developed by David Reynolds, Alex Danchev, and Ambassador Oliver Franks will be used in the analysis. They have argued that the Anglo–American ‘special relationship’ should not be taken to mean an alliance of equals, but a process of interaction laced with close consultation, informality,

12 Mats R. Berdal, The United States, Norway and the Cold War, – (London, ); Jussi M. Hanhimäki, Containing Coexistence: America, Russia, and the ‘Finnish Solution’, – (Kent, Oh., ); Jill Edwards, Anglo–American Relations and the Franco Question – (Oxford, ); John Subritzky, Confronting Sukarno: British, American, Australian and New Zealand Diplomacy in the Malaysian–Indonesian Confrontation, – (London, ); Saul Kelly, Cold War in the Desert: Britain, the United States and the Italian Colonies – (London, ); S. Mahmud Ali, Cold War in the High Himalayas: The USA, China and South Asia in the s (London, ).

Introduction



expectation, and mutual concession.13 In this study, the distinguishing features of that ‘specialness’ will provide the framework within which Anglo–American relations with reference to Hong Kong will be examined. If the Hong Kong case has also displayed these features, it may enhance the argument that the Anglo–American relationship was more special in quality than other alliance relationships. The case of colonial Hong Kong also addresses a number of themes in British imperial history. Apart from the issue of imperial defence, this study also sheds light on the ideas of ‘informal empire’ and ‘diaspora’. As William Roger Louis and Ronald Robinson have put it: ‘Under the shadow of cold war, a once British Empire modulated strategically into an Anglo–American field of influence, and thence into a predominantly American commitment.’14 In other words, the Cold War came to the rescue of the British Empire, which was gradually transformed into an Anglo–American ‘informal empire’, with Britain assuming a junior role in the coalition. Viewed through a Cold War rather than an imperial lens, Geir Lundestad has argued that Britain (and other US allies as well) ‘invited’ the Americans to construct an ‘empire’ in Europe and in other parts of the world in order to contain Soviet Communism.15 Hong Kong, however, does not seem to fit into the thesis of ‘informal empire’ or ‘ “empire” by invitation’: after , it remained Great Britain’s formal colony. But, as John Darwin has pointed out, Hong Kong was ‘decolonised in substance, if not juridically, in the early s’; its ‘political future depended upon the decolonised power—China—being willing to observe the treaty terms’.16 It will be argued here that the success of the British in maintaining a ‘decolonized’ Hong Kong in China’s shadow also depended on the restraint of what might be called the ‘American diaspora’—consuls, information officers, covert specialists, 13 See David Reynolds, ‘A “Special Relationship?” America, Britain and the International Order Since the Second World War’, International Affairs, / (Winter /), –; Alex Danchev, On Specialness: Essays in Anglo–American Relations (London, ), –; Oliver Franks, ‘The “Special Relationship” –’, in William Roger Louis (ed.), Adventures with Britannia: Personalities, Politics and Culture in Britain (London, ), –. 14 William Roger Louis and Ronald Robinson, ‘The Imperialism of Decolonization’, The Journal of Imperial and Commonwealth History, / (Sept. ), –. Quotation from . 15 Geir Lundestad, The American ‘Empire’ and Other Studies of US Foreign Policy in a Comparative Perspective (Oxford, ), –; and idem, ‘ “Empire by Invitation” in the American Century’, Diplomatic History, / (Spring ), –. 16 John Darwin, ‘Hong Kong in British Decolonisation’, in Judith M. Brown and Rosemary Foot (eds.), Hong Kong’s Transitions, ‒ (London, ), .



Introduction

etc.—who sojourned in Hong Kong for Cold War purposes. In other words, Hong Kong should not become part of the American ‘informal empire’, either by British invitation or American imposition. This study will integrate the concepts of ‘informal empire’ and ‘diaspora’ into the analysis of American activities in Hong Kong, thereby throwing more light on Anglo–American relations and British colonialism at the local level. The study is based mainly on archival materials in the United Kingdom and the United States, many of which have hitherto been unused, and some only recently declassified. They include Foreign Office, Colonial Office, Ministry of Defence, Cabinet, and Prime Minister’s Office records in the Public Record Office; Harold Macmillan Papers and Alexander Grantham Oral History Interview in the Bodleian Library of Oxford University; records of the US State Department, the Defense Department, and the Consulate General in Hong Kong in the National Archives and Records Administration; materials in the Harry S. Truman Library and the Dwight D. Eisenhower Library; records in the Operational Archives Branch of the US Naval Historical Center; Karl Rankin Papers in the Princeton University Library; and the foreign service oral history interviews at the Lauinger Library of Georgetown University. Although it focuses mainly on high politics, this study also provides some assessment of public views, as expressed in US and British newspapers, in so far as they shed light on policymaking. Selective use will be made of Chinese materials, including published documents, memoirs, officially compiled monographs, and newspapers in order to illuminate the Chinese Communist and Hong Kong perspectives. My book will not discuss events chronologically, but within a thematic framework that highlights the different dimensions of Hong Kong’s vulnerability in the Cold War—military, political, economic, and internal. Each of the four thematic chapters, covering events from  to , also highlights the different strategies by Britain of meeting the external and internal threats to Hong Kong, which could be summarized as: defence; diplomacy; (economic) development; and ‘de-politization’. Chapter  will first discuss, in three separate sections, British, American, and Chinese Communist perceptions of Hong Kong’s role in the Cold War. The aim is to provide an understanding of the broad framework within which Britain and the United States approached the Hong Kong issue in the next four thematic chapters. Chapter  examines the Anglo–American exchanges over the external defence of Hong Kong,

Introduction



and Chapter  Britain’s diplomacy of engagement with China and restraint over America. In Chapter , Hong Kong’s role in the enforcement of export controls on China and its impact on Anglo–American relations will be discussed. Chapter  will assess the Anglo–American cooperation and conflict over intelligence, propaganda, and covert operations in Hong Kong. The book will conclude with a chronological overview of Hong Kong in Anglo–American interactions between  and , and a discussion of the broader implications of the Hong Kong case for Cold War international history and Anglo–American diplomatic history. The epilogue examines briefly events and developments beyond .



Hong Kong in British, Chinese, and American Cold War Thinking Britain and the United States perceived Hong Kong’s role in the Cold War differently. To London, Hong Kong was an economically valuable colony and a symbol of Britain’s great power status. Yet the British also realized that its future was inextricably linked with the People’s Republic of China that was founded in . At first glance, the Americans did not have great economic and military stakes in Hong Kong, but they gradually defined a vital strategic role for Hong Kong in the containment of China. The Chinese Communists, on the other hand, found British Hong Kong a useful window to the outside world and a wedge against the Anglo–American alliance. This chapter will delineate Hong Kong’s significance in British and American official thinking, and in Chinese Communist calculations. But, first of all, it is necessary to give a brief survey of Hong Kong history in order to provide the local setting.

   Located off the southeastern coast of the Chinese mainland and the mouth of the Pearl River delta, Hong Kong became a Crown Colony of the British Empire in three stages. In , Hong Kong island was ceded in perpetuity to Britain after the defeat of China in the First Opium War. The British enlarged their colonial presence in the Hong Kong area when they acquired the Kowloon peninsula and the Stonecutters island at the end of the Second Anglo–Chinese War in , and got a ninety-nine-year lease of the New Territories and some two hundred islands during the scramble for concessions in .1 The 1 For general accounts of Hong Kong, see Frank Welsh, A History of Hong Kong (London, ); Roger Buckley, Hong Kong: The Road to  (Cambridge, ); Judith M. Brown and Rosemary Foot (eds.), Hong Kong’s Transitions, – (London, ); and Steve Tsang, Hong Kong: An Appointment with China (London, ). Scholarly works which approach Hong Kong’s history from the Hong Kong Chinese point of view

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

three treaties gave British Hong Kong a land area of approximately  square miles. Though lacking natural resources, the Hong Kong that Britain acquired was far from being a small fishing village; indeed, different kinds of economic activities had existed there for centuries, for example pearl-gathering and salt industries.2 Hong Kong became a thriving British trading post, but its economic role was soon eclipsed by Shanghai in the north of China until the second half of the twentieth century.3 In the early days of British rule, Hong Kong was preoccupied with problems, such as crime, legal discrimination, and conflicts between the colonial authorities and the Chinese people.4 Power was concentrated on the Governor and his appointed Executive and Legislative Councils. But British rule was ‘indirect’, in that the colonial government was supported by traditional Chinese communal organizations, and in that the customs of the local people were not interfered with as long as they did not pose a threat to the authorities. The history of British Hong Kong was significantly shaped by, and also helped shape, developments in mainland China. Protected by British law and enjoying relative stability, Hong Kong became an operational base, and a refuge as well, for anti-Qing revolutionaries from the mainland in the late nineteenth and early twentieth centuries. In the meantime, the Hong Kong Chinese frequently identified with political causes on the mainland. In the s and early s, competing Hong Kong merchants financed rival governments in Guangzhou (Canton) and Beijing (Peking), whilst anti-imperialist Hong Kong Chinese joined their Guangzhou comrades in general strike against the British in –.5 In addition, local Chinese merchants were actively involved in the Asian regional economic trade in the nineteenth and early twentieth centuries. Hong Kong served as the centre of the overseas Chinese business networks that connected China, especially its southern part, and Southeast Asia. As a free port, Hong Kong was the main conduit include Tak-Wing Ngo (ed.), Hong Kong’s History: State and Society under Colonial Rule (London, ); and Wang Gungwu (ed.), Xianggang Shi Xinbian [Hong Kong History: New Perspectives], Vols.  and  (Hong Kong, ). 2

Liu Shuyong, An Outline History of Hong Kong (Beijing, ), –. For an analysis of the changing roles of Hong Kong in Britain’s China trade, see Robert Bickers, ‘The Colony’s Shifting Position in the British Informal Empire in China’, in Brown and Foot (eds.), Hong Kong’s Transitions, –. 4 Christopher Munn, Anglo–China: Chinese People and British Rule in Hong Kong, – (Richmond, Surrey, ). 5 Stephanie Po-yin Chung, Chinese Business Groups in Hong Kong and Political Change in South China, – (London, ); Chan (ed.), Precarious Balance. 3



Hong Kong

through which people, money, and goods flowed between the mainland and Southeast Asia.6 For all the problems and challenges it faced, British Hong Kong survived the collapse of the Qing dynasty, the chaos of warlordism, and the Guangzhou–Hong Kong general strike in the first two and a half decades of the twentieth century. But Japanese aggression in China in the s posed the greatest threat to British rule in Hong Kong since . British strategic planners and political leaders including Winston Churchill concluded that Hong Kong was not worth committing Britain’s scarce resources to for a successful defence against a possible Japanese attack. Britain would not reinforce Hong Kong, with the exception of a two-battalion reinforcement from Canada. The result was that it took merely eighteen days for Japan to defeat the British and to begin its occupation of Hong Kong on Christmas Day, December . The Japanese occupation of Hong Kong, which lasted for three years and eight months, brought much suffering to the Hong Kong Chinese and British and foreign expatriates alike.7 In August , the Japanese, defeated by the United States, surrendered Hong Kong to Britain. After , and especially after the communist revolution in , Hong Kong’s triple roles as a British colony, a Chinese community, and, in a sense, a world city, witnessed both continuities and changes. The post-war recovery of Hong Kong was fast and remarkable. In a matter of eight months, the military administration restored power to the civil government under the returned Governor, Mark Young. Building activities were resumed, factories reopened, and trade connections reestablished. By , Hong Kong had restored its pre-war role as a great entrepôt. As Far Eastern Economic Review, an informed economic magazine in Hong Kong, put it: ‘In three glorious years of boom with trade touching record figures year by year, with ever mounting profits in business, and a higher standard of living for most of the inhabitants, Hong Kong has been able to rebuild its shattered portals, grasp in ever larger handfuls the entrepot trade of Eastern Asia and to emerge commercially stronger and more powerful than at any time in its history.’8 Politically, the British contemplated the introduction of constitutional reform in Hong Kong. In May , Young announced his plan 6 Stephen Fitzgerald, China and the Overseas Chinese: A Study of Peking’s Changing Policy – (Cambridge, ), –. 7 Philip Snow, The Fall of Hong Kong: Britain, China and the Japanese Occupation (New Haven, ). 8 FEER,  Dec. , Vol. , No. , .

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

for local self-government in order to help the Hong Kong Chinese ‘develop an active sense of citizenship’. The Young Plan, as it came to be known, focused on an elected Municipal Council. But Young’s municipal scheme was not shared by the unofficial members of the Legislative Council, who put forward an alternative to the Young Plan in . The then Hong Kong Governor, Alexander Grantham, was also not eager for constitutional reform, believing that the Hong Kong Chinese would never develop a British allegiance and that Hong Kong would have to return to China in . In order to keep the British promise of reform, however, Grantham suggested in  an enlarged Legislative Council, with a majority of unofficial members, partly elected by a restricted franchise. But any attempt at constitutional reform was finally abandoned in , thanks to the lack of enthusiasm on the part of the unofficial members, Grantham, and the British government.9 The result was that Hong Kong remained a ‘colonial’ system, or what might be called a ‘benevolent autocracy’, until the late s or even later. Despite the lack of democracy, the British sought to provide the Hong Kong people with efficient administration, freedom, and the rule of law. In fact, after  the British position in Hong Kong was never the same again, thanks to the existence of a powerful regime on the mainland. ‘The Chinese Communist is knocking on Hongkong’s door,’ a local newspaper warned shortly after the founding of the People’s Republic, and ‘there is no one who can predict with certainty what lies ahead and what their attitude will be.’10 Although subsequent developments were to show that Beijing would leave Hong Kong alone, the British could not simply ignore the ‘China factor’ in governing Hong Kong. As Governor Grantham has recollected, ‘Hong Kong’s basic problem is her relationship with China.’11 Successive Hong Kong governors were eager to avoid provoking Beijing. In the meantime, both pro-communist and proNationalist elements in Hong Kong saw the Colony as another battleground for the unfinished Chinese civil war. They sought to win the hearts and minds of the Hong Kong Chinese in the fields of education, labour, and publishing. The Hong Kong government had to deal with this challenge by pursuing a policy of neutrality and non-provocative firmness. 9

For a detailed account, see Tsang, Democracy Shelved. Hong Kong Standard,  Oct. . 11 Sir Alexander Grantham Oral History Interview, Aug. , , MSS. Brit. Emp. s., Bodleian Library of Commonwealth and African Studies at Rhodes House, Oxford, . 10



Hong Kong

Neither communist nor Nationalist activities would be tolerated if they were seen as a challenge to law and order.12 If its political system remained unchanged, this was not true of the character of Hong Kong’s society and economy. As a result of the Chinese civil war of –, tens of thousands of Chinese refugees fled to the Colony, bringing with them capital, entrepreneurial skills, or simply an industrious mentality. When Hong Kong was liberated in , the population was merely ,, but it increased to ,, by mid-. Among the refugees, industrialists from Shanghai reestablished their operations in Hong Kong, whilst the unskilled Chinese, mainly from Guangdong and Fujian, served as a cheap labour force for the burgeoning light manufacturing industries that had begun in the s.13 For a long time, despite the rise of a few prominent local Chinese businessmen, the large British merchant houses, or hongs, had enjoyed a dominant position in the economy of Hong Kong, which concentrated on trading, shipping, and other commerce-related activities. Indeed, the British colonizers, it has been argued, were only interested in the promotion of entrepôt trade, and neglected the development of manufacturing industry.14 For the sake of survival in post-war Hong Kong, Chinese entrepreneurs from the mainland chose to develop light industries, such as textiles, a sector which had not been the traditional domain of the British hongs. The introduction of an embargo on China in  and the re-orientation of China’s economy to the Soviet bloc in the s significantly reduced the volume of Hong Kong’s trade with China. These factors, however, speeded up the industrialization of Hong Kong, though somehow by default. By early , Hong Kong’s industries had made ‘remarkable progress’ since the war in both the volume of output and the variety of products and in the scope of markets.15 Operating mainly on a small scale, the Chinese entrepreneurs were involved not only in production, but also in the marketing of their products abroad. Some of the Chinese manufacturing firms later developed into large business conglomerates, rising to a position that could challenge the traditionally dominant British merchant houses in Hong

12

Tsang, ‘Strategy for Survival’. Wong Siu-lun, Emigrant Entrepreneurs: Shanghai Industrialists in Hong Kong (Hong Kong, ). 14 See Tak-Wing Ngo, ‘Industrial history and the artifice of laissez-faire colonialism’, in idem (ed.), Hong Kong’s History, –. 15 FEER,  Jan. , Vol. , No. , . 13

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

Kong.16 As a Hong Kong economic commentator put it: ‘Some people think only of the British aspect of the Colony, forgetting the two-anda-quarter million Chinese who are here and who, directly or indirectly, do the trade . . . It is their will, no less than that of the British, that the Colony should maintain its status, its law and order, its freedoms and all the other things they fled from China to enjoy here.’17 In short, the Chinese refugees and immigrants, both rich and poor, were to play a significant role in the long-term economic transformation of Hong Kong. Despite the remarkable economic recovery and growth, the life of the majority of ordinary Chinese in Hong Kong remained difficult in the s. The influx of tens of thousands of Chinese refugees resulted in serious housing shortage, overcrowding, and health and fire hazards in the squatter areas. As the Hong Kong government annual report wrote of its repercussions: ‘The very face of Hong Kong underwent a rapid and ugly change. Squatter townships spread in an unsightly rash round the permanent buildings of [the Hong Kong island city of] Victoria and Kowloon, filling the valley floors and mounting the steep hillsides.’ ‘The Colony’s land hunger, always acute, was now approaching famine proportions’, it concluded.18 Until the mid-s, the Hong Kong government provided just minimum welfare services to the poor, in order not to attract more Chinese refugees to Hong Kong. The Chinese refugees and immigrants had to take care of themselves, or to be assisted by voluntary and missionary associations, both local and overseas. But as a result of the Shek Kip Mei fire in , which left more than , squatter residents homeless, the Hong Kong government began a massive resettlement programme.19 The aim was to build multi-storey resettlement blocks and low-cost housing estates for the poor, thus eliminating health and fire hazards in the shanty towns, and clearing occupied lands for normal development.20 Coupled with the provision of housing to the ever-growing 16 Stephen Chiu, The Politics of Laissez-faire: Hong Kong’s Strategy of Industrialization in Historical Perspective, Hong Kong Institute of Asian Pacific Studies Occasional Paper No.  (), . 17 18 FEER,  Jan. , Vol. , No. , –. HKAR , –. 19 David Faure has argued that the Shek Kip Mei fire was not the reason behind, but simply a convenient excuse to overcome opposition from Chinese members of the Legislative Council for a programme of subsidized housing. Such a programme had been recommended by British officials as early as , and Governor Grantham himself was in support of welfare service as early as . See David Faure, ‘In Britain’s Footsteps: The Colonial Heritage’, in David Faure (ed.), Hong Kong: A Reader in Social History (Hong Kong, ), –. 20 See HKAR , –.



Hong Kong

population was increasing government spending on schools, hospitals, roads and other community needs. By , as Grantham reflected on the achievement of his ten-year governorship: We had more schools and more hospitals than ever before. Nearly finished was a brand new airport, capable of taking the world’s largest aircraft, good progress was being made in slum clearance; a ten-million pound reservoir had been put into service . . . All this could be termed normal progress for a growing and progressive city such as Hong Kong.21

Despite the rosy picture painted by Grantham, thousands still lived in shanty towns and on rooftops. In the s, the mass of the Hong Kong populace still had to struggle for survival: material comfort and political aspiration were beyond their reach.22 In contrast, the foreign expatriates (and some Chinese elites) in Hong Kong lived a privileged and comfortable life. During the s, the foreign and Chinese communities were socially segregated, enjoying their own circles of friendship and entertainment. Although the British and other foreigners were less snobbish and exclusive than they had been prior to the war, some of them still had a sense of superiority over the Chinese. Intermarriage was still uncommon in executive and professional business circles, and close interaction beyond the working environment was rendered difficult by the language barrier and differences in habits. Ironically, the two races coexisted peacefully in Hong Kong. The Hong Kong Chinese were generally tolerant of British rule, whilst the British colonizers did not exploit Hong Kong in a way that aroused strong anti-foreign feeling.23 Occasionally, there were violent protests against the British administration in Hong Kong, but not serious racial and political conflicts as had occurred in other British colonies. In short, Hong Kong remained a harmonious society despite the many problems and challenges the bulk of the Chinese faced in the post-war period. The coexistence of the two races was indicative of the cosmopolitan nature of Hong Kong, a meeting point between East and West.24 21

Alexander Grantham, Via Ports: From Hong Kong to Hong Kong (Hong Kong, ),

. 22 David Faure (ed.), A Documentary History of Hong Kong: Society (Hong Kong, ), , . 23 James Hayes, ‘East and West in Hong Kong: Vignettes from History and Personal Experience’, in Pun Ngai and Yee Lai-man (eds.), Narrating Hong Kong Culture and Identity (Hong Kong, ), –. 24 For an analysis of the (superficial) Westernization of Hong Kong, see Joseph Agassi and I. C. Jarvie, ‘A Study in Westernization’, in idem (eds.), Hong Kong: A Society in Transition: Contributions to the Study of Hong Kong Society (London, ), –.

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

Thus, the character of Hong Kong underwent significant changes as a result of the founding of the People’s Republic on its doorstep. Although Hong Kong remained British, the colonial authorities had to live in the shadow of Communist China. Hong Kong, the Chinese city, was transformed by the massive influx of refugees and immigrants from the mainland, who constituted the bulk of the population, and who contributed to the economic take-off of the territory in the s. Hong Kong’s place on the international stage was also changing in the post-war period. Its central role in overseas Chinese business networks was eclipsed by China’s integration into the socialist economy and decolonization and political instability in Southeast Asia, which curtailed the China trade. But from the late s, Hong Kong acquired a new role as a manufacturing, and later financial, centre of the world. What is more, after  Hong Kong also became a ‘Cold War city’, in that it was influenced by, and helped influence, the confrontation between America and China. ‘The mood and the conviction in Hongkong now is that we are no longer an issue by ourselves alone’, the Hong Kong-based Far Eastern Economic Review argued, ‘but that we are absorbed within the vast orbit of the conflict of two worlds and two ways of life; and that the great change here will be part of the greater change that must come when the final chapter of the cataclysm is written.’25 On such issues as Cold War diplomacy and strategy, it was the ‘official mind’ that mattered.

 , ,  ’    After the end of the Second World War, despite granting independence to India and Pakistan in , and Palestine and Burma the next year, the British Labour government was determined to hold on to Hong Kong. Its retention was important to the United Kingdom for prestige, economic, and, with the intensification of the Cold War, strategic reasons. The fall of Hong Kong into Japanese hands during the Pacific War had represented a humiliation for the British Empire and despite the reservations of Chiang Kai-shek26, the British were eager to recover 25

FEER,  Jan. , Vol. , No. , . In , the Chinese Nationalist government might not have lacked the military might to march towards Hong Kong. But without US political support, and with the resumption of the civil war in sight, Chiang chose to act with restraint by not resisting the British reoccupation of Hong Kong. Tsang, Hong Kong, –; Louis, ‘Hong Kong’, . 26



Hong Kong

the territory from the Japanese in . In response to the hope of the US President, Franklin D. Roosevelt, for the return of Hong Kong to China after the war, the British Prime Minister, Winston Churchill, had declared: ‘Hong Kong will be eliminated from the British Empire only over my dead body!’27 In the post-war world, Britain still aspired to be a world power in spite of its own decline and the dominance of the United States and the Soviet Union. The Foreign Secretary, Ernest Bevin, hoped to organize ‘a Western Europe system’, backed by ‘the power and resources of the Commonwealth and of the Americans’, so that British influence would be ‘equal [to] that of the United States of America and the USSR’.28 The retention of Hong Kong was consistent with the preservation of Britain’s world power status. Economically, Hong Kong was a free and efficiently run port, providing storage, insurance, banking, and shipping facilities for international trade in the Far East. The Colonial Office and the Board of Trade regarded it as ‘the chief base in the Far East for United Kingdom and Hong Kong industrialists, traders, bankers, and shipowners and a useful market for United Kingdom exports’.29 Throughout the s, the United Kingdom enjoyed a favourable balance of trade with Hong Kong.30 As part of the Sterling Area, Hong Kong held its currency balances in London, thus helping to support the pound and contributing to Britain’s dollar resource.31 On the debit side, the financial cost to the British government of holding Hong Kong was ‘extremely small’. After , apart from a three million pound loan for the airport, Hong Kong did not require financial assistance from London. The colonial authorities were able to balance the annual budget. Although the United Kingdom still bore the greater part of the cost of its garrison, Hong 27 Buckley, Hong Kong, ; Churchill’s remarks quoted in Xiang, Recasting the Imperial Far East, . 28 CP(),  Jan. , CAB /, PRO. 29 CRO to UK High Commissioners,  Sept. , FO /, F//G; Draft Minute to Prime Minister, enclosed in FO Minute by Dalton,  Feb. , FO /, FC/, PRO. Jürgen Osterhammel, ‘British Business in China, s–s’, in R. P. T. Davenport-Hines and Geoffrey Jones (eds.), British Business in Asia since  (Cambridge, ), –. 30 Clayton, Imperialism Revisited, . 31 Catherine R. Schenk, Britain and the Sterling Area: From Devaluation to Convertibility in the s (London, ), –, . The existence of a free market for US dollars in Hong Kong meant that the Colony could satisfy most of its dollar requirements without draining the dollar reserves of the UK Treasury. But when sterling was exchanged at a heavy discount on the free market, there would be an appreciable loss of dollars. See Catherine R. Schenk, ‘Closing the Hong Kong Gap: The Hong Kong Free Dollar Market in the s’, Economic History Review, / (May ), –.

Cold War Thinking



Kong was ‘incidentally the only Colony apart from Aden which makes an Imperial Defence Contribution’.32 The actual value of Hong Kong to the British economy is difficult to gauge, but London certainly perceived it as too economically valuable and efficiently run a colony to abandon.33 As the communist threat to Asia became increasingly acute by the late s, the retention of Hong Kong in British hands acquired strategic importance. Apart from ‘certain obvious strategic advantages’, such as being a listening post on China and controlling communications in the China seas,34 British decision-makers defined Hong Kong’s significance in Cold War terms. From , Britain had been fighting the communist insurgency in Malaya, a vital dollar-earning colony.35 With the impending communist victory in mainland China in , it also saw the importance of defending Hong Kong for psychological reasons. Thinking in terms of what later came to be known as the domino theory, the Prime Minister, Clement Attlee, agreed with the view that ‘failure to meet this [communist] threat to the security of Hong Kong would damage very seriously British prestige throughout the Far East and South-East Asia’, and ‘the whole common front against Communism in Siam, Burma and Malaya was likely to crumble’.36 Drawing parallels between the two Cold War outposts, Bevin looked upon ‘the position in Hong Kong rather in the same light as that in Berlin’. ‘As in the case of Berlin’, he stated, ‘it was difficult to foresee the course which events might take, but it was, nevertheless, essential for us to maintain our position in Hong Kong.’37 Although British strategic planners regarded 32 Hong Kong contributed roughly £. million out of £. million for the garrisons p.a. But the net cost to London of keeping troops in Hong Kong was just £. million p.a., since even if these troops were not kept in the territory, it would still cost London £ million for their deployment in Britain, and, in that case, Hong Kong would not pay the £. million towards their cost. CO Minute,  July , CO /, FED //, PRO. 33 It should be noted that Hong Kong was more important to certain British mercantile interests than to the British economy as a whole. With the rapid growth of Hong Kong’s manufacturing industries since the mid–s, the United Kingdom had to face competition from Hong Kong’s low-priced products, especially cotton textiles. Draft Minute to Prime Minister,  Feb. , FO /, FC/, PRO; Clayton, Imperialism Revisited, . 34 CRO to UK High Commissioners,  Sept. , FO /, F/, PRO. 35 See Thomas Kaplan, ‘Britain’s Asian Cold War: Malaya’, in Anne Deighton (ed.), Britain and the First Cold War (London, ), –. 36 CM(),  May , CAB /, PRO. 37 Note of meeting between Bevin and Commonwealth Ambassadors in British Embassy, Washington,  Sept. , FO /, F///G, PRO.



Hong Kong

the retention of Hong Kong as ‘not essential in a world war’, this was not the case in the Cold War, for its loss would have ‘grave political and morale implications in Asia’.38 Thus, the defence of Hong Kong became a vital link in the containment of communism in Asia.39 The maintenance of Hong Kong’s status quo was also closely bound up with the preservation of British economic interests in China.40 To Great Britain, ‘the primary justification for the retention of Hong Kong as a British colony’ was ‘the position of Hong Kong as an imperial trading base’.41 Traditionally, Hong Kong was seen essentially as a ‘treaty port’, whose economic function was to serve Britain’s ‘informal empire’ in China.42 As a result of the turmoil on the mainland, Hong Kong increasingly became the main base of operations for British mercantile interests. After the outbreak of the Sino–Japanese War in , such large British business firms as Butterfield and Swire, Jardine Matheson, and the Hong Kong and Shanghai Banking Corporation gradually reoriented their priorities and operations from the mainland, especially Shanghai, to Hong Kong—a process that was intensified after . By the early s, as a result of communist protracted appropriation and discriminatory measures, British businesses in China proved untenable and were forced to withdraw to Hong Kong.43 The British then shifted their emphasis from trade in to trade with China. Hong Kong’s role as the main base of Britain’s China trade appeared more important than ever, however disappointing the result turned out to be.44 From a regional perspective, Britain’s conciliatory approach towards Communist China was shaped by, and helped shape, its general containment strategy in Asia. Britain’s Cold War strategy was predicated on its postwar military and economic weaknesses, so that diplomacy would 38

JP(),  Apr. , DEFE /, PRO. On the linkage between the preservation of the British Empire and the Cold War, see John Kent, British Imperial Strategy and the Origins of the Cold War – (London, ). On Hong Kong in particular, see Tang, ‘From Empire Defence to Imperial Retreat’, . 40 Simply put, there were two categories of British economic interests in China: ) industrial enterprises and real estates which carried out trade in China; ) import-export and shipping firms which engaged in trade with China. FO Minute,  Feb. , FO /, F//, PRO. 41 Paskin to Dening,  May , FO /, F//G, PRO. 42 On this argument, see Bickers, ‘The Colony’s Shifting Position in the British Informal Empire in China’, –. 43 Feng Bangyan, Xianggang Yingzi Caituan [The British Business Groups in Hong Kong] (Hong Kong, ), –; Shai, The Fate of British and French Firms in China. 44 Clayton, Imperialism Revisited, . 39

Cold War Thinking

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be the main instrument to preserve its influence and great power status in the world. According to the Permanent Under-Secretary’s Committee, which acted as a policy planning body, the Russian threat to Asia was ‘unlikely to be a military one’, and the main danger would be communist political infiltration. This made large-scale military aid unnecessary. Instead, economic aid, backed up by US finance, should be the medium ‘to build up the habit of co-operation’ between the Asian and Western countries against communist penetration. With its ‘large potential resources of all kinds’, India was regarded as ‘the key to the whole problem of South-East Asian regional co-operation’, and ‘the lead she can give to other countries’ in the region ‘a major factor in resisting the spread of communism’.45 Thus, in Asia, what the British government envisaged was a defensive strategy of containment, in which the Asian Commonwealth members, especially India, would play an important role, based on regional economic and political collaboration at first and eventually enlarged into some kind of military arrangement.46 As far as Communist China was concerned, the British attitude was more or less in line with India’s. It was the Indian view that, while organized along orthodox Marxist lines, the Chinese Communists ‘would be Chinese first and Communists second and that they would not be controlled by Moscow’. To the Indian Prime Minister, Jawaharlal Nehru, ‘China would remain independent of Moscow in its foreign policy and . . . Chinese instinctive distrust of all foreigners would not exclude the Russians’.47 Britain also believed that over time nationalism would emerge stronger than communism in China. According to the Foreign Office, ‘the only hope of encouraging the emergence in China of a less anti-Western tendency’ was to give Beijing time to realize both the ‘necessity of Western help in overcoming its economic difficulties’ and the ‘incompatibility of Soviet imperialism with Chinese national interests’.48 Thus, peaceful diplomacy, not hostile military measures, should be adopted to drive a wedge into Sino–Soviet relations and to contain communist expansion in Asia. 45 PUSC()Final Approval,  July , FO /, F//G; PUSC()Final Approval,  Aug. , ibid.; CP(),  Mar. , CAB /; CM(),  Oct. , CAB /; PUSC()Final Approval,  Aug. , FO /, F//G, PRO. 46 On this line of argument, also see Singh, The Limits of British Influence. 47 Record of meeting,  May , FO /, F//G; New Delhi to CRO,  June , FO /, F//G, PRO. 48 FO Reports,  Aug. , enclosed in CP(),  Aug. , CAB /, PRO.

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Hong Kong

But while Britain depended on Chinese goodwill to maintain the status quo in Hong Kong, it also relied heavily on the United States for the preservation of its power and influence in the post-war world. By the end of , Bevin’s idea of creating a ‘third world force’ independent of the two superpowers proved unattainable.49 The Permanent Under-Secretary’s Committee concluded that the basis of British foreign policy should be the maintenance of a close Anglo–American alliance, a conclusion endorsed by the Attlee Cabinet.50 Not only was Britain dependent on US financial aid for its economic recovery, it also had to count on the United States for the protection of Western Europe against the Soviet Union.51 After the Suez Crisis of , the Conservative government recognized that Britain could not afford to be a world power without the backing of the United States.52 As long as the unity of the Commonwealth was not upset, and essential resources were not diverted from Europe, Britain would stay in close step with Washington in the Cold War.53 For Prime Ministers Winston Churchill and Harold Macmillan, the maintenance of a ‘special relationship’ with the United States was a higher priority in British foreign policy than Sino–British relations. Half American himself, Churchill enjoyed a close personal relationship with President Dwight D. Eisenhower since their wartime experiences together. On foreign affairs, Churchill was uninterested in the China problem, and was suspicious of the PRC. Instead, he was preoccupied with the revival of Anglo–American cooperation to the wartime level as well as the search for a détente with the post-Stalin Soviet Union. Macmillan, too, had a similar American background and wartime experience with Eisenhower. On the other hand, Clement Attlee had not been 49 Many West European countries were more attracted to federal ideas than to the idea of a ‘third world force’ led by Britain. Britain also lacked the means to mobilize Commonwealth and African resources, while the United States refused to give formal support. John Kent, ‘The British Empire and the Origins of the Cold War, –’, in Deighton (ed.), Britain and the First Cold War, –. 50 Ritchie Ovendale, ‘William Strang and the Permanent Under-Secretary’s Committee’, in John Zametica (ed.), British Officials and British Foreign Policy – (Leicester, ), –. 51 David Dimbleby and David Reynolds, An Ocean Apart: The Relationship between Britain and America in the Twentieth Century (New York, ), –. 52 Lord Beloff, ‘The Crisis and its Consequences for the British Conservative Party’, in William Roger Louis and Roger Owen (eds.), Suez : The Crisis and its Consequences (Oxford, ), –; William Roger Louis, ‘The Dissolution of the British Empire’, in Judith M. Brown and William Roger Louis (eds.), The Oxford History of the British Empire, Vol. : The Twentieth Century (Oxford, ), . 53 For the impact of the ‘three circles’ of Western Europe, the Commonwealth, and the Atlantic alliance on British decision-making, see Kaufman, Confronting Communism.

Cold War Thinking

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so close to President Harry S. Truman, though this was partially compensated for by the good working relationship between their foreign secretaries, Ernest Bevin and Dean Acheson.54 Personal friendships, however, could not hide the conflicting national interests between Britain and America, even though their policy differences may have been centred on means rather than on ends. Indeed, Churchill also had a lot to disagree with Eisenhower over—détente, Indochina, and Taiwan—but he hoped to exploit his ‘special relationship’ with Eisenhower to serve Britain’s national interests. At times, he was willing to subordinate Hong Kong to the broader interests of the Anglo–American relationship. Thus, Hong Kong presented the British government with a persistent problem: accommodating the PRC and simultaneously maintaining solidarity with the United States. Such a dilemma more or less reflected the potential conflict between, on the one hand, the Colonial Office and the Far Eastern Department of the Foreign Office, which put the interests of Hong Kong and relations with China first, and, on the other hand, the North America Department of the Foreign Office, the British Embassy in Washington, together with Cabinet ministers who emphasized the Anglo–American relationship and the wider aspects of the Cold War.55 What made the British balancing act a most delicate one was the attempt by the PRC to exploit the Hong Kong issue to split the Anglo–American alliance. Throughout the s, British officials generally assumed that provided the Chinese Communists were not unduly provoked, they would leave Hong Kong alone because of its economic usefulness as a window to the outside world, its political value in driving a wedge into the Anglo–American relationship, and Beijing’s realization of ‘a terminal date’——for British colonial rule in Hong Kong.56 Before we move forward to discuss US perceptions of Hong 54 Alistair Horne, ‘The Macmillan Years and Afterwards’, in Louis and Bull (eds.), The ‘Special Relationship’, ; Alan Bullock, Ernest Bevin: Foreign Secretary – (New York, ), . Under the Labour government, the British Ambassador to the United States, Oliver Franks, was also close to Acheson, and played an important role in cementing the Anglo–American relationship. Danchev, On Specialness, , . 55 Louis further distinguished between the views of the China desk of the Foreign Office and those of the Colonial Office, with the former seeing Hong Kong essentially from the perspective of Anglo–Chinese relations, and the latter viewing it as a colonial dependency moving towards the path of self-government. Ironically, the Hong Kong Governor, Alexander Grantham, held more to the Foreign Office view, in that Hong Kong was essentially a treaty port for China trade, rather than a colony for constitutional reform. Louis, ‘The Critical Phase’, , . 56 Humphrey Trevelyan, Worlds Apart: China –, Soviet Union – (London, ), –; Grantham to CO,  July , CO /, /; Black to CO,  Oct. , CO /, FED //, PRO.



Hong Kong

Kong in the Cold War, it is necessary to look at Chinese Communist attitudes in order to put Anglo–American policies in perspective.

       Long before their coming to power in , Chinese Communist leaders, especially Mao Zedong, aspired to transform the Chinese state and society, and to restore China’s central position in the world. After a century of internal chaos and humiliation by the West, Mao was eager to destroy traditional Chinese society and to construct a revolutionary state based on the ideology of Marxism-Leninism and China’s unique historical experience. Mao desired to make a ‘fresh start’ in China’s foreign relations by ‘building a new stove’, ‘cleaning the house before entertaining guests’, and ‘leaning to one side’. The Chinese government would eliminate all imperialist influence on the mainland, develop diplomatic relations with all countries on an equal footing, and re-orient China’s economy and foreign relations towards the socialist bloc. Only in this way could Mao demonstrate to the outside world that the Chinese people had really ‘stood up’.57 The Chinese Communists regarded the three treaties that governed the status of Hong Kong and the New Territories as ‘unequal’.58 To them, these ‘unequal treaties’ were invalid, and the principle of China’s sovereignty over Hong Kong was unassailable. But after the Second World War, the return of Hong Kong was not a priority for Mao, who was preoccupied with the civil war with the Chinese Nationalists, and later the Cold War with the Americans. As early as , Mao, speaking to a group of Western journalists, reportedly said that ‘China has enough trouble on her hands to try and clean up the mess in her own country, leave [sic] alone trying to rule Formosa, for us to clamour for the return of Hong Kong’.59 In January , during the visit of Joseph Stalin’s representative, Anastas Mikoyan, Mao spelt out his view on 57 ZhouEnlai Waijiao Wenxuan [Selected Works of Zhou Enlai on Diplomacy] (Beijing, ), –. For an analysis, see Chen Jian, China’s Road to the Korean War: The Making of the Sino-American Confrontation (New York, ), –. 58 They were the Treaty of Nanking of , which ceded Hong Kong island to Britain; the Convention of Peking of , which ceded the Kowloon peninsula and the Stonecutters island; and the Second Convention of Peking of , from which Britain got a -year lease of the New Territories and some  islands. 59 Quoted in Tsang, Hong Kong, .

Cold War Thinking

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Hong Kong when talking about China’s internal and foreign policies: ‘At present, half of the territory is still unresolved. It is of no great meaning to resolve the Hong Kong–Macau question quickly.’60 At the time, the main concern of the Chinese Communists was to defeat the Nationalist government on the mainland, and Hong Kong could be useful in that regard. Historically, Hong Kong had served as a regional centre to coordinate and supervise the war effort in south China. In , a Hong Kong–Macau Work Committee was created under the Chinese Communist Party’s Southern Bureau, later the Guangdong Provincial Committee, to facilitate the civil war in south China. It publicly functioned as a branch of the New China News Agency (NCNA) in Hong Kong, which was also set up that year for propaganda and united front work.61 It has been argued that the decision not to press for the return of Hong Kong for the time being was made by Mao between the communist crossing of the Yangtze River in the spring of  and the establishment of the PRC in October. In spite of its toleration of British colonial rule, the Chinese Communist leadership regarded Hong Kong as an important issue. Through the Hong Kong–Macau Leading Group under the Foreign Affairs Office of the State Council, the Chinese Premier, Zhou Enlai, together with other leaders such as Chen Yi and Liao Chengzhi, directed the work of the Hong Kong–Macau Work Committee. A few days after the founding of the People’s Republic, Zhou instructed Qiao Guanhua, who headed the NCNA in Hong Kong, about China’s Hong Kong policy. According to Zhou, Hong Kong was a problem ‘left behind by history’, and only history would suggest ‘the timing and condition’ for its resolution. Although China would ‘not recover’ Hong Kong at present, it did not mean it would ‘abandon’ or ‘withdraw’ from Hong Kong. Rather, the resolution of the Hong Kong problem would be ‘a long-term task’.62 Thus, when the People’s Liberation Army came close to the Hong Kong border in mid-October, it was instructed to avoid any incident with the British. 60 Qi Pengfei, Richu Riluo: Xianggang Wenti Yibaiwushiliu Nian (–) [Sunrise, Sunset: One Hundred and Fifty-Six Years of the Hong Kong Problem (–)] (Beijing, ), –. 61 Xu Jiatun, Xu Jiatun Xianggang Huiyilu [Xu Jiatun’s Hong Kong Memoirs], Vol.  (Taipei, ), . 62 Jin Yaoru, Zhonggong Xianggang Zhengce Miwen Shilu [A Secret Record of the Chinese Communist Hong Kong Policy] (Hong Kong, ), –. The author had been responsible for press and propaganda work in the Hong Kong–Macau Work Committee of the NCNA since .

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Hong Kong

The Chinese Communist determination to maintain the status quo in Hong Kong was not even changed by the Soviet Union. During Mao’s visit to Moscow to negotiate a Sino–Soviet alliance in early , Stalin tried to encourage the Chinese leader to seize Hong Kong because ‘there are a lot of imperialist agents in this city’. What concerned Stalin, it seemed, was not the elimination of British ‘imperialist’ influence in Hong Kong, but the possibility of a normalization of Sino–American relations. In January , the British government had accorded diplomatic recognition to Beijing. Stalin worried that the United States might also try to wean Mao from Moscow by establishing contact with the PRC. A Chinese attack on Hong Kong, Stalin calculated, would thwart the development of possible ties between Beijing and Washington, for in that case the United States would come to the rescue of Britain. Nevertheless, Mao was determined to leave British Hong Kong alone.63 The retention of Hong Kong in British hands served China’s political and economic objectives, particularly after the outbreak of the Korean War in June . When meeting with Huang Zuomei, then head of the NCNA in Hong Kong, in the spring of , Zhou spelt out in detail his views on Hong Kong. China’s Hong Kong policy was ‘part of the strategic arrangements for the general East–West struggle’, and should ‘not be measured by the narrow principle of territorial sovereignty’. By recognizing the PRC, Zhou said, the Attlee government hoped to ‘preserve the strength of the politico-economic sphere of influence of the British Empire in the Far East’. But there were ‘contradictions and struggle’ between Britain and the United States. By allowing Hong Kong to be held in British hands, the Chinese Communists could ‘hold the initiative’, and could ‘widen and utilize’ the Anglo–American ‘contradictions’ in the Far East. Besides, Hong Kong could serve as ‘a window’ for China to the outside world and as ‘an outpost to break the blockade and embargo imposed on China by the US-led Western coalition’. Zhou stressed that the ‘great strategic significance’ of preserving the status quo in Hong Kong had to be recognized.64 In short,

63 Sergei N. Goncharov, John W. Lewis, and Xue Litai, Uncertain Partners: Stalin, Mao, and the Korean War (Stanford, Calif., ), . 64 Quoted by Nan Shan and Nan Zhu, Zhou Enlai Shangping [A Life of Zhou Enlai] (Changchun, ), –. Throughout the Korean conflict, Hong Kong was being used for the smuggling of goods, strategic or otherwise, to the mainland. Although the exact volume of these goods is difficult to gauge, some of the Hong Kong merchants involved in smuggling did benefit greatly and get rich later. Xu, Xu Jiatun Xianggang Huiyilu, –; Grantham, Via Ports, .

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the guiding principles of the PRC’s Hong Kong policy were what later became known as ‘long-term planning and full utilization’.65 China’s policy towards Hong Kong remained unchanged after the conclusion of the Korean War in July . From  onwards, the Chinese Communists adjusted their revolutionary foreign policy approach by calling for ‘peaceful coexistence’ with the West in order to split the ‘Free World’.66 Britain was an important target for their ‘peaceful coexistence’ initiative, not least because of its concerns over the China trade and Hong Kong. During the Geneva Conference on Indochina in , Zhou and the British Foreign Secretary, Anthony Eden, were apparently impressed by each other’s pragmatism in achieving a peace settlement despite US intransigence. In the course of their meetings in June, Zhou and Eden agreed to upgrade Anglo–Chinese diplomatic relations to the chargé level. Shortly after the Geneva Conference, a British Labour Party delegation visited Beijing. When receiving the British guests, Zhou talked at great length about how to promote Sino–British relations and to enhance peaceful cooperation. But Zhou stressed: ‘Don’t talk about premature questions, such as the question of Hong Kong. The [Chinese] government has not considered whether we have to recover Hong Kong and how to recover it.’67 The Chinese toleration of British rule in Hong Kong was not without limits, however. When the Hong Kong Governor, Alexander Grantham, met with Zhou during his private visit to Beijing in October , the Chinese Premier reportedly mentioned several ‘rules of conduct’ for Hong Kong. The British presence in Hong Kong would be tolerated provided that Hong Kong was not used as an anti-communist base; that no activity which undermined the PRC was allowed in Hong Kong; and that the colonial authorities would protect the Chinese government’s representatives and organizations in the territory.68 In his memoirs, Grantham recorded his conversation with Zhou, but made no reference to the ‘rules of conduct’. While in Beijing, according to the memoirs, Grantham and Zhou talked about the scheduled celebration of the four hundredth anniversary of the founding of the Portuguese 65 Wong Man Fong, China’s Resumption of Sovereignty over Hong Kong (Hong Kong, ), ; Qi, Richu Riluo, . 66 For an analysis of Zhou’s strategy of ‘peaceful coexistence’, see Ronald C. Keith, The Diplomacy of Zhou Enlai (London, ). 67 ZhouEnlai Waijiao Wenxuan, . 68 Luo Ya (Lo Ah), Zhengzhibu Huiyilu [Memories of the Special Branch] (Hong Kong, ), ; and Byron S. J. Weng, ‘Taiwan–Hong Kong Relations, – and Beyond’, American Asian Review, / (Winter ), .

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Hong Kong

Colony of Macau. Zhou stated that ‘the Chinese government and the Chinese people did not like these celebrations, nor would the Chinese in Macau and Hong Kong’. To Grantham, the last was ‘a thinly veiled threat that the communists would stir up trouble, and probably serious trouble, in the two colonies’.69 As the US Army Liaison Officer of the American Consulate in Hong Kong assessed it: ‘The warning given to Sir Alexander Grantham in Peking regarding Macau was actually meant for Hong Kong consumption.’70 Thus, whether Zhou had explicitly told Grantham the ‘rules of conduct’ for Hong Kong, or merely conveyed the message implicitly by way of the Macau example is beside the point. What matters is that the British understood that the PRC would react vigorously to what it saw as provocative activities in Hong Kong, as with regard to the proposed celebration in Macau. This meant that both London and Beijing were particularly sensitive to the possible use by Washington of Hong Kong as a base for subversion against the mainland. Did the United States contemplate such a role for Hong Kong?

-, -,   ‘ ’    In the course of the Pacific War, President Roosevelt, a follower of the Wilsonian principle of national self-determination, called several times for the end of British rule in Hong Kong after the war. In a secret meeting with Stalin during the Yalta conference in February , Roosevelt expressed his hope of ‘giv[ing] back the sovereignty of Hong Kong to China’ and making the territory an ‘internationalised free port’. As the war progressed, however, the US enthusiasm for supporting Chiang Kai-shek’s demand for the return of Hong Kong gradually cooled because of his presumed incompetence on the one hand, and the increasing importance of Britain on the other. On  August, with the acquiescence of the Truman administration, the British Commander, Rear-Admiral Harcourt, received the surrender from the Japanese forces in Hong Kong.71 69 Grantham, Via Ports, –. In the event, the proposed celebrations in Macau were cancelled. 70 Rittgers to Drumright,  Nov. , RG , USIS HK –, Box , NA. 71 On US attitudes towards the decolonization of Hong Kong during the Second World War, see Chan Lau Kit-cheng, ‘The United States and the Question of Hong Kong, –’, Journal of the Hong Kong Branch of the Royal Asiatic Society,  (), –; William Roger Louis, Imperialism at Bay: The United States and the Decolonization of the

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Nevertheless, after  Britain could not take for granted US support for its colonial rule in Hong Kong. During the Cold War, the United States remained anti-colonialist in principle, if not in practice, and was keen to avoid identifying too closely with European colonialism.72 In considering whether ‘the Hong Kong problem’ should be referred to the United Nations in mid-, the State Department was of the view that ‘this would provide the Communists with an opportunity for appearing in a role having wide popular appeal, and would prove embarrassing to this Government in connection with . . . the colonial problem’.73 In a staff study on Hong Kong in , the NSC Planning Board made plain: Despite a consistent record of good government, with substantial achievements in economic and social fields, Hong Kong remains an example of paternalistic white colonial rule over an Asian territory acquired by the techniques of imperialism. In former colonial areas of Asia and Africa, overt American identification with British rule in Hong Kong would be a political liability.74

In other aspects, British Hong Kong did not appear to be vital to US national interests. In , US exports to Hong Kong were less than one per cent of the total, whilst its imports were even more negligible. As a result of the Chinese intervention in the Korean War in late , the US and UN strategic embargoes on the mainland brought US–Hong Kong trade to a standstill. By , despite the gradual relaxation of export controls, the trade did not rise to its level in .75 Less than a thousand Americans lived in Hong Kong in , increasing to a little more than two thousand eight years later. From the viewpoint of security, the JCS believed in  that the United States had little military or strategic interest in the British retention of Hong Kong, however serious the psychological impact on the British Empire of its loss. This belief was maintained by the US military in the s.76 British Empire, –, paperback edn. (Oxford, ), –, ; and Andrew Whitfield, Hong Kong, Empire and the Anglo–American Alliance at War, – (Basingstoke, ). 72 David Goldsworthy, ‘Britain and the International Critics of British Colonialism, –’, The Journal of Commonwealth and Comparative Politics, / (Mar. ), . 73 Sprouse to Butterworth,  Aug. , G./–, RG , DF –, Box , NA. 74 Staff Study on Hong Kong, enclosed in Note by Executive Secretary to NSC, NSC ,  July , DDRS, , Fiche . 75 Census and Statistics Department, Hong Kong Statistics, – (Hong Kong, ), , ; B. R. Mitchell (ed.), International Historical Statistics: The Americas – (London, ), . 76 See Ch. .

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Hong Kong

As the Cold War intensified in the late s, however, the United States gradually saw great value in using colonies and ex-colonies in the global containment of communism. In a sense, the Cold War came to the rescue of the British Empire, which was gradually transformed into an Anglo–American ‘informal empire’, with Britain playing a junior role in the coalition.77 Anti-colonialism as a force in the US policy process had to be balanced against other security and political considerations, such as the global power balance and allied solidarity.78 As one scholar has argued, the willingness of the United States to apply direct pressure for European decolonization was ‘greatest where the colonial power was weak and the liberation movement clearly anti-communist’.79 In the case of Hong Kong, unlike the Dutch East Indies, Britain was not as weak a colonial power as the Netherlands and thus the Truman administration did not press hard for the end to colonial rule. Instead, with its numerous military bases and intelligence collection sites scattered around the world, the British Empire was valued by the United States in the anti-communist struggle. In addition, there was no strong demand for independence, nor even self-government, among the Chinese in Hong Kong, many of whom had fled from the mainland to escape communist rule. Indeed, after , the end of British colonial rule in Hong Kong would mean Chinese Communist domination, since independence was not a feasible option for Hong Kong. Whatever reservations they harboured about European colonialism, the post-war US administrations generally regarded Hong Kong as an exception in the process of decolonization. With the establishment of the PRC in , and the outbreak of the Korean War in , the United States began to define a role for Hong Kong to serve its foreign policy objectives. To begin with, Hong Kong was used for intelligence gathering and ‘China-watching’. That Hong Kong could contribute to US intelligence efforts was the result of three favourable factors: its geographical proximity to the mainland; the availability of Chinese talent; and the convenience of the British facilities. In , the United States, as the first foreign government, opened a consulate in British Hong Kong.80 The coming to power of the Chinese 77

On this argument, see Louis and Robinson, ‘The Imperialism of Decolonization’. William Roger Louis, ‘American Anti-Colonialism and the Dissolution of the British Empire’, in Louis and Bull (eds.), The ‘Special Relationship’, . 79 Geir Lundestad, East, West, North, South: Major Developments in International Politics – (Oslo, ), . 80 Tucker, Taiwan, Hong Kong, and the United States, . 78

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Communists in  brought new significance to the American Consulate General in Hong Kong. As a result of the communist treatment of US consuls in Shenyang, the Truman administration decided to close all US embassies and consulates in mainland China in the winter of –. Consequently, all the consular and reporting work was transferred to the US Consulate in Hong Kong, which was then turned from ‘a quiet post, with a small staff’ in  into ‘a busy center, with heavy loads in visa, citizenship, shipping, propaganda, and political and economic intelligence and reporting functions’ by .81 In addition, the consolidation of communist control on the mainland in the early s increased the difficulty of running human agents in a totalitarian state.82 Because of its strategic location, Hong Kong became a principal US listening post on the periphery of the PRC, at a time when Washington had no formal diplomatic contact with Beijing, and lacked even a formal base for operations inside the mainland.83 Intelligence was obtained by interrogations of refugees and through press monitoring.84 Another important aspect of US intelligence operations in Hong Kong concerned economic reporting and export control work. Shortly after the North Korean invasion of South Korea in , the United States secured the agreement of other Western European countries to introduce export controls against the PRC, and, after a series of Chinese Communist offensives in Korea in late  and , the approval by the United Nations to impose a strategic embargo on the mainland. In the State Department’s view, Hong Kong, owing to its traditional position as an entrepôt for China, presented ‘an ever-apparent and highly publicised danger to the enforcement of the United States policy of denying the Chinese Communist goods and foreign exchange’.85 In order 81 Rankin to Wright,  Nov. , Karl Rankin Papers –, Correspondence (Apr. –May ), Box , Folder , Manuscripts Division, Department of Rare Books and Special Collections, Princeton University Library; Memo. on Hong Kong, Mar. , RG , CA –, Reel , NA. 82 McConaughy to Acheson,  June , RG , The Murphy Collection on International Communism –, China, Box , NA. 83 Flake to McConaughy,  May , RG , CA –, Reel ; McConaughy to Burns,  Oct. , RG , CA –, Miscellaneous File , Box , NA. As Russell Jack Smith, Chief of the Far East Staff of the CIA’s Office of National Estimates, recollected: ‘Hong Kong became an American watchtower on China [after ] . . . In actuality, the China-watchers had few advantages that analysts in Washington did not have. But they did have propinquity to China itself, not an insignificant advantage.’ Russell Jack Smith, The Unknown CIA: My Three Decades with the Agency (Washington, ), . 84 See Ch. . 85 Memo. on Hong Kong, Mar. , RG , CA –, Reel , NA.

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Hong Kong

to ensure that embargoed strategic goods would not find their way into China, the US Consulate in Hong Kong was charged with the responsibilities of extensive export checks and exhaustive investigations into Hong Kong’s import requirements.86 Hong Kong’s proximity to the mainland made it possible, but also highly necessary, for the Americans to oversee the enforcement of export controls in the territory.87 In Hong Kong, the Americans also obtained intelligence by covert means. In , the US intelligence services established a listening post in the Colony.88 The CIA Hong Kong station was attached to, and under cover of, the US Consulate General.89 After the CIA had purchased the Civil Air Transport Incorporated (CAT) as its air arm in covert operations in , Hong Kong became the financial and managerial headquarters of CAT.90 Just as the American Consulate expanded in scope after the closure of the US embassies in China in , the CIA Hong Kong station also grew in size and importance in the s to cope with the ever increasing demands for intelligence on the PRC.91 Claiming that Stockholm was ‘not a major intelligence center’ in the early s, William Colby, a former CIA operative in Scandinavia and later Director of the CIA, thus wrote: ‘The great challenges to secret intelligence gathering were elsewhere, in Berlin, Vienna and Hong Kong.’92 The United States benefited from the British signals intelligence (SIGINT) post in Hong Kong in the field of technical intelligence collection. Under the UK–USA Security Agreement in , SIGINT collection responsibilities were divided on a geographical basis among the United States, Britain, Australia, New Zealand, and Canada. While covering mainly the Soviet Union east of the Urals and Africa, the British Government Communications Headquarters (GCHQ) maintained control of the SIGINT facilities in its colonial outposts all over 86

Richard E. Johnson Oral History Interview,  Jan. , FAOHP, GU, –. 88 See Ch. . Tucker, Taiwan, Hong Kong, and the United States, . 89 Ronald Kessler, Inside the CIA: Revealing the Secrets of the World’s Most Powerful Spy Agency (New York, ), . 90 CAT was originally founded by General Claire Chennault and Whiting Willauer to assist Chiang’s war efforts against the Chinese Communists. After the CIA had purchased CAT in , General Chennault was ‘promoted’ to the chairmanship in Taipei, whilst Willauer acted as president based in Hong Kong, the new financial and managerial headquarters of CAT. Alfred Cox, the CIA station chief in Hong Kong, became vice-president of CAT, assuming managerial duties for the airline in addition to his own responsibilities for CIA covert actions in Asia. Leary, Perilous Missions, –; Prados, President’s Secret Wars, –. 91 Aldrich, ‘ “The Value of Residual Empire” ’, –. 92 William Colby, Honorable Men: My Life in the CIA (New York, ), . 87

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the world, though, in some places, operating jointly with other SIGINT organizations.93 In the late s, the British established the main SIGINT station at Tai Po Sai in Kowloon under the  Signals Unit of the Royal Air Force, which was then moved to Little Sai Wan on Hong Kong Island in . Targeted mainly at the southeastern sector of mainland China and across the South China Sea, the Hong Kong SIGINT station was maintained jointly by the British GCHQ and the Australian Defence Signals Directorate, with the presence of American liaison personnel. The signals intelligence collected was shared within the UK–USA intelligence community.94 After the outbreak of the Korean War, intercepting Chinese Communist military communications became all important for the UN war effort. The British SIGINT facilities in Hong Kong were deemed important enough that Britain and the United States planned for the possible emergency evacuation of these facilities in case of a Chinese attack.95 Even though the vast majority of its intercept coverage focused on south China, with the Hong Kong station providing little, if any, signals intelligence on the movement of Chinese Communist troops in the north,96 the United States remained eager to take advantage of the many convenient listening posts of the British Empire in the Cold War.97 The US Navy, in addition, valued the ‘rest and recreation’ facilities in Hong Kong for its servicemen. One of the great advantages which attracted US naval visits to Hong Kong was its deep-water harbour. According to a briefing pamphlet for the Commander-in-Chief of the US Pacific Fleet, ‘Hong Kong Harbor is so well charted that normally 93 Jeffrey T. Richelson and Desmond Ball, The Ties That Bind: Intelligence Cooperation between the UKUSA Countries—the United Kingdom, the United States of America, Canada, Australia and New Zealand (Boston, ), –, –. According to intelligence historian Christopher Andrew, the date of the secret UKUSA Agreement should be , not  as most scholars (including Richelson and Ball) had recorded. Christopher Andrew, ‘Intelligence and International Relations in the early Cold War’, Review of International Studies, / (), . 94 See Ball, ‘Over and Out’, –. 95 See James Bamford, The Puzzle Palace: A Report on America’s Most Secret Agency (Boston, ), –. 96 Matthew M. Aid, ‘American Comint in the Korean War: From the Chinese Intervention to the Armistice’, Intelligence and National Security, / (Spring ), . 97 During the s, a US plan to build a SIGINT station in Thailand close to the PRC met with local resistance, notwithstanding the US–Thailand Mutual Security Alliance of . On the other hand, the National Security Agency was allowed to establish a Communications Intelligence Relay station in Hong Kong, linking it to the one in the Philippines. Aldrich, ‘ “The Value of Residual Empire” ’, ; Ball, ‘Over and Out’, .

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Hong Kong

no navigational difficulties should be encountered.’ Besides, ‘adequate wharf and pier facilities are available’, and ‘[p]rivate dock facilities are quite sufficient to handle ordinary ship repairs of an emergency nature’, with the nearest US Navy repair facilities in the Philippines.98 As Admiral Arthur Radford, the Commander-in-Chief of the Pacific in the early s, vividly described it: ‘The quiet, the good food and European comforts of Hong Kong convinced me that the Crown Colony should become a major rest and recreational center for men and officers of the fleet.’99 The Commander of the Seventh Fleet, in particular, regarded Hong Kong as one of the best liberty ports and was eager to schedule ‘[a]s many ships as possible’ for visits to the Colony. As a report on its operations between mid- and mid- noted: ‘The regular scheduling of ships of the Seventh Fleet to visit various ports in the Far East for leave and recreation has been a positive morale-builder and an effort is made to schedule each ship for a visit to Hong Kong at least once during its tour.’100 As a production and coordination centre of anti-communist materials for Southeast Asia, Hong Kong contributed to the US psychological warfare against Communist China. Established in , the United States Information Service in Hong Kong (USIS Hong Kong) was of a special character owing to the favourable situation of Hong Kong—its proximity to China, the availability of talented Chinese, and low production costs. As the State Department’s program inspector, Theodore B. Olson, reported on USIS Hong Kong in mid-: ‘Hong Kong’s real importance is twofold: ) as a window looking into Communist China and a door opening both inward and outward; ) as a reservoir of Chinese intelligence and Chinese talent which can be used most effectively on the spot in preparing materials for Chinese audiences elsewhere’. ‘The USIS operation in Hong Kong’, he continued, ‘is relatively small in dimensions but more than usually complex. It is addressed not to one audience group but to at least four; not to a single country but to seven or more’. Although based in Hong Kong, USIS ranked the Hong Kong audience, including both Chinese and British, ‘only third

98 CINCPACFLT Briefing Pamphlet No. –, Apr. , RG , CA –, Reel , NA. 99 Quoted in Association for Radical East Asian Studies, Hong Kong: Britain’s Last Colonial Stronghold (London, ), . 100 Commander of Seventh Fleet to CNO,  Aug. , Post  Reports, Box , NHC.

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and fourth in priorities’, behind overseas Chinese and mainland Chinese audiences. Although anti-communist materials were produced in Hong Kong, they were used mainly by other USIS posts in Southeast Asia and other agencies in Washington.101 USIS Hong Kong was primarily responsible for producing Chinese language anti-communist materials—in printed form, for radio broadcasts and on film. Its main publications included World Today (or America Today prior to ), a semi-monthly magazine attributed to USIS, and Four Seas, a monthly pictorial which was unattributed. It also produced pamphlets and motion picture leaflets, and assisted local publishers with the production and translation of books. Chinese language scripts were produced for the Voice of America broadcasts from transmitters in Manila and Honolulu.102 In August , the Eisenhower administration established the United States Information Agency (USIA) to take over all overseas information programmes, formerly under the supervision of the Department of State, and to implement the planning of the newly created Operations Coordinating Board.103 USIA approved Country Plans submitted by USIS posts all over the world, and provided guidance on official propaganda to further US national interests.104 It signified an intensified effort of overt or white propaganda, in addition to the psychological and covert operations undertaken by the CIA.105 Nevertheless, US strategic, economic, and military interests were global in nature. It is one thing that Washington regarded Hong Kong as useful for intelligence gathering, overt propaganda, and export controls against China. It is quite another that the administration would necessarily follow the policy recommendations of the American Consulate in Hong Kong,106 let alone committing the United States to the defence of the British Colony. Indeed, Taiwan also played an important role in intelligence gathering on Communist China. With its huge CIA station of  staff, the presence of military intelligence units, and the stationing of sophisticated telecommunications monitoring

101 Inspection Report to State by Olson,  June , RG , USIS HK –, Box , NA. 102 HK to USIA,  Mar. , RG , USIS HK –, Box , NA. 103 Scott Lucas, ‘Campaigns of Truth: The Psychological Strategy Board and American Ideology, –’, The International History Review, / (May ), –. 104 Hans W. Tuch, Communicating with the World: U.S. Public Diplomacy Overseas (New York, ), . 105 See Ch. . 106 Tucker, Taiwan, Hong Kong, and the United States, –.

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Hong Kong

facilities after , the United States made full use of its ally’s territory for intelligence and covert operations.107 If the British government had Hong Kong in mind in dealing with the PRC, the US administration was certainly more concerned about American domestic politics and the global struggle with the Soviet Union than about the fate of the Colony. In the course of the s, the United States, gradually and sometimes reluctantly, increased its commitment to Taiwan by providing substantial economic and military assistance, concluding a mutual defence pact, and supporting its continued representation in the United Nations and other international organizations. On the other hand, the Truman administration after Chinese intervention in Korea and the Eisenhower administration after  sought to weaken the PRC by political isolation, economic containment, and military encirclement. A hard-line wedge strategy against China, it was hoped, would increase Beijing’s dependence on Moscow, create unfulfilled expectations and impractical demands between the two socialist brothers, and finally contribute to the collapse of the Sino–Soviet alliance.108 In short, Hong Kong was only a peripheral factor in US global considerations. If Hong Kong per se was not central to US global interests, Britain as a junior partner in the Cold War certainly was. With Germany and France seriously devastated in the immediate aftermath of the war, Britain remained a principal power, and helped galvanize other European countries to support the US strategy of containment. The United States needed Britain’s contribution to the defence of Western Europe, and expected Britain to play a leading role in European integration. Until the Suez Crisis in , the Americans basically regarded the Middle East as a British responsibility.109 In Asia, however, the socalled Anglo–American ‘special relationship’ appeared more problematical. However close was his friendship with Churchill, Eisenhower did not want to appear to give a privileged status in Britain, which he saw as just ‘one among a number of allies’.110 In private, though, Eisenhower

107 See John W. Garver, The Sino–American Alliance: Nationalist China and American Cold War Strategy in Asia (Armonk, NY, ), –. 108 On the US wedge strategy against the Sino–Soviet alliance, see John Lewis Gaddis, The Long Peace: Inquiries into the History of the Cold War (New York, ), –. 109 David Reynolds, ‘Great Britain’, in idem (ed.), The Origins of the Cold War in Europe: International Perspectives (New Haven, ), –. 110 Ritchie Ovendale, Anglo–American Relations in the Twentieth Century (London, ), .

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did expect more from the British. Especially in times of crisis, the United States was eager to work in concert with its allies in order to reduce the burden of containment. In practice, Britain thus stood out as the closest of all US allies in the Cold War.111

111 Dobson has distinguished between formal and informal, or de facto, special relationship between Britain and the United States. See Alan P. Dobson, ‘Informally Special? The Churchill–Truman talks of January  and The State of Anglo–American Relations’, Review of International Studies, / (), –.



Defending the Indefensible Colony: Anglo-American Exchanges over the Security of Hong Kong 1 The most serious challenge to the British retention of Hong Kong since the Japanese occupation and Chiang’s unsuccessful claims came in  when the Chinese Communists were about to gain complete victory over the Nationalists in the Chinese civil war. The Labour government sent reinforcements to Hong Kong twice in order to deter, but failing that, to defend against a possible communist attack. In the event, Hong Kong survived the establishment of the PRC in October. Its military vulnerability in the shadow of Beijing nonetheless continued to worry London throughout the s, as conflicts in Korea, Indochina, and the Taiwan Strait raised the spectre of an attack in the context of a wider Sino–American war; and as the British domestic economy and defence policy necessitated the reduction of overseas garrisons, rendering Hong Kong indefensible against an external attack save with outside assistance. In , the question of Hong Kong’s defensibility again came to the forefront in the light of the general defence review under the new Conservative government. The Hong Kong garrison would be reduced to a level such as was inadequate to fulfil the main tasks of internal security. Throughout this period, US air and naval support for Hong Kong was considered to be vital for defending the indefensible Colony. To the United States, the defence of Hong Kong was important not in itself, but rather for its international implications, notably for Anglo–American relations. US military officials evaluated the security of Hong Kong in accordance with their assessments of the communist threat and of British intentions and capabilities to hold the Colony. When considering a possible US commitment to Hong Kong, however,

1 This chapter is a revised version of my article, ‘A Reward for Good Behaviour in the Cold War: Bargaining over the Defence of Hong Kong, –’, The International History Review, / (Dec. ), –.

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decision-makers in Washington placed more emphasis on London’s probable support for the United States elsewhere in Asia. By the same token, calculations and expectations of US reactions were vital to the British in planning for the defence of Hong Kong.

            From late  onwards, the future of British Hong Kong became uncertain in view of the communist defeat of the Nationalists in Manchuria and North China. In early , the British did not worry about a direct communist attack on Hong Kong; rather, their worries were internal unrest caused by the influx of refugees, communistinspired strikes, and local guerrilla attacks.2 As the British defence policy for Hong Kong since  was to abandon the Colony in the event of a global war or a large-scale attack, the garrison there consisted of just one infantry brigade. This strength was considered by the Colonial Office to be ‘seriously insufficient’ to cope with the probable refugee problem and guerrilla attacks. But it was not until after the outbreak of the Amethyst Incident on  April, which dealt a great blow to British prestige in the Far East,3 that the Cabinet decided (eight days later) to strengthen the Hong Kong garrison by one brigade group.4 As the Chinese Communists continued their advance south in May, the British began to be concerned not just about internal unrest, but also about the risk of a direct communist attack. Both the Chiefs of Staff and the Foreign Office believed that the authorized reinforcements would

2 CO Memo. for COS Secretariat, enclosed in Paskin to Dening,  Jan. , FO /, F//G; MoD to GHQ,FE,  Jan. , F//G, PRO. 3 On  April, the Royal Navy frigate, HMS Amethyst, while sailing from Shanghai to Nanjing, came under heavy communist artillery fire and was grounded in the Yangtze River, with serious casualties and damage. Several attempts by the Royal Navy to rescue Amethyst failed and resulted in more deaths. Although Amethyst finally managed to escape in late July, the incident had become a subject of hot debate in Parliament, and exposed the limits of British power in the Far East. According to Tsang, the decision to reinforce Hong Kong was aimed mainly at restoring confidence in the Far East as a result of this humiliating incident. Tsang, Hong Kong, –. For a comprehensive account of the Amethyst Incident, see Malcolm H. Murfett, Hostage on the Yangtze: Britain, China, and the Amethyst Crisis of  (Annapolis, Md., ). 4 CO Memo. for the COS Secretariat,  Jan. , FO /, F//G; CM(),  Apr. , CAB /, PRO.

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Hong Kong

not be able to meet a major attack and that additional forces should be sent in order to show British determination to defend Hong Kong.5 The Attlee Cabinet increasingly saw the issue in Cold War terms: failure to meet the communist threat to Hong Kong ‘would damage very seriously British prestige throughout the Far East and Southeast Asia’, and ‘the whole front against communism in Siam, Burma and Malaya was likely to crumble’. On  May, the Cabinet decided to send further reinforcements to Hong Kong, bringing the army strength up to a division plus a brigade, supported by heavy guns, tanks, and sea and air forces.6 In the meantime, the Hong Kong government passed a number of ordinances to increase its power in dealing with the internal security situation, for example the power of curfew, suppression of illegal strikes, registration of persons, and expulsion of undesirables.7 With the much strengthened garrison and the control of air and sea, the British were confident about deterring a communist attack, and if that failed, putting up the best fight with the available forces while appealing to the United Nations for help. But by committing such a large force (a total of five brigades) to Hong Kong, they increased its significance, for its loss would have serious consequences for British prestige and imperial defence.8 Thus, despite its confidence in Hong Kong’s defence, the Labour government still hoped to obtain promises of support from the Commonwealth countries and especially the United States. However close Anglo–American relations were in Europe, London could not take US support for British colonial rule in Asia for granted. As the Acting UK High Commissioner in Canada reported in early , ‘the whole idea of colonial rule was repugnant to North American thought’, and Britain ‘would need to have a very strong case indeed if she was to secure backing whether in Canada or in the United States for maintaining by force of arms British sovereignty in a Crown Colony’.9 In order to rally US support, the British calculated that the defence of Hong Kong should be presented as ‘a decision to resist [communist] aggression’, not a policy to preserve British colonial rule.10 To Ernest 5 CP(),  May , CAB /; Memo. by Attlee,  May , FO /, F//G, PRO. 6 CM(),  May , CAB /, PRO; HKAR , . 7 Lieutenant Colonel D. H. Oxley (ed.), Victoria Barracks – (Hong Kong, ), . 8 Tsang, Hong Kong, . 9 Acting UK High Commissioner in Canada to CRO,  May , FO /, F//G, PRO. 10 CM(),  May , CAB /, PRO.

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Bevin, London had to be ‘very cautious’ in its approach to Washington. What the British government wanted at this stage was US ‘moral support’, not ‘a public statement by U.S. Government’ on defending Hong Kong, since this might ‘create difficulties for the U.S. Administration, particularly while the ratification of the [North Atlantic] Pact and the Arms Bill are still under consideration’. Ambassador Franks agreed that the matter should be handled very carefully, so that ‘the Americans should not get the impression that we are forcing them’.11 In early , the Far East was not high on the global agenda of the Europe-oriented Truman administration, preoccupied with the Berlin Blockade and the creation of the North Atlantic Treaty. Given the lack of a great US stake in Hong Kong, the State Department regarded its uncertain future in view of the Chinese Communist advance as ‘a British problem’, and recommended that the administration should not take the initiative in raising the question with the British.12 Thus, when, on the occasion of the signing of the North Atlantic Treaty in Washington in early April, Bevin mentioned to Dean Acheson that ‘it was most important that we should stand firm’ in Hong Kong, the latter ‘had no particular comment to make’. The Foreign Office minuted that this was ‘(n)ot very encouraging’, and thus every effort should be made to convince the Americans that ‘Hong Kong is just as useful to U.S. business in the Far East as it is to British.’13 Two days later, Bevin told Acheson that, as regards Hong Kong, ‘the United Kingdom intended to stand firm, making it, if necessary, a sort of “Berlin of the East”, which could be used to influence the Chinese situation whatever might eventuate’. To Acheson, ‘the thought of another Berlin, if this involved another airlift, filled me with considerable distaste!’14 In fact, at this stage, the Truman administration was not clear about Britain’s long-term policy with regard to Hong Kong. Owing to the Foreign Office’s desire to keep on good terms with the Chinese 11 FO to Paris,  May , FO /, F//G; Paris to FO,  June , F//G; Franks to FO,  June , FO /, F//G, PRO. 12 Memo. by Davies,  May , enclosed in Sprouse to Butterworth,  May , RG , CA –, Reel , NA. 13 Franks to FO,  Apr. , FO /, F//; Minute by Coates,  Apr. , ibid., PRO. 14 Memo. of Conversation,  Apr. , FRUS, , , pt. , –. As Tsang and Louis forcefully argued, the British defined the significance of Hong Kong in Cold War terms in order to rally US support, not to turn the Colony into another flashpoint like Berlin. Tsang, ‘Strategy for Survival’, ; Louis, ‘Hong Kong’, .

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Hong Kong

Communists, the Labour government had refrained since the end of the war from making any firm statement on British intentions in Hong Kong. Even after the Cabinet had decided to reinforce the Hong Kong garrison in April–May, as late as mid-June it had yet to devise a longterm policy regarding Hong Kong’s future.15 In response to Acheson’s query about how to discuss the Hong Kong question with the British, George Kennan, the head of the State Department’s Policy Planning Staff, stated that ‘it would be somewhat academic on our part to come up with policy suggestions prior to knowing at least what the British intentions are’, and recommended that, if Bevin raised the issue, Acheson adopt ‘a Socratic approach’ by asking questions to clarify the British view.16 Such an opportunity occurred during the meeting of the Council of Foreign Ministers in Paris on  May. Bevin handed Acheson a memorandum announcing the British decision to send further reinforcements to Hong Kong, and asking for ‘the moral support’ of the United States ‘as representing a contribution to the general aim of us all to resist Communist expansion’.17 When Bevin’s advisor, R. E. Barclay, raised the issue of Hong Kong some days later, Acheson expressed the view that, in an unprovoked military attack on Hong Kong, which the State Department thought to be unlikely, the United States would give ‘moral support’ to the British and support them ‘in an appeal to the United Nations’. Acheson then asked how the British would respond to the communist pressure of boycotts and blockades, which was believed to be ‘the most probable course’, and what they expected from an appeal to the United Nations, when ‘the issues might not be very clear and when the offending party would not be a member of the United Nations’. He added that a British reply to these questions ‘would help to clarify American thinking on this whole problem’. When meeting with Bevin on  June, Acheson again asked what the British would do if the Chinese Communists ‘resorted merely to economic pressures’, a question to which Bevin ‘did not make any direct answer’.18 In 15 Not until  June  did the Cabinet decide to undertake at once a ‘thorough review of long-term policy in respect of Hong Kong’. On British attitudes towards the status of Hong Kong in the early post-war period, see Tsang, Hong Kong, –. 16 Kennan to Butterworth,  May , G./–, RG , DF –, Box , NA. 17 Memo. by Bevin to Acheson, in Paris to Dening,  June , FO /, F//G, PRO. 18 Memo. of Conversation,  June , RG , CA –, Reel , NA; Paris to FO,  June , FO /, F//G, PRO; Memo. of Conversation,  June , FRUS, Memorandum of the Secretary of State, – and Meetings and Visits of Foreign Dignitaries –, Microfiche Supplement, Fiche .

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short, this exchange of views on Hong Kong was purely exploratory. Without knowing accurately British intentions in Hong Kong and probable reactions to communist actions, the Truman administration remained non-committal. If the American estimate of British intentions was uncertain, their assessment of the communist threat to Hong Kong seemed more definite. A report from the US Consulate General in Hong Kong in early June pointed out that the Chinese Communists would not launch a military attack against the Colony, and would instead use such economic weapons as cutting water and food supplies and stopping rail services.19 The US Ambassador in China, John Leighton Stuart, drew a similar conclusion in his communication to the State Department.20 According to a CIA estimate in mid-June: ‘The eventual return of Hong Kong to China . . . appears probable, but not within the calendar year of .’21 Despite the rather optimistic intelligence estimate of communist intentions in Hong Kong, the US military could not completely ignore the possibility of a communist attack, since this might have ‘serious military implications affecting the long-range security interests of the United States in the Pacific’. In a study of the implications of a possible communist attack on foreign colonies in South China, the US Army highlighted the Chinese Communist capability of subjecting Hong Kong to attack, and drew out seven general courses of action open to the administration, including military assistance to the British, appropriate action under the North Atlantic Treaty, and introduction of the problem to the United Nations, with the last being the ‘most feasible and desirable’.22 Based on this study, the JCS offered their military advice to the Secretary of Defense and the NSC. Geographically, Hong Kong lacked ‘natural defensive strength and the depth necessary for defense by large forces and for the security of vital installations’. A successful defence of Hong Kong would require ‘the establishment of a military position well inland’, which in turn would involve ‘a movement of largescale forces into China’. Thus, ‘unless we are willing to risk major military involvement in China and possibly global war’, it would be ‘unwise’ for the United States to contribute forces for the defence of 19

HK to State,  June , RG , HKC –, Box , NA. Stuart to Acheson,  June , FRUS, , , –. 21 ORE –, CIA,  June , TP, PSF, Intelligence File, Box , HSTL. 22 Memo. by Chief of Staff, US Army,  June , in Note by Secretaries to JCS, JCS /,  June , RG , Records of the Joint Chiefs of Staff, Part : –, The Far East (China), Reel . 20



Hong Kong

Hong Kong.23 Indeed, US strategy in the Pacific up till the outbreak of the Korean War avoided military entanglement in continental Asia, and instead relied on the so-called ‘defensive perimeter’ that stretched through the Philippines, Okinawa, and Japan to project US power. In , Acheson excluded Taiwan, Korea, and Indochina, not to mention Hong Kong, from this perimeter.24 Just as the Americans were assessing British intentions and capabilities to hold Hong Kong, the British too were calculating the responses of the Commonwealth countries as well as the United States to their requests for assistance to the Colony. On  June, the Cabinet was informed that, except for New Zealand and, to a lesser extent, South Africa, other Commonwealth governments were reluctant to commit themselves to the British position in Hong Kong. As regards those questions raised by Acheson and the State Department, the Secretary of State for the Colonies, Arthur Creech Jones, said that ‘they raised the whole problem of long-term policy in respect of Hong Kong’, and thus it was time to ‘review that problem afresh in the light of the changed conditions in China’. Bevin stated that, in the light of the Commonwealth and US responses, the British government, it appeared, ‘would have to bear the main responsibility for devising effective measures of safeguarding British interests in Hong Kong’. It was agreed that the government should ‘undertake at once a thorough review of longterm policy in respect of Hong Kong’.25 This was completed two months later, and the Cabinet concluded on  August that the British government would be prepared to discuss the future of Hong Kong only with a central Chinese government that was ‘friendly, stable and in control of a united China’. Such a Chinese government, it was noted, ‘did not exist at present’, and until conditions changed, the British intended ‘to retain their position in Hong Kong’.26 23 A Report to NSC by Secretary of Defense, NSC ,  July , RG , NSC Policy Paper File, Box , NA. 24 For a critical analysis of the ‘defensive perimeter’ strategy, see John Lewis Gaddis, ‘The Strategic Perspective: The Rise and Fall of the “Defensive Perimeter” Concept, –’, in Dorothy Borg and Waldo Heinrichs (eds.), Uncertain Years: Chinese–American Relations, – (New York, ), –. 25 CM(),  June , CAB /, PRO. 26 The Cabinet endorsed the conclusion ‘as an interim policy’, after omitting the words ‘and democratic’ from the original statement (CP()). It also agreed that further consideration should be given to the suggestion that Hong Kong be brought ‘under some system of international control’. On  September, the Foreign Office ruled out the possibility of ‘an international regime’ for Hong Kong due to foreseeable difficulties. In the circumstances, the UK government considered that it was ‘not possible or desirable’ to determine

Defending the Indefensible Colony



The future of Hong Kong became a greater concern for the United States in the late summer of . By that time, the Truman administration was undertaking a ‘very thorough study and reexamination of our [US] policy in the Far East’ in view of the impending communist victory on the mainland and the growing divergence in Anglo–American policies. Acheson desired to have ‘a frank exchange of views’ with the British in order to find out how far they would support the United States on such issues as continued recognition of Nationalist China, trade control policy, and Chinese representation in the United Nations.27 The Hong Kong issue also came up in the Anglo–American discussions as part of their policy coordination. On  September, the Assistant UnderSecretary of the Foreign Office, Esler Dening, told his US counterpart, Walton Butterworth, that the British forces in Hong Kong ‘would be adequate to deal both with a frontal attack and internal unrest at the same time, if necessary’. In reply to those questions raised by Acheson in June, Dening stated: ‘It was not possible to estimate how long the resistance would have to be maintained but, as with Berlin, the British Government faced the prospect with resolution.’28 Three days later, Bevin reiterated to Acheson the British view that they could defend Hong Kong from both external attack and internal trouble. Bevin then read out a statement that Britain would only ‘discuss the future of Hong Kong with a friendly and stable Government of a unified China’, and until such conditions came, it ‘intend[ed] to remain in Hong Kong’. Acheson commented that the conclusion was ‘a sound and reasonable one, which should receive the support of the U.S. Government’, and Bevin replied that ‘our agreement would be encouraging to his Government’.29 It became clear to the Truman administration that Britain was determined to hold on to, and felt confident of defending Hong Kong.30 In the meantime, US intelligence sources continued to suggest that an a long-term policy for the future of Hong Kong, and that ‘until conditions change our policy must be to remain in Hong Kong’. Thus, the ‘interim policy’ of  Aug. became de facto ‘long-term policy’. CM(),  Aug. , CAB /; Scarlett to Barcley,  Sept. , FO /, F//G; CRO to UK High Commissioners,  Sept. , F//G, PRO. 27 Acheson to Douglas,  July , FRUS, , , –. 28 Conversation between Dening and Butterworth,  Sept. , FO /, F//G, PRO; Memo. of Conversation,  Sept. , RG , CA –, Reel , NA. 29 Memo. of Conversation,  Sept. , FRUS, , , –; FO Memo.,  Sept. , FO /, F//G, PRO. 30 A Report to NSC by Acting Secretary of State, NSC /,  Sept. , RG , NSC Policy Paper File, Box , NA.



Hong Kong

overt Chinese military attack on Hong Kong was unlikely, although communist subversive activity remained a threat.31 This was confirmed by the US Consulate in Hong Kong after the founding of the PRC on  October, which reported that developments along the Hong Kong frontier were regarded as ‘gratifying to the British authorities’, since regular communist troops ‘did not approach closer than twenty-five miles from the frontier’.32 If the US assessment of the communist threat to Hong Kong was optimistic, its estimate of British capabilities to hold the Colony was not. After studying the British view regarding the defence of Hong Kong, the JCS concluded that their British counterparts were ‘over optimistic’ in believing that they could withstand determined communist attacks, or even a Chinese boycott or blockade. In addition, from the viewpoint of US security, the JCS had ‘little military or strategic interest’ in the British retention of Hong Kong, since US war plans did not call for the retention by force of ‘any foothold in continental China or Korea’ in the event of war; nor could the United States contribute forces for the defence of the Colony ‘without risking major military involvement and possibly global war’.33 On  October, the NSC endorsed the JCS view that the United States would ‘not provide military support’ to the British for the defence of Hong Kong in the event of a communist military attack; instead, it would provide ‘moral support’ in an appeal to the UN. To the NSC, the latter course would not involve the use of US forces, for the Soviet Union ‘would certainly veto any Security Council action involving employment of armed forces under UN auspices’. Approved by Truman the next day, NSC Action No.  was to guide the US approach towards the defence of Hong Kong until it was superseded by a more comprehensive NSC policy statement in .34 In , after a series of discussions in the context of the Anglo–American response to the rise of Communist China, the Truman administration was impressed by the British argument of the significance of Hong Kong in the Cold War. Nevertheless, the United States was

31 See HK to State,  Oct. , RG , HKC –, Box , NA; ORE –, CIA,  Oct. , TP, PSF, Intelligence File, Box , HSTL. 32 Rankin to Acheson,  Nov. , FRUS, , , –. 33 A Report to NSC by Secretary of Defense, NSC /,  Oct. , RG , NSC Policy Papers File, Box , NA. 34 Minutes of th NSC Meeting,  Oct. , RG , NSC Meeting, Box , NA.; NSC Action No. b,  Oct. , TP, PSF, Subject File, National Security Council (A–D), Box , HSTL.

Defending the Indefensible Colony



unwilling to commit its scarce resources and sacrifice its priorities in Europe by giving more than ‘moral support’ to the Labour government. But this ‘moral support’ was all that the British sought, at a time when they were confident of deterring, and probably defending Hong Kong against, a communist attack.35

          Although Hong Kong survived the establishment of a communist regime on its doorstep in , the North Korean invasion of the South in June  and the massive Chinese intervention in November again raised questions about its external defence. The British main worries were not an isolated attack by Beijing on Hong Kong, but a possible communist attack on Taiwan which would lead to hostilities between the United States and the PRC. In such a situation, the British would be caught in a policy dilemma: their support for the United States in defending Taiwan might provoke the PRC into attacking Hong Kong; while their non-involvement in a Sino–American war would split the Anglo–American alliance.36 The British policy was to restrain Washington from extending the conflict beyond the Korean peninsula, an extension which would trigger a Chinese attack and present London with difficult choices. In this regard, Hong Kong would be ‘defended’ by a diplomacy of restraint on the part of Britain.37 In essence, the British sense of vulnerability over Hong Kong stemmed from the weakness of its much reduced garrison vis-à-vis China’s growing military strength. Earlier in March–April, the worsening situation in Malaya, where a counter-insurgency was waging, had necessitated the dispatch of two brigades ( Gurkha and  Commando Brigades) from Hong Kong to that more critical theatre.38 By the time the Korean War started, there were only two brigades and two squadrons in the Colony, a garrison which was considered inadequate to hold a serious attack. In addition, the concentration of Chinese troops 35 As Louis has argued, Bevin wanted ‘to secure general American endorsement for the British stand but to leave it at that’. Louis, ‘Hong Kong’, –. 36 Crowe to Garner,  July , CO /, /; GHQ,FE to MoD,  Aug. , ibid., PRO. 37 See Ch. . 38 DO(),  Mar., CAB /; DO(),  Apr. , ibid., PRO.



Hong Kong

in Guangzhou close to Hong Kong left the British with little or no advance warning of a communist attack.39 Thus, in view of the US demands for a British commitment to the Korean campaign, the Chiefs of Staff thought it ‘militarily unsound’ to send any land or air forces from Hong Kong or Malaya to the peninsula. Even when Prime Minister Attlee, for ‘strong psychological reasons’, decided in late July to commit British forces to Korea, it was stressed that the proposed Brigade Group ‘should not be formed at the expense of the Hong Kong Garrison’.40 But the critical situation in Korea in late August could not await the slow formation and deployment of  Independent Infantry Brigade from faraway Britain. Under tremendous US pressure, the Cabinet, for the sake of the Anglo–American relationship, had to send immediately from Hong Kong the two-battalion th Brigade to help defend the Pusan perimeter.41 All these developments as a result of the Korean War called into question the existing British defence policy for Hong Kong. While Britain’s global strategy in the event of a world war was to abandon the Colony (and indeed the Far East as a whole), British military officials and strategists now had to ponder a situation in which Hong Kong would be ‘attacked by China, covertly supported by Russia, as part of a limited war’, a war which would involve China and Britain only without ‘becoming a world war’.42 To the Chiefs of Staff, ‘it is problematical whether Hong Kong could be considered defensible’ in such a limited war. To meet this threat, it was necessary ‘to increase considerably the land and air forces in Hong Kong’, the consequence of which, however, would ‘gravely undermine our efforts in the Cold War elsewhere and our readiness for the Hot War’. But these had to be balanced against ‘the very serious effects in the Far East of losing Hong Kong in the face of a local attack’. The British Chiefs thus suggested that Britain should ‘deter Communist China from attacking Hong Kong by giving the impression that there would be strong opposition’—i.e. ‘a policy of bluff’.43 On  September, the Cabinet Defence Committee concluded as the interim Hong Kong defence policy that Britain would not rein39 40 41

Gregorian, The British Army, –. DO(),  July , CAB /; DO(),  July , ibid., PRO. Jeffrey Grey, The Commonwealth Armies and the Korean War (Manchester, ),

–. 42

MoD to BJSM, Washington,  July , FO /, FC//G, PRO. COS(),  July, , DEFE /; COS(),  Aug. , DEFE /, PRO. 43

Defending the Indefensible Colony



force the Colony with forces other than the replacement of the two battalions sent to Korea,44 and would appeal to the United Nations in the event of a Chinese attack. Britain would try to deter the PRC from attacking Hong Kong and avoid provoking Beijing. In the meantime, the British also considered the possibility of seeking US assistance in the event of an attack on Hong Kong.45 Indeed, the North Korean invasion had prompted Attlee to suggest to Truman in early July the holding of high-level staff talks in Washington to examine the political and military implications of the crisis for the world situation. At the first meeting with the Chairman of the JCS, General Omar Bradley, on  July, Franks and Dening indicated that Britain had ‘sufficient forces’ to maintain internal security in Hong Kong, and to resist a ‘small-scale’, though not a ‘major’, attack by Beijing. They also stated that an armed attack on Hong Kong ‘would result in a virtual state of war [between Britain and China] and that they would appeal to the UN’. The next day, in reply to an American inquiry, the British said that they would not consider ‘the possibility of a UN trusteeship over Hongkong’ as ‘a possible means of forestalling a Communist attack’, and would discuss the future of Hong Kong ‘only with a friendly, united and democratic China’.46 Apart from discovering British intentions in Hong Kong, the Americans also assessed the changing security situation there. The US Consulate in Hong Kong reported to Washington that a direct communist attack on Hong Kong ‘cannot be ruled out’ since there were ‘nearly , Communist troops massing in the Canton area with only half of them scheduled to move north’. The external security of the Colony, moreover, had been ‘considerably weakened’ by the recent communist conquest of the Manshan islands, a series of Sino–Hong Kong border incidents, and the Western embargoes on China of gasoline and other strategic items which lessened Hong Kong’s economic usefulness to Beijing. The one bright spot was the internal situation, which remained relatively calm and stable at this stage.47 44 For the British military’s deliberations over the return of the th Infantry Brigade to Hong Kong, see Anthony Farrar-Hockley, The British Part in the Korean War, Vol. : An Honourable Discharge (London, ), –. 45 MoD to GHQ,FE,  Oct. , FO /, FC//G, PRO. 46 Summary Notes of st and nd Meetings,  and  July , TP, DSR, Document File [No.], Box , HSTL; COS(),  July , DEFE /, PRO. 47 Daily Summary Excerpt,  July , in Woodrow J. Kuhns (ed.), Assessing the Soviet Threat: The Early Cold War Years (DC, ), ; HK to State,  Aug. , G./–, RG , DF –, Box , NA; Grantham, Via Ports, .



Hong Kong

What concerned the Truman administration most was not the security situation in Hong Kong, but the changing perception of the US position in the world as a result of the North Korean invasion. Even before the war broke out, by the spring of  the US attitude towards the communist world had hardened as a result of the Soviet acquisition of the nuclear bomb in August , the signing of the Sino–Soviet alliance in February , and the formulation of NSC  in April. The Korean War seemed to confirm the global nature of Soviet aggression and to intensify the American sense of ‘vulnerability’ in the military balance of power.48 In August, US decision-makers pondered various courses of action in response to possible further Soviet moves in the light of the Korean situation, as contained in an NSC staff study. Although regarding communist-incited internal unrest as ‘more likely’, the NSC staff did not rule out the possibility that the Soviet Union ‘might inspire aggression by satellite forces’ against Hong Kong, warning that an increase in Chinese Communist capabilities, by whatever means, would ‘contribute to the over-all capabilities of the USSR’. The NSC staff thus suggested: ‘If such aggression were directed against Hong Kong the United States should consider furnishing relief assistance to the British and such military assistance as may be appropriate in the light of our own military commitments and capabilities at that time.’49 On the th, the NSC approved the staff study as ‘a working guide’ (NSC /) for the coming few months, but agreed that final recommendations to the President regarding US actions in the event of any contingencies would be deferred ‘until it is established that the event is certain to occur’.50 Thus, shocked by the perceived Kremlininspired North Korean attack, the United States, more belligerent towards the communist bloc, was inclined ‘to wrest the initiative’ by risk-taking.51 But as far as American military assistance to Hong Kong was concerned, there was no promise of any sort unless and until the 48 Gordon H. Chang, Friends and Enemies: The United States, China, and the Soviet Union, – (Stanford, Calif., ), –. On the concept of ‘window of vulnerability’ in American thinking, see Marc Trachtenberg, ‘A “Wasting Asset”: American Strategy and the Shifting Nuclear Balance, –’, in idem, History and Strategy (Princeton, ), –. 49 Note by Executive Secretary to NSC, NSC /,  Aug. , TP, PSF, National Security Council File—Meetings, Box , HSTL. 50 Minutes of th NSC Meeting,  Aug. , ibid.; Memo. for President,  Aug. , ibid., Box , HSTL. 51 On this line of argument, see Melvyn P. Leffler, A Preponderance of Power: National Security, the Truman Administration, and the Cold War (Stanford, Calif., ), –.

Defending the Indefensible Colony



Chinese Communists made a direct move against it, and the US President made a final decision on the American response. The massive Chinese intervention in Korea in November  and their New Year offensive in January  sent further shock waves through the Truman administration. As the situation in Korea became critical by January —a forced US/UN evacuation from Korea was not an impossibility—Americans in Hong Kong had to prepare for the worst. Though the local security situation by no means reached crisis proportions, there were widespread rumours of an escalated Sino–American war and an enormous sense of uncertainty within the American community.52 Thus, in early January, the US Consulate General in Hong Kong, without prior consultation with the colonial authorities, offered evacuation advice to American dependents in the colony, with the result that hundreds of Americans (mostly women and children) and some American business corporations (e.g. the Chase Bank) left. The JCS directed CINCPAC to prepare evacuation plans in the event of the spread of hostilities between the United States and China. Meanwhile, arrangements were made between the Americans and the British to coordinate evacuation plans. For the purpose of evacuation, a US naval transport vessel was to be stationed in Hong Kong harbour.53 The unilateral decision by Washington to evacuate American residents was not to the liking of some British officials in Hong Kong and London, for it was thought that this would spread alarm and aggravate the internal security situation.54 Added to this were the British reservations about the US adoption of a rigid licencing policy for Hong Kong and its pressure for a total embargo on China. Indeed, from the British point of view, the American attempts to intensify the economic warfare against the PRC during the Korean War posed as great a threat to Hong Kong as a possible military attack by the Chinese Communists, preoccupied with the fighting in the peninsula.55 Nevertheless, as the war front in Korea stabilized with the opening of armistice negotiations in July, the uncertainty over Hong Kong’s safety also began to dissipate: by late , US dependents who had left earlier returned; and the US Navy maintained its presence in the harbour. 52 FE(O)(WP)(),  Jan. , CAB /, PRO; Ambassador Arthur William Hummel Jr. Oral History Interview,  June , FAOHP, GU, . 53 Memo. by Office of Chinese Affairs,  Jan. , RG , CA –, Reel , NA; Decision on JCS /,  Jan. , RG , Geographic File –, Box ; Memo. of Conversation,  Feb. , RG , CA –, Reel , NA. 54 COS(),  Jan. , DEFE /, PRO. 55 See Ch. .



Hong Kong

As the most critical phase of the Korean conflict had passed, the British Chiefs of Staff revised the interim defence policy for Hong Kong approved in September . By mid-, they held a ‘more optimistic view’ as to the defensibility of Hong Kong, partly based on the British experience in Korea against China. It was now estimated that if air superiority could be maintained, Britain ‘could probably hold the Colony’ even with three brigades (not the previously assumed three divisions). On  May, the British Chiefs agreed, subject to ministerial approval, that in the event of a Chinese attack on Hong Kong ‘other than as part of global war’, Britain’s policy ‘should be to defend the Colony and appeal to the United Nations’. In the meantime, the Hong Kong garrison ‘should not be reduced’, and all practical measures should be taken ‘to deter the Chinese from attacking Hong Kong’.56 Later that year, the new Prime Minister, Winston Churchill, argued that Britain ‘should regard an attack on Hong Kong as a major issue involving a declaration of war against China, a war in which we should hope for the support of the Americans’.57

       As the Korean War dragged on through , the United States and its allies became increasingly worried about communist aggression on another front—Indochina. Since , the French had been fighting a colonial war against the Viet Minh, who received military assistance and political advice from the Chinese Communists.58 It was the fear of Chinese direct intervention in Southeast Asia that prompted the military representatives of America, Britain, and France, later to include Australia and New Zealand, to gather to discuss possible courses of military action, without commitment by government, to meet such aggression.59 At the British request, Hong Kong was put on the agenda 56

COS(),  Mar. , DEFE /; COS(),  May , ibid., PRO. Churchill’s view summarized in JP()(Final),  Mar. ; COS(),  Mar. , DEFE /, PRO. 58 See Qiang Zhai, China and the Vietnam Wars, – (Chapel Hill, NC, ), –. 59 The origins of the Five Power Military Conferences on Southeast Asia, as this series of military talks were called, could be traced back to the Tripartite Military Conference on Southeast Asia in Singapore in mid-May . See Historical Division of the Joint Secretariat, The History of the Joint Chiefs of Staff: The Joint Chiefs of Staff and the War in Vietnam: History of the Indochina Incident –, Vol.  (Wilmington, Del., ), –. 57

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of the Five-Power Military Conferences.60 During the Five-Power Military Conference in early February , the British sought to discover the US attitude towards military assistance to Hong Kong. They got to know that the United States did not consider the retention of Hong Kong as ‘necessary or desirable in the face of Chinese aggression’, and would not provide ‘any direct assistance in the defence of the colony’, except ‘such Naval and Air assistance as might be available from their forces in the Far East’ for the purpose of evacuation.61 With the deterioration of the French position in the Tonkin area in mid-, however, the defence of Southeast Asia became more vital to overall US national security interests.62 On  June, the Truman administration approved NSC /, which, as part of the US strategy to meet communist aggression in Southeast Asia, called for US ‘[a]ssistance to the British to cover an evacuation of Hong Kong, if required’.63 Responsibility for the purpose of developing evacuation plans fell onto CINCPAC. In late , Admiral Arthur Radford, then CINCPAC64 and later the Chairman of the JCS, made his longest ever trip to Southeast Asia to examine the problems in the region. In Hong Kong, Radford discussed the Colony’s defence with the Commander of the British Forces. The Admiral was impressed by what the British had done to turn Hong Kong into ‘a costly target’ for Chinese Communist attack, although it was still ‘not completely defensible’ without US air and naval support.65 Radford was a staunch anti-communist and a strong advocate of the use of air and sea power.66 To him, ‘the retention of Hong Kong in friendly hands was important to our [US] interests’.67 At the ANZUS 60

JP()(Final),  Jan. ; COS(),  Jan. , DEFE /, PRO. Memo. by the US Member of the Five-Power Ad Hoc Committee on Southeast Asia to JCS,  Feb. , FRUS, –, , pt. , –; JP()(Final),  Mar. , DEFE /, PRO. 62 Leffler, A Preponderance of Power, –. 63 Report to NSC by Executive Secretary, NSC /,  June , FRUS, –, , pt. , –. 64 Radford held two positions—as the Commander-in-Chief of the land, air and sea forces in the Pacific, and as the Commander-in-Chief of the US Pacific Fleet. 65 Stephen Jurika, Jr. (ed.), From Pearl Harbor to Vietnam: The Memoirs of Admiral Arthur W. Radford (Stanford, Calif., ), –. 66 Arthur W. Radford, ‘Our Navy in the Far East’, The National Geographical Magazine, / (Oct. ), –; Michael T. Isenberg, Shield of the Republic: The United States Navy in an Era of Cold War and Violent Peace, Vol. : – (New York, ), , . According to military historian Edward J. Marolda, because of its role in the Pacific War, the US Navy had a traditional Asian-orientation and believed in the efficacy of force. Edward J. Marolda, ‘The U.S. Navy and the Chinese Civil War, –’, Ph.D. thesis, George Washington University, . 67 Memo. of Conversation,  Feb. , FRUS, –, , pt. , –. 61

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Hong Kong

(Treaty between Australia, New Zealand, and the United States) Council meeting in August, Radford argued that ‘Hong Kong could and should be held’. Later, he reiterated the view to the Hong Kong Governor, Alexander Grantham, and suggested the holding of staff talks to plan for the defence of Hong Kong.68 Radford’s confidence was encouraging. Apart from his view, by early  the British Chiefs of Staff had also discerned other ‘indications that the Americans attach[ed] importance to the defence of Hong Kong’. They were impressed by a study prepared by the military staff planners of the ANZUS Council in November  which stressed the ‘strategic importance’ of Hong Kong as ‘the only remaining beachhead in friendly hands on the mainland of China’ and as ‘a useful point of contact with anti-Communist elements in Communist China’. In addition, during his visit to London in February , John Foster Dulles, the US Secretary of State of the newly-inaugurated Eisenhower administration, asked whether the British considered Hong Kong to be ‘defensible’. The Minister of Defence, Lord Alexander, replied that the land defence was ‘good’, but the ‘weakness’ lay in the vulnerability of the airfields which were within communist artillery range. Nevertheless, if the British ‘retained command on the sea and in the air’, they could ‘hold out, even against a major attack, for about a fortnight’. Dulles told the British Foreign Secretary, Anthony Eden, that ‘he was relieved to learn that we [the British] thought Hong Kong could hold out long enough for reinforcement to be received’. Dulles also asked ‘whether Britain had been given any clear understanding of the American attitude in the event of an attack on Hong Kong’, and, if not, ‘whether any had been sought’.69 The perceived US interest in Hong Kong affected British defence planning in a positive way. Earlier in March , the British Chiefs of Staff had concluded that, in the event of a major attack, either in a global war or in a major Chinese aggression, ‘Hong Kong was indefensible’. Future planning should be based on the assumptions that the garrison in Hong Kong should be maintained at a level sufficient to ‘ensure internal security’, and, in the case of attack, to ‘delay any major Chinese advance overland long enough to ensure the orderly evacuation of civilians’. This was due mainly to the increase in Chinese Communist military strength, especially the effectiveness of their Air Force, so much so that the balance of air power, which was ‘the key to the successful 68 COS to Scott,  Jan. ; Admiralty to C-I-C,FE,  Feb. , DEFE /, PRO. 69 JP()(Final),  Mar. ; COS(),  Mar. , DEFE /, PRO.

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defence of Hong Kong’, was ‘now most unfavourable’ to the British. Also, the military discussions at Washington had made plain that Britain could not rely on America for ‘direct assistance in the defence of the Colony’.70 By early , however, the perceived US interest in Hong Kong led the British to reconsider their assumptions of defence planning. On  March, the Cabinet Defence Committee agreed to hold military discussions with the Americans on the defence of Hong Kong when the opportunity arose, without commitment to governments. The British wanted to find out whether the JCS shared Radford’s sympathetic views on Hong Kong. Such talks could also help make clear US strategic thinking on Hong Kong’s place in the allied strategy for the Far East, and the attitude of the new Republican administration towards Hong Kong as a whole.71 As it turned out, Radford’s was a lone voice in the Pentagon. When approached by the British Chief of the Imperial General Staff, General John Harding, at the NATO meeting in Paris in April , the Chairman of the JCS, General Bradley,72 said that, in view of the present commitments in Korea, the United States would not be prepared to assist Britain to hold Hong Kong, though it ‘might be able to support us [the British] temporarily with sea and air forces to cover evacuation if that was forced upon us’. Besides, General Bradley did not perceive Hong Kong as a base for large-scale land operations against China in general and Guangzhou in particular: it ‘would be costly in resources and unlikely to be profitable’.73 Given his emphasis on NATO, General Bradley, not surprisingly, did not share the view of the ‘Asia-first’ Radford regarding the use of air and naval power to defend Hong Kong.74 On the other hand, the British, it seemed, had also misread Dulles’s expressed interest in Hong Kong.75 As the British Ambassador to the United States, Roger Makins, astutely observed, Dulles might ‘only have been making an enquiry’ since he was ‘entirely new in office’, and thus it was ‘over optimistic to imagine that U.S. 70

JP()(Final),  Mar. , DEFE /; COS(),  Mar. , ibid., PRO. D(),  Mar. , CAB /; COS(),  Mar. , DEFE /, PRO. 72 General Bradley was a hangover from the Truman administration until Admiral Radford took over in Aug. . 73 Paris to MoD,  Apr. , DEFE /, PRO. 74 As Radford recollected in his memoirs, his seniors in the JCS had given too much attention to Europe at the expense of Asia. Jurika (ed.), From Pearl Harbor to Vietnam, . It should be noted that, when Radford himself became the JCS Chairman, he in turn had to consider the wider strategic picture, and did not press hard for a US commitment to Hong Kong. 75 For the possible reasons behind Dulles comment on Hong Kong, see Chs.  and . 71

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Hong Kong

policy as such at present envisages the defence of Hong Kong’.76 This was particularly so since the US Secretary ‘was not informed that we [Britain] would be at war with China if Hong Kong was attacked’, a war in which the British hoped for US support. Robert Scott of the Foreign Office also believed that when commenting on Hong Kong, Dulles ‘was not thinking of a formal state of war between the United Kingdom and China, but was only expressing satisfaction that if the Chinese attacked Hong Kong they would be letting themselves in for a regular military operation of no short duration’.77 In the spring of , the Eisenhower administration was still devising its national security policy. By October , the Eisenhower administration had finished its review of national security programmes. Parallel with the approval of the ‘New Look’ (NSC /) was a policy statement on Communist China (NSC /). Taking into account the ‘altered structure of power’ brought about by the Chinese Communist regime and the Sino–Soviet alliance, NSC / called for the reduction of the relative power position of China in Asia by ‘means short of war’. In building up its military strength in the Far East, the United States relied largely on the British in Malaya and Hong Kong, the French in Indochina, as well as on the indigenous forces of Korea, Vietnam, and Nationalist China.78 This shift also had an important bearing upon US defence planning for Hong Kong. In order to maintain a state of immediate readiness for renewed fighting in Korea, and to prepare for eventualities associated with the deteriorating situation in Indochina, CINCPAC became more involved in strategic planning.79 In early , the previous JCS directive which restricted US planning for the defence of Hong Kong to assistance in evacuation only was removed. In February, the JCS authorized CINCPAC ‘to coordinate with [the] British in planning studies for assistance in [the] defense of Hong Kong’, with the understanding that this involved ‘no commitment’ on the part of the US government.80 Between  and  April, CINCPAC planning staff officers and the staffs of the three British service forces in Hong Kong held talks in Singapore, which, from the British point of view, resulted in ‘a 76

Makins to FO,  Apr. , DEFE /, PRO. [Emphasis in the original] Scott to Cabinet Office,  Mar. , DEFE /; MoD to GHQ,FE,  Mar. , ibid., PRO. 78 Report to NSC, NSC /,  Oct. , FRUS, –, , –. 79 CINCPACFLT Annual Report  July — June , Post  Jan.  Command File, NHC. 80 JCS to CINCPAC,  Oct. , RG , Geographic File –, Box ; JCS to CINCPAC,  Feb. , RG , Geographic File –, Box , NA. 77

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valuable preliminary basis for the co-ordination of United States assistance in the defence of Hong Kong’. The discussions covered different aspects of the defence problem, such as command and control, operations, communications, electronic equipment, and logistics, but not the scale of US assistance.81 Notwithstanding their misperception of US intentions in , the British were again encouraged by the renewed US interest in Hong Kong in early . As the British Joint Planning Staff estimated, the Americans ‘have recently shown interest in the defence of Hong Kong in the context of their overall strategic interest in the Far East’.82 Anglo–American relations in Hong Kong had apparently improved to such a point that the US Consulate General in Hong Kong brought to the attention of the State Department in late January ‘the high degree of friendly cooperation’ between the US and UK military service personnel in the territory. As a result, Washington authorized the US Consulate and the American Embassy in London to indicate to appropriate British officials ‘U.S. appreciation for the splendid co-operation’ which had developed between the two countries in Hong Kong.83 All these developments occurred at a time when the Churchill government was undertaking a radical review of defence policy in order to reduce the strength of UK military forces to a level even lower than that suggested by the  Paper on Defence Policy and Global Strategy.84 At their meeting in February, the Chiefs of Staff pointed out that, as a result of the radical review discussions, the reduction of the Hong Kong garrison from two brigade groups (with certain ancillary troops and three Royal Air Force Squadrons) to one brigade group and one squadron was ‘inevitable’ and only a ‘question of timing’. But they worried that the reduction of forces to the level capable of only token resistance ‘would be apparent to the Americans, and their continued interest in the defence of Hong Kong could not be counted on’ as a result.85 Thus, when the Cabinet Defence Committee decided in principle in mid-April to reduce the Hong Kong garrison ‘by gradual and unobtrusive stages to the level required for internal security purposes’, 81

JP()Note ,  July ; COS(),  July , DEFE /, PRO. JP()(Final),  Feb. , DEFE /, PRO. 83 State to London,  Jan. , FO /, FC/; FO to War Office,  Feb. , ibid., PRO. 84 See Ian Clark and Nicholas J. Wheeler, The British Origins of Nuclear Strategy – (Oxford, ), –; John Baylis and Alan Macmillan, ‘The British Global Strategy Paper of ’, The Journal of Strategic Studies, / (June ), –. 85 JP()(Final),  Feb. ; COS(),  Feb. , DEFE /, PRO. 82

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Hong Kong

it agreed that the decision would be ‘kept most secret’. Neither the Hong Kong Governor and the British regional commanders nor the Eisenhower administration would be informed at this stage, for US knowledge of the reduction ‘would prejudice the prospects of establishing a system of collective defence in South-East Asia and the Western Pacific’. Execution of the decision had to wait until further review after the coming Geneva conference on Korea and Indochina, and, if possible, be ‘linked with any general reduction of forces in Korea’. The decision of reduction, however, ‘in no way affected the intention of H.M.G. to defend the Colony with the forces available’.86 But the British certainly realized that US air assistance to Hong Kong, especially the provision of UHF Radio and IFF Mark  equipment, would be vital to its successful defence.87 In short, the British government had to take the American factor into serious account in defence planning for Hong Kong.

       In the spring of , Eisenhower was apparently more willing to help to defend Hong Kong as a result of the deteriorating situation in Indochina. The United States hoped to secure support from Britain and other allies for ‘united action’ in Indochina to relieve the French troops under communist siege at Dien Bien Phu. From the Five-Power Military Conferences on Southeast Asia, the Americans realized that the British were reluctant to take action against the Viet Minh, which might provoke Beijing into attacking Hong Kong. Thus, on  April, Eisenhower wrote personally to Churchill: ‘The coalition we have in mind would not be directed against Communist China. But if, contrary to our belief, our efforts to save Indochina and the British Commonwealth position to the south should in any way increase the jeopardy to Hong Kong, we would expect to be with you there.’88 Eisenhower calculated that, by suggesting possible US assistance to Hong Kong, he might convince a reluctant Churchill to help rescue the French forces in Dien Bien Phu. If France could not get out of the Indochina imbroglio, Eisenhower feared, its support for the rearmament 86

CC(),  Apr. , CAB /; COS(),  Mar. , DEFE /, PRO. COS(),  July , DEFE /, PRO. 88 Eisenhower to Churchill,  Apr. , in Peter G. Boyle (ed.), The Churchill–Eisenhower Correspondence, – (Chapel Hill, NC, ), –. 87

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of West Germany within the European Defence Community would be put at risk. At stake was the concept of European security, not the defence of a strategically insignificant British colony.89 Thus, Hong Kong was seen by Eisenhower as a diplomatic carrot to be used to encourage Britain to align more closely with the United States during the crisis. As Eisenhower later explained to the Republican leaders, ‘if we all went in together into Indochina at the same time, that would be fine but if they don’t go in with us, they can’t expect us to help them defend Hong Kong’.90 When Churchill spoke of Eisenhower’s ‘united action’ idea in a Cabinet meeting, Eden said that the ‘proposal to organise the collective defence of South East Asia’ was ‘to be welcome’, as it ‘could remove the anomaly of our [Britain’s] exclusion from ANZUS and contribute to the security of Hong Kong and Malaya’. But Eden also expressed his ‘grave misgivings’ about the timing of the proposed arrangement since it would jeopardize the prospect of peaceful negotiation at the Geneva conference on Indochina.91 Churchill too was not convinced by Eisenhower, the US President’s assurance over Hong Kong notwithstanding. On foreign affairs, Churchill himself did not spend much time on China, let alone Hong Kong. And as far as the Far East was concerned, he believed that ‘our main sector must be Malaya’.92 In , the aging Prime Minister was preoccupied with arranging a summit meeting with the post-Stalin Soviet leaders. To Churchill, the success of any détente with the Soviet Union depended, in no small part, on the avoidance of conflict with the PRC.93 Fearing that it would trigger a third world war, split the Commonwealth, and alienate domestic opinion, Britain at last refused to participate in ‘united action’ in Indochina. Without British support, the United States was unwilling to act alone, and the French forces in Dien 89 On the linkage between NATO and Indochina, see Lawrence S. Kaplan, ‘The United States, NATO, and French Indochina’, in Lawrence S. Kaplan, Denise Artaud, and Mark R. Rubin (eds.), Dien Bien Phu and the Crisis of Franco–American Relations, – (Wilmington, Del., ), –. 90 Quoted in Stephen E. Ambrose, Eisenhower: The President, Vol. : – (London, ), –. 91 Geoffrey Warner, ‘Britain and the Crisis over Dien Bien Phu, April : The Failure of United Action’, in Kaplan and others (eds.), Dien Bien Phu and the Crisis of Franco–American Relations, –. 92 Churchill to Eisenhower,  June , PREM /, in Andrew N. Porter and A. J. Stockwell (eds.), British Imperial Policy and Decolonisation, –, Vol. : – (London, ), . 93 John W. Young, Winston Churchill’s Last Campaign: Britain and the Cold War – (Oxford, ), –.

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Hong Kong

Bien Phu surrendered in early May. After the partition of Vietnam at the Geneva conference, the United States concentrated its efforts on forming a collective security organization in Southeast Asia. Yet again, the Hong Kong issue was to raise its head in negotiations for the Southeast Asia Treaty Organization (SEATO) in mid-. From the beginning, Dulles wanted to leave out Hong Kong: its inclusion ‘would involve an extremely significant additional commitment on the part of the United States’. Besides, the Eisenhower administration worried that the inclusion of Hong Kong in a treaty from which Nationalist China was excluded ‘would raise a problem for us’ in Taipei as well as with the China lobby in Congress, which might refuse to ratify the treaty.94 The British, however, insisted that Taiwan should not be brought into SEATO, as it would alienate the Asian Commonwealth and preclude Indian participation. Thus, they did not press for the inclusion of Hong Kong at this stage in order to reduce US pressure for Taiwan’s inclusion, which would be ‘disastrous for the success of the scheme as a whole’.95 At the final meeting of the US–UK Study Group on  July, which was held to draft a treaty, the US representatives stated that ‘in the U.S. view, commitments under Paragraph c() [‘the use of armed forces’ in the event of ‘overt Communist aggression’] did not apply to Hong Kong’.96 The British agreed to this, provided any explicit reference to the exclusion of Hong Kong should not appear in the Study Group report, but only in a separate US record of the meeting.97 There was no misunderstanding between Britain and the United States this time: Hong Kong was not to be included in SEATO. Any differences arose from the British assumption that Hong Kong would not be excluded from American protection, whether it was covered by SEATO or not. The Americans might have given the British such an impression during the US–UK Study Group meetings. At the second meeting on  July, the Under-Secretary of State, Walter Bedell Smith, spoke of the ‘difficulties’ about the inclusion of Hong Kong in the treaty, suggesting that ‘perhaps some separate arrangement about Hong Kong was possible’. Smith added that he was himself ‘confident [that] it could be 94 Memo. of Meeting,  Aug. , RG , CF –, Box ; US Minutes of nd Meeting of US–UK Study Group,  July , ibid., Box , NA. 95 COS(),  Aug. , DEFE /; CO to FO,  Aug. , FO /, D//G, PRO. 96 State to Geneva,  July , RG , CF –, Box , NA. 97 Makins to FO,  July , FO /, D/, PRO.

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defended by the joint efforts of Britain and the United States’.98 At the next meeting two days later, Smith asked the Minister at the British Embassy in Washington, Robert Scott, whether the word ‘general’ should be added to the phrase ‘area of Southeast Asia’, as this ‘might enable the U.S. Government to act in the event of an attack on Hong Kong without having to get Congressional approval specifically to cover Hong Kong’. In reply, Scott said that he was ‘personally not so concerned by an absence of direct reference to Hong Kong. An attack by the Chinese Communists on Hong Kong would be “out of the blue sky” and would be a prelude to general war.’99 As the Foreign Office minuted later: ‘It is after all clear that in the event of a Chinese Communist attack on Hong Kong the U.K. Government would be faced with so serious a situation that it would be tantamount to an attack on the United Kingdom itself. All the consequences of such an attack from a Southeast Asia Defence Organization point of view might be expected to follow whether Hong Kong is included or not.’100 The British Embassy in Washington also assumed that ‘If Hong Kong is attacked, the Americans will be with us: we do not think there is the slightest doubt about it . . . But that has nothing to do with any new commitments which may arise out of the Southeast Asia Treaty . . .’101 In this regard, the British expectation of US assistance to Hong Kong was based not on Smith’s personal and informal remarks at the Study Group meetings, but rather on the assumption that an attack on Hong Kong would mean war between Britain and China, in which case the United States would be involved from the beginning.102 In other words, it was the perception of the United States as a close ally of Britain, not the existence of any specific US undertaking over Hong Kong, that mattered.103 Whether a misperception or not, British ministers and officials 98 Record of nd US–UK Study Group meeting,  July , FO /, D/, PRO. 99 Record of rd US–UK Study Group meeting,  July , FO /, D/, PRO; US Minutes of rd US–UK Study Group meeting,  July , RG , CF –, Box , NA. 100 FO Minutes,  Aug. , FO /, D/, PRO. 101 Washington to FO,  Aug. , FO /, D//G, PRO. 102 COS(),  July , DEFE /, PRO; London to State,  Nov. , .G/–, RG , DF –, Box , NA. 103 According to Lombardo, the British believed that there was an informal US commitment to Hong Kong in the course of the SEATO discussions since US officials had intimated to them that defence arrangements for Hong Kong could be made separately if the Colony was not included in SEATO. But Lombardo has not shown what this ‘separate arrangement’ was in contributing to the British belief in US protection of Hong Kong. Lombardo, ‘Eisenhower, the British and the Security of Hong Kong’, , .



Hong Kong

in the Foreign Office, who were dealing regularly with their American counterparts in Washington, were inclined to believe that the United States would come to the rescue of Britain when the chips were down. The outbreak of another crisis in Asia in late  again cast a shadow over the external defence of Hong Kong. On the eve of the Manila conference to launch SEATO in September, the Chinese Communists began their bombardment of the Nationalist-held offshore islands of Quemoy and Matsu in the Taiwan Strait.104 Earlier in August, British ministers had decided in principle to reduce the garrison in Hong Kong to the level necessary for internal security, but in view of the new tensions the decision had yet to be implemented. The crisis escalated in early , when the Chinese Communists captured the Dachen Islands, the US Congress passed the Formosa Resolution which authorized the US president to deploy forces to defend Taiwan and the ‘related’ areas, and Eisenhower threatened the PRC with nuclear attack. With the deterioration of the situation, the British Chiefs of Staff had to reconsider the reduction in the Hong Kong garrison. Essentially, the Taiwan Strait crisis highlighted once again the British dilemma of defending Hong Kong in the Cold War. As a Joint Planning Staff study made plain: ‘The cold war political aims of United Kingdom policy in the Far East are in conflict with military capabilities where Hong Kong is concerned.’ Politically, Britain’s policy was to ‘demonstrate her intention of holding the Colony’; but militarily, it was clear that ‘Hong Kong is indefensible without considerable United States aid.’ Whilst the present garrison in Hong Kong should not be reduced until circumstances in the Far East became more favourable, the study argued, reinforcement ‘can only be justified to maintain our political aims in the Colony’. Nevertheless, the British Chiefs firmly believed that ‘there is no question of surrendering the Colony without resistance’. It was thus ‘more important than ever to avoid any indication, to China and the United States or to the world at large, of weakening our determination to resist Chinese aggression against the Colony’.105 Despite tensions in the Taiwan Strait, US officials on the ground found a relatively calm situation in Hong Kong.106 In reviewing whether 104 See Gordon H. Chang and He Di, ‘The Absence of War in the U.S.–China Confrontation Over Quemoy and Matsu in –: Contingency, Luck, Deterrence?’, American Historical Review, / (Dec. ), –. 105 COS(),  Jan. , DEFE /; JP()(Final),  Feb. , ibid.; JP()(Final),  Feb. , ibid., PRO. 106 HK to State,  Oct. , G.(w)/–, RG , DF –, Box ; HK to State,  Feb. , G.(w)/–, RG , DF –, Box , NA.

Defending the Indefensible Colony



US policy towards Hong Kong was adequately covered by the general Far Eastern policy (NSC /) on reaction to communist aggression against a country not covered by US treaty obligations, the NSC planning staff concluded in March  that, pending further study, NSC Action No. , which was approved by Truman in , should not be superseded.107 But Eisenhower, who always approached the issue of Hong Kong from the perspective of the broader Anglo–American relationship, wrote to Churchill on  February pledging some sort of support for Hong Kong: ‘It would surely not be popular in this country if we became involved in possible hostilities on account of Hong Kong or Malaya, which our people look upon as “colonies”. . . Nevertheless, I do not doubt that, if the issue were ever framed in this way, we would be at your side.’108 Notwithstanding a seeming meeting of minds on Hong Kong, Eisenhower sent his letter at a time of serious Anglo–American disagreements over the disposition of the offshore islands. The British felt that, whilst Taiwan should not be allowed to fall into communist hands, this was not the case with Quemoy and Matsu, which they regarded as part of China. The Eisenhower administration, however, could not agree with the abandonment of Quemoy and Matsu, owing to pressure from the government in Taipei and the military and Congress at home.109 In essence, Eisenhower’s letter was one in a series of exchanges with Churchill, in which each tried to convince the other of the importance of Nationalist possession of, or withdrawal from, Quemoy and Matsu. It seemed that Eisenhower did have the offshore islands in mind when hinting at possible US support for Hong Kong. Later, Admiral Felix Stump, Radford’s successor as CINCPAC, probably best captured Eisenhower’s thinking in his letter to Churchill: ‘Hong Kong is an offshore island which is indefensible without immediate U.S. naval and air support. As such it might be a useful quid pro quo to secure more courageous British support for a firm U.S. policy with respect to the defense of Kinmen [Quemoy] and Matsu.’110 107 Memo. for NSC,  Mar. , WHO, SANSAR –, NSC Series, Policy Papers Subseries, Box , DDEL. 108 Eisenhower to Churchill,  Feb. , in Boyle (ed.), The Churchill–Eisenhower Correspondence, –. 109 For details, see Michael Dockrill, ‘Britain and the First Chinese Offshore Islands Crisis, –’, in Michael Dockrill and John W. Young (eds.), British Foreign Policy, – (London, ), –; Foot, ‘The Search for a Modus Vivendi’, –. 110 Memo. for Stump, Plans Division, USARPAC, Dec. , , Strategic Plans Division Records, OP–S/OP–S Subject & Serial Files (Series XVI), , Box , NHC.



Hong Kong

Churchill’s view on the defence of Quemoy and Matsu and of Hong Kong was consistent with his attitude towards the proposed ‘united action’ in Indochina a year ago: the avoidance of conflict with the PRC. To Churchill, who always hoped for a détente in Europe during his premiership, China was ‘not important enough to be a case of major hazards’; it was ‘Soviet Russia that ought to dominate our minds.’111 Undoubtedly, Churchill was not moved by Eisenhower’s vague promise to defend Hong Kong in the event of a wider war with China, a war which Britain wanted to avoid in the first place. Indeed, it was the British Chiefs’ view that ‘the defence of Hong Kong in war is disproportionate to its strategic value’.112 To Britain, the best defence for Hong Kong was a diplomacy of restraint, one which should influence the United States to resolve the crisis peacefully.

     ? It was Chinese Premier Zhou Enlai who defused the Taiwan Strait crisis at the Bandung conference in April  by offering to negotiate with the Americans. With the lessening of tensions in late , the British Conservative government agreed to reduce substantially the garrison in Hong Kong to the level required for internal security on a gradual basis.113 This aroused US concern. Having learnt that the British would soon cut nearly two-thirds of their , troop numbers, the US Consul General in Hong Kong, Everett Drumright, brought this to the attention of the Assistant Secretary of State for Far Eastern Affairs, Walter Robertson, in January . Drumright stated that he did not know why the British had to reduce their military strength at this particular time, and wondered whether it was related to the state of the British economy, the demands of Malaya and the Middle East, or to the first step ‘to pull out bag and baggage from the Far East’. ‘What concerns me most is not the weakening of Hong Kong’s defenses’, Drumright continued, ‘but rather the psychological impact it will have on the Chinese here and on the indigenous peoples in this part of the 111

Quoted in Young, Winston Churchill’s Last Campaign, –. COS(),  Mar. , DEFE /, PRO. 113 According to the British plan, subject to review in the light of the political situation, the present garrison of two brigade groups (six infantry battalions, five artillery regiments and one armour) would be reduced to one brigade group (or six units) by . COS(),  Jan. , DEFE /, PRO. 112

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world’, particularly at a time when ‘the tide is running against us’ as a result of the Sino–American ambassadorial talks in Geneva and the ‘weak-kneed attitudes’ shown by the US allies towards the communists.114 Notwithstanding the British efforts to play down the troop reduction,115 Robertson replied to Drumright in February that the strength of the British military forces in Hong Kong was of ‘an important token significance as a sort of index of British intentions’, and was ‘necessary to carry out the delaying action’ for the successful implementation of the British and American emergency evacuation plans, the latter of which had to be re-examined in the light of the British decision.116 While the United States was watching closely, the British were calculating the possible American reaction. At the ANZUS meeting in Melbourne in January , Admiral Stump, CINCPAC, stated that ‘Hong Kong was defensible’. The British Joint Planning Staff estimated that, although the British government had not told the Americans officially its decision on troop reduction, ‘it seems probable that Admiral Stump was aware of our policy to reduce the Hong Kong garrison when he made his assertion’. Regardless of his intentions, the British, encouraged by Stump’s expressed confidence in Hong Kong, were keen to find out whether the United States would agree to bilateral talks on the territory’s defence.117 In essence, apart from Stump’s remarks, the British military commanders in the Far East also believed that, from early , the Eisenhower administration was taking greater interest in Hong Kong. At the inter-departmental British Defence Coordination Committee, Far East (BDCC[FE]) meeting in mid-April, the Commander-in-Chief of the Far East Air Force, Air Marshal Francis Fressanges, raised the topic of the US interest in the air defence of Hong Kong by reporting that arrangements had been made with CINCPAC for ‘the supply of [modern radar] equipment to Hong Kong to facilitate the control of U.S. carrier borne aircraft’. He stated that ‘[i]f the Americans were prepared to make a contribution to its [Hong Kong’s] defence of a formidable force of carrier borne aircraft, we should do everything we can to increase our 114 Drumright to Robertson,  Jan. , G./–, RG , DF –, Box , NA. 115 Memo. of Conversation,  Feb. , RG , CA –, Geographic File , Box , NA. 116 Robertson to Drumright,  Feb. , RG , CA –, Miscellaneous File , Box , NA. 117 JP()(Final),  Mar. , DEFE /, PRO.



Hong Kong

own contribution and to maintain the goodwill now being shown by the U.S. over this question’. Robert Scott, now Commissioner-General in Southeast Asia, claimed that ‘the United States were clearly showing considerable interest in the defence of Hong Kong’.118 The enhanced US interest in the air defence of Hong Kong occurred not in isolation, but against the backdrop in  of a strengthening of ties between the US and British Air Forces at the strategic nuclear level. As Britain now possessed a limited number of nuclear weapons, and was deploying the V-bomber, the Eisenhower administration hoped to coordinate strategic planning with the British and to assist them to develop a credible nuclear deterrent.119 Similarly, in the Far East, strategic thinking began to converge. After the formation of SEATO, the defence of Southeast Asia became an allied responsibility. British strategic planners assumed that the main deterrent to communist aggression in Southeast Asia was the US nuclear capability and willingness to retaliate. The inauguration of the thermonuclear age and the development of tactical nuclear weapons meant that a limited war in the Far East would not necessarily lead to global war.120 Thus, there was a growing emphasis on nuclear deterrence in British strategic planning, an emphasis which constituted what might be called Britain’s ‘New Look’ strategy. As Air Marshal Fressanges explained in a BDCC(FE) meeting, ‘the new look in the [British] Defence Policy in the Far East was, in fact, the revived U.S. interest in Hong Kong and South East Asia. It was important that this change of view of the United States should be emphasized in our planning.’121 In this regard, the British were right in assuming that the United States saw the defence of Southeast Asia as a single entity, and that Eisenhower’s strategy rested on massive nuclear retaliation against the source of communist aggression. The growing US interest in Hong Kong in  also took place at a time when the Eisenhower administration was attaching more importance to Southeast Asia as a whole. Despite the relative peace in Indochina after the partition of Vietnam, US decision-makers were preoccupied with a sense of impending regional crises—from Burma to Indonesia to South Vietnam—and were determined to combat signs of 118

BDCC(FE)(),  Apr. , DEFE /, PRO. John Baylis, Ambiguity and Deterrence: British Nuclear Strategy – (Oxford, ), –. 120 W. David McIntyre, Background to the ANZUS Pact: Policy-Making, Strategy and Diplomacy, – (London, ), –; Martin S. Navias, Nuclear Weapons and British Strategic Planning, – (Oxford, ), –. 121 BDCC(FE)(),  June , DEFE /, PRO. 119

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neutralism, radical nationalism, or communism.122 In September, the United States assumed full responsibility in South Vietnam through its ‘nation-building’ programmes. What is more, it was confronted with a new kind of threat from the communist call for ‘peaceful coexistence’. Zhou’s success at Bandung in April , and Nikita Khrushchev’s economic offensive in Asia and Africa from late  onwards intensified US interest in the Third World.123 With the increasing US commitment to Southeast Asia, CINCPAC had to draw up contingency plans for likely trouble spots.124 In July, Admiral Stump proposed the holding of informal staff-level discussions, without committing governments, on the defence of Hong Kong against overt Chinese aggression in conditions short of global war. The British Chiefs of Staff agreed soon after.125 The US–UK talks took place in Hong Kong from  to  September between the staff officers of CINCPAC and the British Far East Land Forces. They agreed on a ‘broad concept of operations’ upon which plans for the possible defence of Hong Kong might be based: phase one involved resistance and maintenance of law and order by the British; phase two included counter-attack by US air and naval forces; and phase three called for destruction of enemy ground forces, in which reinforcement of the garrison might be required.126 When discussing the staff report, the BDCC(FE) was of the view that the ‘underlying assumptions implicit’ in the joint US–UK concept should be stressed: That the U.K. intends to defend Hong Kong. That the U.S. is not prepared to see Hong Kong fall into Communist hands. That there would be continuing and close alignment of Anglo–American policies in respect of Hong Kong. That both Governments are prepared to see nuclear weapons used in the defence of the Colony.127

In other words, the joint concept for the defence of Hong Kong was based on the ‘assumption’ that the United States might employ nuclear weapons to carry out the second and third phases of the plans. As Air 122 On this theme, see Robert J. McMahon, The Limits of Empire: The United States and Southeast Asia Since World War II (New York, ), –. 123 Chang, Friends and Enemies, –. 124 CINCPACFLT Annual Report  Jul. — Jun. , Post  Jan.  Command File, NHC. 125 COS(),  July , DEFE /; COS(),  Aug. , DEFE /, PRO. 126 JP()(Final),  May , DEFE /, PRO. 127 [Emphasis added] BDCC(FE)(),  Nov. , DEFE /, PRO.



Hong Kong

Marshall Fressanges explained at the BDCC(FE) meeting in November: ‘Although Hong Kong was not in the SEATO area’, Dulles’s statement that ‘nuclear weapons would if necessary be used by the United States in the event of any attack on SEATO nations’ could ‘probably be taken to cover Hong Kong also’. Scott agreed but added the qualification that ‘if the United States thought that Hong Kong was being attacked as an isolated action against British interests, entirely divorced from any other aggression, it was quite possible that they might not assist in the defence of the Colony’. He suggested that the Chiefs of Staff should ask the British government whether it would accept these ‘political assumptions’.128 But before the British could explore further the feasibility of US nuclear support for the external defence of Hong Kong, they had to reassess its internal security situation because of events there and at home. On  October, during the Republic of China national day celebration, riots, triggered by a dispute about the display of Guomindang flags, broke out in Kowloon and Tsuen Wan and led to serious clashes between Nationalist supporters and Chinese Communist sympathizers in Hong Kong. Shortly after the riots, Zhou Enlai claimed that the residents in Kowloon had ‘no confidence’ in the Hong Kong government and the Chinese government had a ‘duty [to] protect them’.129 Zhou warned that ‘Communist China could not permit further Hong Kong disorders on the doorstep of China.’ The US Consulate in Hong Kong reported that, despite the initial investigation which showed no evidence of involvement by the Taiwan authorities, Governor Grantham did ‘take a serious view of Peiping’s “menacing” attitude’, especially Zhou’s claim that the Chinese People’s government had ‘a duty to protect the Chinese residents of Hong Kong’.130 What worried Grantham most was that the  riots had called into question the adequacy of the Hong Kong garrison even to maintain internal security. After the riots, he came to believe that there had to be enough troops in Hong Kong to cope with possible subversion and riots, which might lead China to intervene on the grounds of safeguarding its nationals: ‘We cannot afford to take time in suppressing disorder. Unless any future disturbances are brought under control very rapidly, 128

BDCC(FE)(),  Nov. , DEFE /, PRO. HK to State,  Oct. , G./–, RG , DF –, Box , NA. 130 New York Times,  Oct. ; HK to State,  Oct. , G./–, RG , DF –, Box ; HK to State,  Oct. , G.(w)/–, ibid., Box , NA. 129

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the Chinese Government will be tempted to intervene, as they have already threatened to do next time.’131 But by this time, British ministers had decided that the RAF Squadron and armoured regiment would have to withdraw early in , and by the end of that year, only a Gurkha Infantry Brigade (two Gurkha and one British battalion) supported by a field regiment would remain. According to the latest estimate of the Commander of British Forces, Hong Kong, shortly after the riots, the reduction would render the Hong Kong government unable ‘to preserve internal security in its fullest sense’, since, in the event of civil unrest, all three battalions were required to maintain ‘law and order in the towns’, and no troops would be available for ‘a show of force on the frontier’. Also, evacuation of foreign nationals could not be completed under such circumstances. Grantham was deeply concerned that the decision on reduction would also create a ‘morale problem’ not only for ordinary civilians, but also for the Police, if there existed ‘doubts about the ability of H.M.G. to hold Hong Kong’.132 After reassessing the force requirements for internal security, Grantham and the Commander of the British Forces asked for seven battalions.133 However, their request came at a time (early ) when the new Conservative government under Harold Macmillan, eager to make substantial defence cuts for the sake of the economy, was undertaking a thorough review of long-term British defence policy.134 To the Minister of Defence, Duncan Sandys, the garrisoning of Hong Kong was ‘a costly military commitment’ and, for the sole purpose of ‘maintaining law and order’, not for ‘the defence of the territory’, six major units including four infantry battalions, one armoured regiment and one field artillery regiment should be enough. In addition to the reduction of the land garrison, the Royal Naval dockyard and the Air Force base in Hong Kong would have to be closed down.135 In short, colonial interests had to be sacrificed by the metropole. From the American point of view, the security situation in Hong Kong after the  riots was not of particular concern. The US Embassy in London was surprised that the publication by the Hong Kong government of the official report on the riots in early  had 131

DC(),  Mar. , CAB /, PRO. COS(),  Dec. , DEFE /; COS(),  Dec. , ibid., PRO. 133 DC(),  Jan. , CAB /, PRO. 134 For background, see Philip Darby, British Defence Policy East of Suez – (London, ), –. 135 DC(),  Feb. , CAB /, PRO. 132

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Hong Kong

‘attracted comparatively little attention’ in the communist press. Even the subsequent statement by the Chinese Foreign Ministry criticizing the report, as the US Consulate in Hong Kong commented, ‘does not herald the adoption of any sanctions against the Colony by Peiping’.136 But if the communist threat to Hong Kong was not so worrying, British intentions regarding the Colony were. The Macmillan government’s contemplated reduction in Britain’s worldwide commitments led to public speculation about possible British withdrawal from Hong Kong. An article entitled ‘Hong Kong’s Future’ in the February issue of Newsweek magazine wrote: ‘It won’t happen tomorrow or the day after, but the British are seriously weighing the return of Hong Kong to Communist China. Since the island is almost impossible to defend, some British strategists feel voluntary withdrawal might pay dividends . . .’ The publication of the article in the Hong Kong press ‘under large headlines’ led to such heated speculation in Hong Kong that the Colonial Secretary, Alan Lennox-Boyd, had to make a statement in Parliament on  February denying the claims.137 In essence, the Eisenhower administration’s concern over the future of Hong Kong arose from its worries that the proposed reduction in Britain’s worldwide commitments might require a US takeover of Britain’s former overseas obligations. After the Suez crisis of , the United States had deepened its involvement in the Middle East.138 Whatever reservations about the re-assertion of British influence in Egypt, Washington still hoped to see Britain continue to play the role of a world power, albeit one that was staying closely in step with the United States. Thus, apart from ‘restor[ing] confidence in the Anglo–American relationship’, another principal objective of the Bermuda conference between Eisenhower and Macmillan scheduled for March was ‘to ascertain the extent of the reduction of British overseas military and economic commitments’.139 The Eisenhower administration wanted to find out the extent to which London’s defence cuts were likely to affect the British presence in places ‘such as Malaya, Hong Kong, etc., particularly if there is any possibility that the Americans would have to consider themselves 136 London to State,  Jan. , G./–, RG , DF –, Box ; HK to State,  Jan. , G.(w)/–, ibid., Box , NA. 137 CO to HK,  Feb. , FO /, F/; CO to HK,  Feb. , F/, PRO. 138 Alan P. Dobson, Anglo–American Relations in the Twentieth Century: Of Friendship, Conflict and the Rise and Decline of Superpowers (London, ), . 139 Elbrick to Dulles,  Feb. , RG , CF –, Box ; Memo. of Conversation,  Feb. , ibid., NA.

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stepping in’.140 According to a conference brief prepared by the State Department, ‘it is highly desirable that the British be urged, within their financial limitations, to maintain as much of their overseas obligations as possible’.141 When they arrived in Bermuda on  March , Eisenhower and Dulles dined with Macmillan and his Foreign Secretary, Selwyn Lloyd, at the Mid-Ocean Club. The subject of Hong Kong was touched upon in the course of their dinner conversation. Macmillan remarked that ‘they were considering abandoning Hongkong’ because it was ‘a costly business to hold it’. In response to Dulles’ comment that ‘it was generally assumed that Hongkong was profitable’, the Prime Minister explained that ‘it might be profitable to some of the Chinese traders in Hongkong but not profitable to the UK’, and the Colony was kept only ‘for strategic reasons and because of concern for the future of the population if they were abandoned’. Dulles replied that ‘Hongkong could be regarded as part of the insular and peninsular positions which it was important for the free world to hold.’ And ‘if the UK policy in China were aligned with ours’, he continued, ‘we might be able to help to hold it’. When discussing China later in the conversation, Dulles explained that what Washington wanted was London’s ‘wholehearted’ support for the exclusion of the PRC from the United Nations, and hinted that this would ‘make it easier’ for the administration to meet the British demands for the relaxation of the China trade differential.142 It is not clear, from the US record of the conversation, whether Macmillan was persuaded to consider not ‘abandoning Hongkong’. But as the Director of Chinese Affairs at the State Department, Ralph Clough, recollected later, the Americans ‘were startled at the time that such a suggestion should come from so authoritative a British quarter’.143 In April, the Macmillan government, having finished its review of long-term British defence policy, published the Sandys White Paper. To compensate for a substantial reduction in service manpower, Britain would emphasize nuclear deterrence and rely on mobile reinforcement forces.144 Uncertain, pending Sandys’ visit, how many troops would be 140

Washington to FO,  Feb. , FO /, ZP/, PRO. Briefing Paper, BEM D–/,  Mar. , RG , CF –, Box , NA. 142 Continuation of Memo. of Dinner Conversation,  Mar. , RG , CF –, Box , NA. The trade issue will be examined in Ch. . 143 Clough to Martin,  Oct. , RG , CA, , Country File , Box , NA. 144 For an analysis of the White Paper, see Wyn Rees, ‘The  Sandys White Paper: New Priorities in British Defence Policy?’, The Journal of Strategic Studies, / ( June ), –; Baylis, Ambiguity and Deterrence, –. 141

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Hong Kong

withdrawn from Hong Kong, Grantham raised the question of the adequacy of the garrison’s size at the Chiefs of Staff Committee meeting in late July. ‘If therefore it was really Her Majesty’s Government’s intention to persist with the cuts in defence forces, to a point where the forces available in the Colony would be of insufficient strength to suppress rioting’, Grantham argued, ‘it would be better to surrender our position voluntarily and so avoid the ignominy of a forced evacuation.’145 Whether Grantham was merely trying to persuade a reluctant government to commit more troops to Hong Kong, or was seriously calling for a British pullout from Hong Kong is difficult to tell.146 But what is certain is that Grantham was not alone in advocating the reconsideration of Hong Kong’s future. The Chiefs of Staff agreed that if certain minimum forces could not be maintained in Hong Kong on a permanent basis, ‘[u]rgent consideration should be given to some sort of negotiated settlement with the Chinese Communists concerning the future of the Colony’. They felt that Grantham’s views ‘were of such importance that they should be brought to the notice of Ministers’.147 In addition, an inter-departmental Working Party on Hong Kong had been formed in  ‘to take stock inter-departmentally of our [British] position in Hong Kong’.148 The  riots and the proposed cuts in the Hong Kong garrison led the Foreign Office representatives to ponder in early  whether ‘we shall have to cut our losses before very long’, and ‘the likelihood that from now on the position, as far as our retention of the Colony is concerned, is likely to continue to deteriorate’.149 Nevertheless, one still cannot tell from the declassified British documents how serious the British were, Macmillan’s remarks at Bermuda notwithstanding. Suffice to say, Macmillan was temperamental in character, willing to change course whenever necessary.150 Besides, the 145

COS(),  July , DEFE /, PRO. Suffice to say, Grantham took for granted that Hong Kong would be returned to China in , when the -year lease for the New Territories expired. He also held the view that Hong Kong should always have been regarded as part of China, and that the Hong Kong Chinese would not develop a British allegiance. Grantham, Via Ports, ; Louis, ‘Hong Kong’, , , . 147 COS(),  July , DEFE /; COS(),  July , DEFE /; COS(),  Aug., DEFE /, PRO. 148 The Working Party had been formed some time in . That year, it held its first meeting, based on an FO memorandum. Since then, its work was held up by the defence review and the uncertainty over the level of armed forces in Hong Kong. Ashton to Wallace,  Oct. , CO /, FED//, PRO. 149 Dalton to Johnston, March , , ibid. 150 e.g. Macmillan changed course ° during the Suez crisis. Louis, ‘The Dissolution of the British Empire’,  146

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Sandys White Paper did not suggest the abandonment of British overseas commitments, but the maintenance of the same obligations with much reduced forces.151 From an economic point of view, the ‘costbenefit’ analysis of empire, which was undertaken by high-ranking officials in Whitehall between February and September at Macmillan’s request, provided no clear answer as to the value of Hong Kong to the United Kingdom because of its unique position in the Sterling Area and its role as a financial and commercial centre for the Far East.152 By , despite the independence of Malaya, Macmillan certainly had little intention of abandoning Britain’s world role east of Suez.153 What is clear, nonetheless, is that the Eisenhower administration was sceptical of the British determination to remain in Hong Kong in . Against this background, the National Security Council undertook in July–August its review of US policy on Hong Kong, an issue which had not been raised since March .154 On  July, the NSC Planning Board gave preliminary consideration to a draft statement of policy on Hong Kong (NSC ) and an enclosed staff study. The Planning Board raised the issue of ‘current British intentions regarding Hong Kong’, because of their indication to Eisenhower at Bermuda of ‘an interest in Hong Kong considerably less than vital’, and asked whether the British ‘intend to stay as long as they can, or merely stay until Chinese Communist pressure reaches a point prompting the British to evacuate rather than fight’.155 Later, the draft was revised to include a statement regarding British intentions in Hong Kong framed ‘in such general terms that it does not make clear whether we believe the British will fight to keep Hong Kong’. The revised draft also deleted ‘all mention of a “deal” with the British’, as US assistance 151 Rees, ‘The  Sandys White Paper’, –; Michael Dockrill, British Defence Since  (Oxford, ), . 152 D. J. Morgan, The Official History of Colonial Development Vol. : Guidance towards Self-Government in British Colonies, – (London, ), . For an insightful account of Macmillan’s ‘cost–benefit’ or ‘profit–loss’ analysis of empire, see Tony Hopkins, ‘Macmillan’s Audit of Empire, ’, in Peter Clarke and Clive Trebilcock (eds.), Understanding Decline: Perceptions and Realities of British Economic Performance (Cambridge, ), –. 153 Even the decolonization of Malaya was seen as the means to preserve Britain’s influence in the region. John Subritzky, ‘Macmillan and East of Suez: The Case of Malaysia’, in Richard Aldous and Sabine Lee (eds.), Harold Macmillan: Aspects of a Political Life (London, ), –. 154 Memo. for NSC, Mar. , , WHO, SANSAR, –, NSC Series, Policy Papers Subseries, Box , DDEL. 155 Note by NSC Planning Board,  July , WHO, NSCSP, –, Special Staff File Series, Box , DDEL.

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Hong Kong

to be provided would be ‘of sufficient[ly] limited nature as to make doubtful any willingness from the British to pay the price for it’.156 According to the staff study, the British intended to remain in Hong Kong ‘so long as they can do so without critically endangering relations with Communist China’ but would, in the case of communist attack, ‘accede rather than attempt to maintain their position by force of arms’. The staff study doubted whether British forces in Hong Kong could, unaided, provide ‘the necessary time for an evacuation of the European residents’. Nonetheless, the Chinese Communists would ‘leave Hong Kong alone’ for the present because of the Colony’s usefulness for espionage and subversion, and in driving a wedge between America and Britain. Thus, in the event of direct or indirect communist attacks on Hong Kong, the NSC Planning Board suggested, the United States would support Britain in the United Nations and would ‘intervene to the extent necessary and practicable with armed forces’ for evacuation of Americans and other nationals of interest, but would ‘not provide armed forces to assist the British in quelling disorders in Hong Kong’.157 When considering the draft policy statement at the NSC meeting on  August, Eisenhower expressed reservations about even providing support for evacuation of Americans in Hong Kong. He asked ‘what so many Americans were doing in Hong Kong’, and suggested ‘restrict[ing] U.S. visas to Americans who really had an obligation to be’ in the Colony. This demonstrated once again that Hong Kong in itself was not of much significance to Eisenhower. The JCS Chairman, Admiral Radford, however, saw no urgent need to restrict the entry of Americans into Hong Kong, feeling that any evacuation could be completed in a short time since there were enough ships in the harbour. After a short debate, the Council approved NSC .158 By August , then, US policy regarding Hong Kong in the event of a Chinese attack did not go beyond the evacuation of American civilians. Why, despite the earlier hints and offers, did the Eisenhower administration remain non-committal to the Colony’s defence? The answer lies in the US perceptions of British determination to hold Hong 156 Briefing Note for Planning Board Meeting,  July , ibid. The price which the Americans had in mind was probably Britain’s wholehearted support for the exclusion of Communist China from the United Nations. See Ch. . 157 Staff Study on Hong Kong, Note by Executive Secretary to NSC, NSC ,  July , DDRS, , Fiche ; Memo. for NSC, NSC ,  Aug. , RG , NSC Policy Paper Series, Box , NA. 158 Memo. for th NSC Meeting,  Aug. , EPAWF –, NSC Series, Box , DDEL.

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Kong and their willingness to support Washington over Chinese representation in the United Nations. When Eisenhower’s NSC gave consideration to the draft policy statement on Hong Kong in July–August, the security situation in the Colony did not appear particularly threatening. Nor did London ask Washington for support at the time.159 But, as the Special Assistant to the President for the Operations Coordinating Board, Frederick Dearborn, pointed out later, NSC  was approved ‘in such haste without waiting for the field’s views’.160 The Eisenhower administration, doubtful of the British willingness to fight to hold Hong Kong, seemed eager to reach a decision.161 Later, in correspondence with Clough, Drumright confirmed that ‘the British Government has actually given serious consideration to the possibility of abandoning Hong Kong or at least withdrawing all defense forces’. Clough agreed, and brought the assessment to the attention of Assistant Secretary Robertson. Referring to Macmillan’s remarks in March, Clough replied to Drumright that ‘the casual mention of such a possibility at Bermuda might have been merely a diplomatic device by which to encourage us to make commitments with respect to Hong Kong either military or economic’, but ‘I infer from your letter that it goes deeper than that’.162 More importantly, Eisenhower always regarded Hong Kong as a possible bargaining chip to obtain British support in the containment of Communist China. At Bermuda, Dulles had hinted that if London 159 In May, the Chiefs of Staff agreed that it was premature to hold talks with the US government at the political level until further military recommendations concerning the feasibility of using nuclear weapons to defend the Colony were available. JP()(Final),  May ; COS(),  May , DEFE /, PRO. 160 On  July, the draft staff study on Hong Kong was sent to the US Consulate in Hong Kong for comment, when Consul General Drumright was on leave. The comments by the US Consul, Thomas P. Dillon, on the draft reached Washington on  Aug., but  days after NSC  had been approved. And it was not until  Aug. that the State Department sent the approved policy statement to Dillon. Drumright to Clough,  Sept. , /G/–, RG , DF –, Box ; Clough to Dillon,  July , RG , CA , Country File , Box , NA; Dillon to Clough,  Aug. , DDRS, , Fiche ; Clough to Dillon,  Aug. , .G/–, RG , DF –, Box , NA. 161 In his article, Lombardo has suggested that the indefensibility of Hong Kong, which ‘was further complicated by the apparent lack of willingness of the British to defend Hong Kong’, was one of the two ‘major reasons’ behind the NSC decision not to commit to the defence of Hong Kong in August. But he failed to grasp the full salience of the ‘British factor’ in the formulation of NSC . Lombardo, ‘Eisenhower, the British and the Security of Hong Kong’, –. 162 Drumright’s letter of  Sept.,  to Clough is still classified in the National Archives. But part of its content is mentioned in Clough’s reply to Drumright. Clough to Robertson,  Oct. , RG , CA , Country File , Box ; Clough to Drumright,  Oct. , RG , CA , Subject File , Box , NA.

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Hong Kong

agreed to cease pressing for the admission of the People’s Republic into the United Nations, Washington would reciprocate by helping to hold Hong Kong. But as late as  August (two days before Eisenhower and his advisors met to consider NSC ), the administration still had ‘not yet received definite word that the British will support the moratorium on the issue of Chinese representation’ at the coming session of the General Assembly of the United Nations.163 The Eisenhower administration certainly saw no need to follow up its conditional offer with regard to Hong Kong. But it did not take too long for Eisenhower and Macmillan to have another chance for bargaining over the defence of Hong Kong. The new NSC decision, of course, remained secret from the British. But since the  US–UK staff talks, British military commanders and strategic planners increasingly harboured doubts about the feasibility of US nuclear support for Hong Kong embodied in the joint concept of operations. They realized that two factors were important for a successful defence of Hong Kong: the availability of ‘sufficient ground forces’ in the Colony to take ‘the brunt of the first attack before United States nuclear interdiction took effect’ and ‘the timely arrival of United States forces to neutralise the enemy air and isolate Hong Kong from enemy reinforcement’.164 But the Commander of British Forces, Hong Kong, and the British Chiefs were too aware that a garrison of four infantry battalions would be unable to prevent the attacking force from reaching Kowloon for seventy-two hours, thus making any nuclear counter-action by America ineffective. Besides, the previous estimate that, with fortyeight hours warning, the United States would be in action within twelve hours of Chinese attack was too optimistic, in view of ‘the delay inherent in obtaining political approval’ from the US President for the use of nuclear weapons.165 Nonetheless, such doubts did not prevent the British Chiefs of Staff from continuing to coordinate Anglo–American planning on a purely military basis, without commitment to government. Indeed, continued engagement of US interest in Hong Kong became more important than ever once the Defence White Paper had been published, and the reduction of the Hong Kong garrison decided upon. As Sandys told his 163 Memo. from Wilcox to Dulles,  Aug. , FRUS, –, , –. Not until  Aug. did the British officially inform the US delegation at the United Nations that they would support a moratorium (deferring discussions about the issue). See Ch. . 164 Report by the Conference Secretary,  Sept. , DEFE /, PRO. 165 DCC(FE)(),  Nov. , DEFE /, PRO.

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military staff in September, ‘the only real security for Hong Kong lay in the realization by the Chinese that an attack on the Colony would bring in the United States’.166 In other words, the only way of defending the indefensible Hong Kong would be by strategic deterrence—to deter a Chinese attack in the first place, thus making any US response unnecessary. The conclusion was hardly a new one, but it was confirmed and reinforced by debates at the highest level of British government throughout late  and .

 Defending Hong Kong in the Cold War proved to be a difficult task for Britain. Whilst Britain had no strategic interest in retaining Hong Kong in a global war, it was an entirely different matter in the event of a limited war and the Cold War. Although the British did not predict an overt Chinese attack on Hong Kong as likely throughout the s, they could not rule out the possibility that the Colony would be attacked in the event of the spread of hostilities between China and America over Korea, Indochina, or Taiwan. Such a feeling of vulnerability was reinforced by their stark realization that, except for a short period after reinforcement in , the garrison in Hong Kong would be unable to defend against a large-scale attack, however remote it might be. By –, the British were gravely concerned that the garrison would be inadequate to fulfil even the main tasks of internal security (maintenance of law and order, a ‘show of force’ on the frontier, completion of evacuation plans, etc.). To them, internal security was always regarded as a greater threat than external security, although the two had become blurred after the  riots. Nevertheless, from time to time, some British officials were encouraged by the perceived US interest in Hong Kong. The United States assessed the defence of Hong Kong primarily in Cold War terms. This does not mean that either the Truman or Eisenhower administrations regarded Hong Kong as ‘the Berlin of the East’ and were willing to commit scarce resources, even risk global war, for its survival as a British colony. Quite the contrary, the retention of Hong Kong in British hands was not strategically vital to US national interests. Nevertheless, Hong Kong sometimes still received attention at the highest level of US government. US decision-makers who wanted 166

BDCC(FE)(),  Sept. , DEFE /, PRO.

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Hong Kong

to contain communist aggression in Korea, bolster the French in Indochina, pacify the British over Quemoy and Matsu, and secure Britain’s support for the international isolation of China paid the price in bargaining over the defence of Hong Kong. Throughout this period, US officials estimated that the greatest threat to Hong Kong was not an external Chinese attack, but communistinspired internal unrest. The US assessment of British intentions and capabilities to hold Hong Kong was less consistent and clear. In , the Truman administration had great doubts about British capabilities, if not their intentions, to hold Hong Kong. By , the Eisenhower administration, certain of the inadequacies of the British forces even to cover an evacuation, was sceptical about British determination to fight to remain there. Militarily, a successful defence of Hong Kong would require the establishment of a stronghold on the mainland. Neither Acheson’s defensive perimeter concept nor Eisenhower’s strategy of massive retaliation justified a static defence of territories such as Hong Kong. Above all, the defence of Hong Kong was more a political than a military decision for the administration. Despite the fact that US and British strategic planners had conducted contingency planning and agreed on joint operations, these were merely hypothetical exercises, which did not commit governments. Given its scarce resources in the Far East and important priorities in Europe, the United States was unwilling to make a political commitment to the British Colony. Although Eisenhower and Dulles had offered to help defend Hong Kong, their main calculations were to encourage Britain to support the United States in other policy areas. Without a definite statement by London to stand firm on the issue of Chinese representation, Eisenhower concluded in August  that the United States would not assist Hong Kong beyond evacuation of civilians. Nevertheless, some British officials did suppose that the United States would defend Hong Kong in the case of communist attack. This was based on three assumptions. First, as Scott believed, ‘Hong Kong would never be attacked except as part of a global war, in which case the United States would be involved from the beginning.’ Secondly, in Lennox-Boyd’s view, ‘A Chinese attack on Hong Kong would mean World War III, since the British would fight for Hong Kong and the United States would come to the assistance of the United Kingdom.’ Lastly, the British Joint Planning Staff assumed that, although ‘Hong Kong is not within the SEATO boundary . . . its defence against overt Chinese attack is generally covered by the U.S. nuclear deterrent in the

Defending the Indefensible Colony

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Far East. The United States [is] not, however, specifically committed to its defence.’167 Not all British officials agreed that a Chinese attack on Hong Kong would necessarily lead to global war.168 But there was little doubt that such an attack would be seen as so serious an issue that it would lead to war between Britain and the PRC, and the rescue by the United States of its ally, perhaps by using nuclear weapons. The British were correct in assuming that Eisenhower’s strategy in Southeast Asia rested on massive retaliation, and that a US response to communist aggression would not be restricted to the area nominally covered by SEATO.169 But as Eisenhower and Dulles wanted to keep the enemy guessing about possible US reactions, the United States would not commit itself to particular courses of action, nor allocate its forces to specific contingencies.170 Thus, no one—neither the communists, the British, nor Eisenhower himself—could be sure whether tactical nuclear weapons would be used in a limited war such as a Chinese attack on Hong Kong. That Hong Kong was protected by the US nuclear umbrella might have been wishful thinking on the part of British strategic planners and regional commanders. But the interest shown by CINCPAC in the defence of Hong Kong, the series of studies undertaken with US strategic planners, and the assurances given by Eisenhower and Dulles, however conditional, might also have misled the British, and raised their expectations of US help. The expectation that the United States would behave as a close ally might have been confined to a handful of British officials, such as Scott and Lennox-Boyd. But it was the CommissionerGeneral in Southeast Asia and British regional commanders who were responsible for Hong Kong’s security, and their military views upon which ministers based their political decision. More importantly, given the hypothetical nature of the Chinese military threat to Hong Kong, perception and expectation of US support mattered as much as a 167 COS(),  July , DEFE /, PRO; London to State,  Nov. , .G/–, RG , DF –, Box , NA; JP()(Final),  July , DEFE /, PRO. 168 Both the First Sea Lord, Lord Mountbatten, and Grantham believed that a limited war with China without the involvement of the Soviet Union was a possibility. COS(),  July , DEFE /; BDCC(FE),,  Sept. , DEFE /, PRO. 169 Memo. for Secretary of Defense by JCS,  Feb. , RG , Geographic File –, Box ; Memo. for Secretary of Defense by JCS,  Nov. , ibid., Box , NA. 170 David Lee, ‘Australia and Allied Strategy in the Far East, –’, The Journal of Strategic Studies, / (Dec. ), –; Saki Dockrill, Eisenhower’s New Look National Security Policy, – (London, ), –.

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Hong Kong

formal commitment. After all, the presence of the Seventh Fleet in the Taiwan Strait, and the visit of US sailors on leave to Hong Kong did comfort the British, and could act as an immediate deterrent to communist attack.171 In leaving Hong Kong alone, Beijing might not have been ‘deterred’ by the American nuclear retaliation. But informed public opinion in Hong Kong and London did predict a US response to a Chinese attack.172 The strategy of deterrence seemed to have worked. In a sense, the Anglo–American discussions over the defence of Hong Kong were academic. To the British, as the Chinese Communist threat was more a political than a military one, the retention of Hong Kong depended as much on diplomatic engagement with the PRC as on defence arrangements with the United States. 171 FO Minutes by Wilkinson,  Apr. , FO /, FC/, PRO; HK to State,  Nov. , G./–, RG , DF –, Box , NA; Black to CO,  Oct. , CO /, FED //, PRO. 172 See Xianggang Shibao,  Feb. ; Xingdao Ribao,  Sept. ; Daily Express,  Sept.  in FO Minute,  Sept. , FO /, F/, PRO.



Meeting the Political Threat: Hong Kong in Britain’s and America’s China Policy The victory of Mao Zedong in the Chinese civil war in  confronted the Labour government not just with the problem of defending Hong Kong, but also the question of dealing with a communist regime on the mainland. The future of Hong Kong, it was believed, was inextricably linked with Britain’s relations with the new China. In order to preserve their colonial rule in Hong Kong, the British had to seek a modus vivendi with its giant neighbour. This was particularly so since they were all too aware that Hong Kong could not be defended by military means. It should be stressed that the Hong Kong factor alone did not dictate Britain’s China policy: the maintenance of British economic interests on the mainland and the strategy of driving a wedge into the Sino–Soviet partnership equally necessitated a diplomacy of positive engagement. But at a time when foreign (mainly British) investments on the mainland were being squeezed out by the Chinese Communists, and when Beijing remained closely aligned with Moscow, the political vulnerability of Hong Kong became a more immediate concern for British governments during the s. Moreover, in times of war and crisis, there were critical junctures when deteriorating international and local events rendered Hong Kong particularly vulnerable in British eyes. In the day-to-day operations of diplomacy, British officials were conscious of avoiding unduly provoking the PRC. Thinking in global terms and constrained by domestic politics, both the Truman (after ) and Eisenhower administrations adopted a hard-line approach towards the PRC, while keeping Taiwan out of communist hands. Hong Kong was not a factor of great weight to the United States. But if Hong Kong per se was not a major concern, Britain as a principal partner in the Cold War certainly was. US decision-makers realized that Britain was reluctant to cooperate with America against China if such action were to expose Hong Kong to

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Hong Kong

communist retaliation. In order to secure British support, President Eisenhower, for example, had to pay a price by demonstrating an interest in the Colony. Hong Kong, however unimportant in itself, became an important factor in the calculations of US decision-makers. This chapter focuses on how Britain attempted to ‘defend’ Hong Kong by diplomacy—accommodating the PRC on the one hand, and restraining the United States on the other.

          In the course of its deliberations over defence arrangements for Hong Kong in , the Labour government realized that the Chinese Communists, which were emerging victoriously in the civil war, should not be unduly provoked. In May, the Foreign Office expressed concern over a possible announcement on the British decision to defend Hong Kong: ‘if we show too provocative an attitude over Hong Kong in public we may force the Communists to take action against it as a matter of prestige’.1 In the long term, the British believed that the viability of Hong Kong depended as much on the acquiescence of the Chinese Communists as on defence preparations by Britain. ‘[T]he aim of our policy’, the Attlee Cabinet concluded on  May, ‘should be to find a basis on which a Communist Government of China could acquiesce in our remaining in Hong Kong.’2 And what made the Chinese Communists tolerant of the British colonial rule was Hong Kong’s economic value to the mainland. But by this time, the Truman administration was contemplating using export controls as an instrument to change the political orientation of the Chinese Communists, about which the British had severe reservations. As Bevin put it bluntly in a Cabinet meeting, ‘the Chinese do not love Hong Kong because it is governed by the British, but because it offers safe and profitable trading facilities’. If ‘these trading facilities are restricted or cut off’, he

1

Dening to Mayhew,  May , FO /, F//G, PRO. CM()(),  May , CAB /, PRO. According to Michael Yahuda, from  onwards, there was a sort of tacit understanding between London and Beijing that Chinese tolerance of British rule in Hong Kong would be predicated on British consent to a non-confrontational approach towards the mainland and no attempt at the introduction of democracy or self-government in Hong Kong. Yahuda, Hong Kong, –. 2

Meeting the Political Threat

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continued, ‘then the Chinese interest in our retention of the colony will dwindle or disappear’.3 To the Labour government, then, the best way of safeguarding Hong Kong was by a combination of defence and diplomacy. The British were inclined to develop formal diplomatic and economic relations with the communist regime, rather than using trade controls as a lever to change its political orientation as suggested by the Americans. But British ministers also realized that they had to drive home to the US administration that London itself had legitimate reasons to accord diplomatic recognition to the PRC. They had to impress upon the Americans that Hong Kong’s future necessitated an accommodation with the Chinese Communists. In this regard, Hong Kong served as both a reason for, and a justification of Britain’s conciliatory China policy. Given their differences over the introduction of export controls in particular and diplomatic recognition in general, the British and the Americans undertook extensive consultations and discussions with a view to aligning their policies. On  September, the British Embassy in Washington sent an aide-memoire to the State Department, stating that there was ‘no difference’ between them as to the objectives of not increasing the military strength of China, and of combating the spread of communism. Indeed, ‘because of their position in Hong Kong and South-East Asia’, the aide-memoire noted, the British had ‘immediate and compelling reasons for being anxious to secure the achievement of both objectives’. But the British government was ‘sceptical of the efficacy of export controls aimed at a modification of the political alignment of the Chinese Communist regime’, which it believed was ‘unwilling to modify political principles for the sake of commercial advantages’.4 The next day, during their meeting in Washington, Acheson told Bevin that ‘[w]e don’t feel there is any point in engaging in economic warfare but we think China should pay its way’, and that ‘we should not extend any extra facilities to a Chinese Communist regime’. In reply, Bevin said that ‘the British were not in a hurry to recognize but that they have big commercial interests in and trade with China and were not in the same position as . . . [the Americans] were relatively and absolutely’. ‘Also the British had to keep an eye on Hong Kong’, he stressed. Nevertheless, Bevin concluded that London would ‘proceed with caution’, and have 3 Memo. by Attlee,  May , FO /, F//G, PRO. Also, see Ch. . 4 Aide-memoire by British Embassy, Washington to State,  Sept. , FRUS, , , –.

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Hong Kong

‘close consultation’ with Washington on the question of recognition. He emphasized that ‘the difference was in tactics and not in objectives’, and Acheson agreed.5 Chinese Communist Attitudes towards International Obligations Truly, the Americans believed that a decision on recognition should not be made until and unless the Chinese Communists could satisfy the three conditions laid down by Acheson on  May: the new Chinese government should achieve ‘de facto control of territory’, enjoy ‘general acquiescence’ of the Chinese people, and be willing ‘to discharge its international obligation’.6 When meeting with Bevin and his advisers in Washington in September, Acheson insisted that ‘the Communists recognize international obligations in full as a prerequisite to recognition’. The Director of the Office of Far Eastern Affairs, Walton Butterworth, further raised the question that ‘the Communists have stated they intend unilaterally to abrogate the various treaties regardless of the provisions for termination’, which the United States regarded as ‘intolerable’. ‘It was possible that denunciation of the treaties’, he continued, ‘might include denunciation of those respecting Hong Kong.’ Bevin replied that he ‘could not imagine Russia advising China to abrogate treaties’. He also expressed his belief that the Chinese Communists would not attack Hong Kong directly, and his confidence at the time that Hong Kong could be defended as a result of the reinforcements.7 Certainly, the Truman administration attached great importance to the need for the Chinese Communists to respect international law and treaties before formal diplomatic recognition could be granted to the new Chinese government. The communist treatment of Angus Ward since late 8 had led Washington to question their willingness to follow the basic principles of international relations. On  October , Ward and four of his staff were formally arrested by the communist authorities in Shenyang. This hardened the US attitude towards the recognition of the PRC.9 A State Department’s briefing paper for the 5

Memo. of Conversation,  Sept. , ibid., –. Acheson to Stuart,  May , ibid., –. 7 Memo. of Conversation,  Sept., RG , CF –, Box , NA. 8 In Nov. , the communist authorities placed under house arrest Angus Ward, the US Consul General in Shenyang, and his staff on the grounds of espionage. See Hua Qingzhao, From Yalta to Panmunjom: Truman’s Diplomacy and the Four Powers, – (Ithaca, NY, ), –. 9 Chen, China’s Road to the Korean War, . 6

Meeting the Political Threat

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Washington meeting noted that recognition by other friendly countries ‘while this flagrant instance of treatment of foreign officials remains unsettled would have the effect of acquiescing in, if not condoning, such practice and could serve as a precedent for the Communists’.10 Thus, by raising with Bevin the question of possible communist denunciation of international treaties respecting Hong Kong, Butterworth might well have intended to raise some doubts in British minds about Communist China’s willingness to act as a responsible member of the international community. But after the establishment of the PRC in October, the Labour government believed that recognition could not be unduly delayed. On  November, the British Embassy in Washington informed the State Department in a memorandum that the Cabinet was in favour of granting de jure recognition to Communist China, but would make no decision until after consultations with the administration and British representatives and colonial governors in Southeast Asia.11 When discussing the memorandum with Graves the same day, Butterworth asked if the absence of any reference to obtaining communist assurances about respect for international obligations prior to extending recognition ‘indicated that the British Government would not expect to obtain any quid pro quo’. In reply, Graves expressed his government’s view that ‘the disadvantages of nonrecognition were so great as to outweigh any possible advantages to be obtained from securing Chinese Communist assurance of respect for international obligations’. Nevertheless, Graves added that ‘the British Government would expect to obtain Chinese Communist assurances regarding observance of the Kowloon lease agreement prior to extending recognition’, but ‘the question of Hong Kong did not arise since this was British territory ceded by treaty’.12 Notwithstanding Graves’s comments, the Labour government was under no illusion that the fate of Hong Kong could be separated from that of the New Territories.13 Even before the PRC was founded, the 10

Memo. by Perkins,  Nov. , FRUS, , , –. British Embassy, Washington to State,  Nov. , ibid., –. 12 Memo. of Conversation,  Nov. , ibid., –. 13 e.g., as early as July , George Kitson, the head of the Foreign Office’s China Department, had noted in his revised memorandum on ‘The Future of Hong Kong’: ‘Any attempt on our part to draw a distinction between Hong Kong and the New Territories would simply be treated as legal casuistry. The two have become inseparable in the Chinese mind, and no solution can be satisfactory unless it treats the problem as a whole.’ Quoted in Peter Wesley-Smith, Unequal Treaty –: China, Great Britain, and Hong Kong’s New Territories, rev. edn. (Hong Kong, ), . 11

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Hong Kong

Cabinet had concluded that ‘both Nationalists and Communists in China are likely to aim at eventual recovery not only of the leased territories but also of ceded areas of the Colony’. It seemed unlikely that any Chinese Government would be prepared to renew the lease of the New Territories which was to expire in , but for the time being, it was believed, the Chinese Communists would not agitate for the return of Hong Kong.14 In late August, the Cabinet concluded that the British would not discuss the future of Hong Kong with the new Chinese government ‘unless it were friendly, stable, and in control of a united China’. The reasons were that, if the British were negotiating with ‘an unfriendly Government’, they would be ‘under duress’. If the Chinese government was not ‘stable’, the British government ‘could not rely on it to preserve Hong Kong as a secure free port’. And if China was ‘not united’, the future of Hong Kong ‘would be likely to become a pawn in the contest between conflicting factions’. Since such a ‘friendly’, ‘stable’, and ‘united’ Chinese government did not exist in  or in the foreseeable future, the British policy was to remain in Hong Kong.15 In short, the Labour government did not want to make the future of Hong Kong an issue with the Chinese Communists during its deliberations over diplomatic recognition. Military Aid to Nationalist China and American Domestic Politics The British were also concerned about the continued supply of US arms to the Nationalist government. Early in , Dening argued that ‘there is no hope that the Nationalists will be able to offer effective resistance to the Communist advance’. ‘Therefore if the Communists are going to overrun South China’, he continued, ‘it follows that any arms we supply will fall into their hands, and such arms may subsequently be used against us [in Hong Kong] or against the French in Indo-China’. Later, Bevin approved the recommendation that a ban should be imposed and be rigidly enforced on the supply of arms and equipment to any part of the mainland of China, whether under Nationalist or 14 From Feb.  onwards, a number of leftist newspapers in Hong Kong, under the direction of Beijing’s propaganda machine, have conveyed the message that Hong Kong’s future would be secured under the new China—indeed, the two were portrayed as inextricably linked. See Yuan Xiaolun, Zhanhou Chuqi Zhonggong Yu Xianggang Jinbu Wenhua [The CCP and Leftist Culture in Hong Kong during the Early Post-war Period] (Guangzhou, ), –. 15 CP(),  Aug. , which is similar to CRO to UK High Commissioners,  Sept. , FO /, F//G, PRO.

Meeting the Political Threat

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Communist control. For that purpose, he needed to secure the cooperation of the US administration.16 While the Attlee government wanted to stop further supply of US arms to Nationalist China for the sake of Hong Kong, the Truman administration was constrained by domestic politics and priorities in Europe in its efforts to disengage from the Chinese Nationalists. Indeed, by early , Washington had come to acknowledge the virtual defeat of the Nationalist regime, and thus shifted its strategy from direct support to Chiang Kai-shek to more subtle political and economic means. On  February, Truman approved a recommendation to stop all military supplies to the Nationalists. But owing to opposition from Congress and the China lobby, Truman had to reverse his decision on suspension, and instead ordered a slowing down in the pace of military deliveries. It was hoped that limited military aid to the Nationalists could delay the communist victory on the mainland, and demonstrate US credibility to the ‘Free World’.17 In the spring, domestic pressure for continued support to the Guomindang government gained momentum, at a time when the Chinese Communists were about to cross the Yangtze. More importantly, at the time, the Truman administration was eager to secure congressional approval of the second installment of European recovery aid (or Marshall Aid) for the fiscal year . As a result, Acheson believed that he had to make a compromise on China for the sake of Europe. He agreed to permit the unobliged portion of the $ million in military aid under the China Aid Act of  to be spent beyond the expiration date of  April . In a word, domestic politics meant that the Truman administration could not abandon outright Nationalist China.18 The British government was not unaware of the domestic pressure on the US administration for supporting the Chinese Nationalists. In May, the British Embassy in Washington reported to London the State Department’s view that US military aid to the value of $ million remained to be supplied under the China Aid Act of . ‘In view of 16 FO Minute by Dening,  Apr. , FO /, F//G; Minute by Bevin to Attlee,  June , ibid., F//G, PRO. 17 Chester J. Pach, Jr., Arming the Free World: The Origins of the United States Military Assistance Program, – (Chapel Hill, NC, ), –; Ronald L. McGlothlen, Controlling the Waves: Dean Acheson and U.S. Foreign Policy in Asia (New York, ), –. 18 James Chace, Acheson: The Secretary of State Who Created the American World (New York, ), ; Thomas J. Christensen, Useful Adversaries: Grand Strategy, Domestic Mobilization, and Sino–American Conflict, – (Princeton, ), –.

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Hong Kong

Congressional origin of this military aid programme’, according to the State Department, ‘it is not likely to be suspended unless National Government disintegrates completely.’19 In a minute to Bevin, Dening recorded that ‘the Americans, who are somewhat afraid of Congressional opinion, are not prepared to place a complete ban on the shipment of arms, but are in fact sending such shipments to Formosa, and not to China proper’.20 Notwithstanding their view that the whole of mainland China would soon fall into communist hands, by mid- the British still hoped that ‘Formosa will not come under Communist domination’. Thus, in view of the US attitude, London did not at this stage press for an absolute ban on military supplies to Taiwan (as distinct from China proper); indeed, it might also consider applications for shipment of arms to Taiwan on their merits.21 By the autumn of , however, the dust of the Chinese civil war seemed to be settling: the Chinese Communists proclaimed the establishment of the PRC in October; and the Nationalist government retreated from Guangzhou to Chongqing and, by the year’s end, to Taipei. Taiwan’s deteriorating situation aroused the concern of the British government. During the Council of Foreign Ministers meeting in Paris in November, Bevin told Acheson: ‘We were holding the position in Hong Kong well, but I was worried about events in Formosa.’ The British Foreign Secretary mentioned some reports which suggested that the Chinese Nationalists had ‘large supplies of arms and equipment in Formosa which the UK assumed would fall to the Communists without much resistance’. Bevin feared that this supply of arms would be used ‘not as a potential force against the Communists, but rather as a potential source for the Communists which might be used against Hong Kong or Indochina’. Bevin hoped that the US administration would examine whether arms were still being supplied to the Nationalists on Formosa.22 Later, in a memorandum to Livingston Merchant of the State Department, the Counsellor of the British Embassy in Washington, Hubert Graves, noted that a hundred tanks, eight B– bombers, and a significant amount of aviation spirit, which were purchased by the Nationalists through a private American concern, had 19

Washington to FO,  May , FO /, F//, PRO. Minute by Dening to Bevin,  May , FO /, F//G, PRO. 21 Minute by Bevin to Attlee,  June , ibid. 22 Paris to FO,  Nov. , FO /, F//, PRO; Minutes of US, UK, and French Foreign Ministers Meeting in Paris,  Nov. , RG , CF –, Box , NA. 20

Meeting the Political Threat



recently been unloaded, and that further large consignments of military equipment could be expected.23 Nevertheless, the British realized the difficulties faced by the US administration in stopping all military supplies to Taiwan. ‘It seemed doubtful however whether success would attend these efforts’, the Cabinet Defence Committee was told, ‘as the State Department appeared to be unwilling to step in and prevent completion of deliveries which had been sanctioned by Congress.’24 As a matter of fact, no sooner had the European Recovery Program been renewed by Congress in April than the Truman administration started lobbying for the ratification of the North Atlantic Treaty and the approval of the Military Assistance Program. Unprecedented in terms of the scale of expenditure and the nature of the commitment to allies in peacetime, the Military Assistance Program met with great resistance from Capitol Hill. It was only after heated debates, substantial cuts in the proposed appropriations, and the shock of a successful Soviet atomic explosion that the Mutual Defense Assistance Act was finally approved in October. But, in the process, the China Lobby in Congress succeeded in securing from a reluctant White House an additional $ million in military aid for ‘the general area of China’. The Secretary of Defense, Louis Johnson, wanted to earmark part of the military aid for Taiwan, but the State Department had already allocated much of it to Indochina, Korea, and the Philippines. Although the US government would not provide new military assistance for the Nationalists, it allowed the completion of military aid to Taipei under the  China Aid Act.25 On  December, Oliver Franks expressed to Acheson concern about the further US shipment of military supplies to Taiwan, especially medium and heavy tanks and aircraft, since ‘Formosa would sooner rather than later pass into the hands of the Chinese Communists who might well at some stage use such material and weapons against Hong Kong.’ In reply, Acheson spelt out the status of military shipment to Taiwan under the $ million in the China Aid Act. He stressed ‘the implications both foreign and domestic of our [US] arbitrarily cutting off remaining shipments to Formosa which would amount to less than $ million (as of November ) of the $ million’. Any action to stop further shipments at this stage would be of ‘insignificant practical value’. 23 Memo. by Graves to Merchant,  Dec. , Papers of Dean Acheson, Memoranda of Conversations, Box , HSTL. 24 DO(),  Dec. , CAB /, PRO. 25 Christensen, Useful Adversaries, –; McGlothlen, Controlling the Waves, –.



Hong Kong

Nevertheless, Acheson agreed ‘to look into the question of medium and heavy tanks’ since, according to Franks, ‘the British military in Hong Kong had not now in their possession anti-tank weapons that could deal with other than light tanks’. In response to an enquiry by Franks as to whether the US attitude towards Formosa had changed since the conversations in Washington, Acheson concluded that his government would not employ military forces to prevent the fall of Taiwan into communist hands, but would seek ‘by political and economic means to do everything feasible to prevent that’.26 If the Labour government felt that it had legitimate reasons to recognize a government that had established effective control over much of the mainland, the Truman administration was propelled by domestic politics to prolong the life of a regime that had lost the ‘mandate of heaven’. Agreement to Disagree on Recognition During diplomatic consultations with the Truman administration in , the Labour government realized that it could not easily change the US policy of ‘waiting for the dust to settle’, not least because of domestic politics in Washington. What the British wanted, however, was to justify their own decision on recognition of Communist China. As Dening summarized it in a draft Cabinet paper: ‘Other Powers will not necessarily follow suit immediately. But this is a case where our own interests are so vital (even more vital in Malaya and Hong Kong than in China proper) that we should be prepared to take the consequences of a unilateral decision.’27 After the Cabinet had finally decided in mid-December to accord de jure recognition to the PRC, Bevin sent a personal message to Acheson: [W]e have deferred a decision on this matter as long as we felt able, but having taken into account all the circumstances and all the views expressed by other Governments, we nevertheless feel we must now proceed to recognition. There are some factors which affect us specially not only our interests in China but the position in Hong Kong and also in Malaya and Singapore, where there are vast Chinese communities.28

26 27 28

Memo. of Conversation,  Dec. , FRUS, , , –. Dening to Strang,  Dec. , FO /, F//, PRO. British Embassy, Washington to State,  Dec. , FRUS, , , –.

Meeting the Political Threat



By frequently pointing out the vulnerability of Hong Kong, the British sought to impress upon the Truman administration the necessity of a conciliatory approach towards the Chinese Communists. Whatever its reservations, the US State Department came to accept that the British had legitimate reasons to recognize the PRC, not least because of Hong Kong. A position paper prepared for Acheson during his forthcoming meeting with Bevin in Paris thus suggested: It would also be well for the Secretary to keep in mind the attitude of the British with respect to Hong Kong. If the British should, because of pressure from the United States, withhold recognition of the Chinese Communists for a considerable period, it is possible that complications over Hong Kong would arise which might lead to a Chinese Communist attack on the Colony.29

US decision-makers realized that China was an area more important to Britain than to the United States.30 So long as disagreement over China did not spill over into cooperation in other parts of Asia and, more importantly, in Europe, the top priority for both countries, the United States agreed to disagree with Britain on the issue of recognition.

         On  January , the Labour government accorded de jure recognition to the PRC. But this did not immediately gain the goodwill of the Chinese Communists. In reply three days later, Beijing expressed its willingness to start negotiations for the establishment of diplomatic relations. Anglo–Chinese negotiations, however, turned out to be protracted, and were discontinued when the Korean War broke out in June.31 The Chinese Communist leadership blamed the British for failing the tests of sincerity, because of their continuing support for Nationalist China in the United Nations, and their attitudes towards Guomindang organizations and Chinese national properties in Hong Kong.32 The latter included the 29

Memo. by Perkins,  Nov. , ibid., –. Nancy Bernkopf Tucker, Patterns in the Dust: Chinese–American Relations and the Recognition Controversy – (New York, ), . 31 For Anglo–Chinese negotiations until the outbreak of the Korean War, see Tang, Britain’s Encounter with Revolutionary China, –. 32 The PRC Foreign Ministry and the CCP Central Documentary Research Department (eds.), MaoZedong Waijiao Wenxuan [Selected Works of Mao Zedong on Diplomacy] (Beijing, ), . 30



Hong Kong

dispute over the ownership of seventy-one aircraft grounded in Hong Kong between late  and .33 The aircraft dispute was illustrative of the British dilemma of safeguarding Hong Kong, when Beijing exploited the Hong Kong issue to split the Anglo–American alliance, and equally when the US Congress manipulated it to criticize the administration. On  November , the managing directors and staff members of the China National Aviation Corporation (CNAC)—a Hong Kongbased company with the Guomindang government holding a majority of its share—and the Central Air Transport Corporation (CATC)—an official agency of the Nationalist government—defected to the newlyestablished PRC with eleven aircraft, leaving behind seventy-one aeroplanes in the Colony. The Chinese Communists then claimed that these seventy-one aeroplanes were the property of the PRC. In order to deny the aircraft to Beijing, the Nationalist government immediately transferred the ownership of CNAC and CATC to the Civil Air Transport (CAT) under General Claire Chennault, the pro-Chiang ‘Flying Tiger’ pilot, and Whiting Willauer, his business partner. Caught between these claims and counter-claims, the British resorted to legal means to decide the fate of the aircraft. On  February , the Hong Kong court ruled that the seventy-one airplanes belonged to the PRC. This did not mark the end of the dispute, however. Beijing demanded the immediate transfer of the aircraft to China, whilst Washington brought pressure to bear on London to prevent the planes from falling into communist hands. In his oral communication of  March with John Hutchison, the British representative who was sent to Beijing to negotiate for the establishment of diplomatic relations, Zhang Hanfu, the Chinese Vice-Minister of Foreign Affairs, asked London to clarify its relations with Taipei in view of its earlier abstention on a Soviet resolution to unseat the Chinese Nationalist representative in the United Nations, and its attitude towards the disputed aircraft in Hong Kong. In the light of the unsatisfactory British reply of  March, Zhang asked Hutchison on  May to make further clarification of the British failure to fully protect the aeroplanes, seven of which had been sabotaged, and to allow their early return to China.34

33 For a standard account of the aircraft dispute, see Tang, Britain’s Encounter with Revolutionary China, –; Zhai, The Dragon, the Lion, and the Eagle, –. 34 FO to British Representatives Overseas,  June , FO /, FC/, PRO; Martin, Divided Counsel, –, –.

Meeting the Political Threat



Chinese Communist leaders did have genuine grievances about the British handling of the aircraft dispute. But the role of the incident in their refusal to establish diplomatic relations with the British government should be put in perspective. It is true that Mao desired to establish formal diplomatic relations with all countries, including the Western ones. But he insisted that they first curtail all links with the Chinese Nationalists. Their failure to do so simply demonstrated that Western imperialist powers still refused to recognize the emergence of the new China, and to treat the PRC with equality and respect. Besides, the Chinese Communists made a distinction between recognition and establishment of diplomatic relations. Before the establishment of formal relations with certain countries, further negotiations were necessary in order to clarify their attitudes towards the Chinese Nationalists. This being the case, Beijing did not feel an urgent need to reciprocate London’s recognition until the British views on Taiwan had been made clear during Anglo–Chinese negotiations. From Mao’s perspective, ‘delaying’ the British demands for diplomatic relations did not mean ‘deadlock’, but merely ‘keeping the initiative in our hands’. At a deeper level, this reflected the Chairman’s determination to ‘build a new store’ and to ‘clean the house first before entertaining guests’.35 In handling the aircraft dispute, the British government could not totally ignore its possible impact on Anglo–Chinese relations. According to a Cabinet paper prepared jointly by the Foreign Office and the Colonial Office, ‘it is by no means inconceivable that the People’s Government do not intend to finalise their negotiations until it is clear whether His Majesty’s Government intend to prevent the departure of the aircraft from Hong Kong’. It warned that any British action ‘which could be shown to be demonstrably partial in favour of the United States might stultify the whole of our policy towards China’. Moreover, the British had Hong Kong’s security to consider. If the Hong Kong authorities yielded to US pressure by preventing the return of the 35 Pan Gen, ‘Zhongying Jianjiao Tanpan de Changqi’ [‘The Long Troubled Historical Path of Sino–British Negotiations for the Establishment of Diplomatic Relations’], in Diplomatic History Research Division of the PRC Foreign Ministry (ed.), XinZhongguo Waijiao Fengyun [Events of New China’s Diplomacy: Memoirs of Chinese Diplomats], Vol.  (Beijing, ), ; Pei Molong, Zhou Enlai Waijiaoxue [School of Zhou Enlai’s Diplomacy] (Beijing, ), ; Li Qiao, ‘Qite de Jianjiao—Zhongying Hushe Daibanchu Shimuo’ [‘The Peculiar Establishment of Diplomatic Relations—The Establishment of the Office of Chargé d’Affaires between China and Britain from Beginning to End’], in Fu Hao and Li Tongcheng (eds.), Waijiao Fengyun—Waijiaoguan Haiwai Miwen [Diplomatic Turbulence—Overseas Secrets of Diplomats] (Beijing, ), .



Hong Kong

aeroplanes to the mainland, ‘the Chinese Communists might be provoked to organise strikes, disturbances and sabotage’, or to impose an ‘economic blockade’ of the Colony. The survival of Hong Kong depended largely on ‘our not becoming involved in Chinese political issues, the maintenance of an impartial administration and on insisting that the rule of law must prevail’.36 For these reasons, the ownership of the disputed aircraft had to be settled by the courts in Hong Kong, and London should not interfere in the judicial process. But the involvement of the United States complicated the British calculations. From the beginning, some prominent anti-communist figures in the United States were involved in the aircraft dispute and lent their support to Chennault. First of all, ‘Big Bill’ Donovan, the former chief of the wartime Office of Strategic Services, acted as the legal counsel for CAT. In a conversation with Alexander Grantham, Donovan insisted that the planes be handed over to him ‘without further ado’, and otherwise threatened to ‘make it hot’ for the Hong Kong Governor with London.37 On Captol Hill, the pro-Chiang Republican Senator, William Knowland, denounced the Hong Kong court’s February decision to grant the seventy-one aircraft to the PRC, calling it ‘one of the greatest blows to the non-Communist world that has been delivered in that part of the globe’. He warned that these planes, which included C–s and C–s, could be used by Beijing for an attack upon Formosa, Southeast Asia, and Japan. Knowland threatened that Britain could ‘no longer expect assistance from us to help to stop communism in Europe’ when its action ‘actually accelerate[d] the spread of communism in Asia’. Wayne Morse of the Republican Party (Oregon) also spoke out in the Senate that, as a supporter of the Economic Cooperation Administration (ECA), he was ‘not going to support any appropriations for ECA to be used by Great Britain to build up the Communist air force of Communist China’.38 Indeed, Chennault himself had been actively involved in lobbying for his cause. Throughout the aircraft dispute, he communicated constantly with the China Lobby, congressmen, and US officials in order to mobilize their support against the British decision in favour of the Chinese Communists. Chennault thus played a significant role in escalating tension in Washington.39 36

37 Grantham, Via Ports, . CP(),  Apr. , CAB /, PRO. Congressional Record, Senate,  Feb. , ; Congressional Record, Senate,  Feb. , , in RG , The Murphy Collection on International Communism –, Box , NA. 39 On this point, see Lowe, Containing the Cold War in East Asia, –. 38

Meeting the Political Threat



The Truman administration paid close attention to the development of the aircraft dispute, fearing that the aeroplanes might provide important military transport for the PRC to invade Hainan or Taiwan.40 More importantly, the aircraft row occurred at a time when McCarthyism was gaining momentum in Washington, and when a tougher approach towards the communist bloc was gaining ascendancy. On  February, the Republican Senator of Wisconsin, Joseph McCarthy, fired the first shot at the Democratic administration by charging that the State Department had been infiltrated by communist agents. McCarthy’s charge, however ill-founded, was to put Acheson’s China policy on the defensive. Furthermore, in March the hard-line Dean Rusk replaced Butterworth as the Assistant Secretary of State taking charge of Asian affairs. Later, John Foster Dulles, the leading Republican expert on foreign affairs, was appointed as Acheson’s consultant charged with the responsibility of negotiating a Japanese peace treaty. This changing of the guard at the top brought new debates and new initiatives on US China policy. By the spring of , there was growing talk within the State Department about ‘drawing the line’ in Taiwan. Together with the formulation of the national security policy statement, NSC , the attitude of the US administration towards the communist bloc had hardened by the spring of .41 Against this domestic backdrop, the Truman administration exerted tremendous pressure on the Attlee government to influence the Hong Kong authorities’ decision. As early as December , the State Department had expressed to the British Embassy in Washington the ‘extreme seriousness’ with which the United States viewed the possibility of communist possession of the aeroplanes.42 After the local court had ruled in favour of the PRC in February , Acheson took up the issue with Ambassador Franks on  March. The US Secretary stated that ‘the Governor of Hong Kong had shown himself to be particularly preoccupied, perhaps understandably so, with the local situation and relations with his immediate neighbors, and that perhaps he had not been made sufficiently aware by London of the importance of the larger issues involved, including US–UK relations’. While the Chinese Nationalists and the Americans were not permitted to have access to the spare parts 40 HK to State,  Apr. , G./–, RG , DF –, Box ; HK to State,  Feb. , G./–, ibid., NA. 41 See McGlothlen, Controlling the Waves, –; Xiang, Recasting the Imperial Far East, –. 42 Memo. of Conversation,  Dec. , RG , CA –, Reel , NA.



Hong Kong

and machinery, Acheson continued, the Chinese Communists were allowed to do so, with the result that some eight hundred tons of this equipment had been loaded on to a British ship, presumably heading for the mainland. More importantly, Acheson warned that ‘[s]ome congressmen were talking in terms of opposing M[utual] A[ssistance] P[rogram] shipments and ECA assistance to Britain unless this problem were resolved, as well as opposing State Department appropriations’. According to Acheson, ‘this subject would become even hotter’, and ‘we were in for a great deal of trouble’.43 The British government understood the domestic pressure on the Truman administration regarding the disputed aircraft. During a Cabinet meeting in early April, Bevin said that ‘[p]ublic opinion in the United States about China was highly charged’, and thus ‘if the impression gained ground in the United States that American interests [in the aircraft case] had not been fairly treated, the effect on Anglo–American relations would be out of proportion to the particular issues here involved’. The Cabinet was aware that failure to prevent the aeroplanes from falling into communist hands would have ‘serious effect not only on Anglo–American relations but even on the personal position of the United States Secretary of State, which is somewhat precarious at the moment’.44 Moreover, in a year of congressional elections, according to the inter-departmental Far Eastern (Official) Committee, the Democratic administration had ‘to act with extreme caution’, so much so that the State Department ‘felt compelled for internal political reasons to take a strong line with us [British] about the aircraft at Hong Kong’.45 Worrying that an anti-communist Congress might endanger the continuance of the Marshall Aid and the Military Assistance Programme, the British finally yielded to US pressure. On  April, the Cabinet decided to issue an Order-in-Council, which provided for the detention of the aircraft in Hong Kong, pending an adjudication as to their ownership, with right of final appeal to the Privy Council in London.46 The Order-in-Council was issued on  May , and, after a long period of litigation and appeal, the Privy Council decided in June  that the aeroplanes belonged to Chennault’s company.

43 Memo. of Conversation,  Mar. , Papers of Dean Acheson, Memoranda of Conversations, Box , HSTL. 44 CM(),  Apr. , CAB /; CP(),  Apr. , CAB /, PRO. 45 FE(O)(),  Apr. , CAB /, PRO. 46 CM(),  Apr. , CAB /, PRO.

Meeting the Political Threat



Notwithstanding the communist criticism of Britain’s ‘two-faced’ policy in Hong Kong,47 British officials believed that the aircraft dispute was more a pretext than a main cause for Beijing to delay establishing diplomatic relations with London.48 The PRC was not in a hurry to establish formal relations with Western imperialist countries. When the Order-In-Council was issued in May , the Chinese Communists made strong protests, but did not break off their negotiations with the British. And when the Privy Council decided to grant the aeroplanes to CAT in , Beijing again protested and took over the British-owned public utilities in China, but its propaganda did not last long.49 Whatever their assessments of Beijing’s intentions and reactions, the British nevertheless wanted to avoid exacerbating further the difficulties in Anglo–Chinese relations. Throughout the aircraft dispute, the British government relied on the legal proceedings in Hong Kong, and tried to avoid the impression of being subjected to US pressure.50 Despite the deadlock in Anglo–Chinese negotiations, the Labour government regarded the policy of recognition as a correct one, and did not want a rupture of relations with the PRC.51 Given the political vulnerability of Hong Kong, the British were inclined to opt for compromise, rather than confrontation, with the PRC. But whether they would succeed also depended on the United States. The anti-communist elements in the US Congress were eager to exploit the question of aircraft ownership to pressure the Truman administration into taking a tougher line towards the PRC as well as Britain. When warning Franks in March  that the continuation of Marshall Aid and the Military Assistance Program might be seriously endangered if the aeroplanes were awarded to the PRC, Acheson actually referred to the threat made by these Congressmen.52 It seems 47 Pei Jianzhang, (et. al.), Zhonghua Renmin Gongheguo Waijiaoshi, – [Diplomatic History of the People’s Republic of China, –] (Beijing, ), . 48 Record of Conversation,  Mar. , FRUS, , , –; Younger to Bevin,  May , Documents on British Policy Overseas, Series , Vol. , –. 49 Tang, Britain’s Encounter with Revolutionary China, ; Tsang, Democracy Shelved, –. 50 e.g., after the Cabinet had decided to issue an Order-In-Council, the Foreign Office instructed information officers of the Regional Information Office in Singapore: ‘It is important to avoid the impression that His Majesty’s Government has surrendered to American pressure on this issue.’ FO to Singapore,  May , FO /, PG/, PRO. 51 FE(O)(),  Apr. , CAB /, PRO. 52 The existing accounts of the aircraft dispute seem to give the impression that it was the State Department, rather than Congress, which threatened to stop Marshall Aid and Military Assistance Program to Britain. Of course, it was US officials who conveyed such



Hong Kong

unlikely that the pro-British US Secretary would have been willing actually to jeopardize the Anglo–American alliance and thus the security of Western Europe merely because of seventy-one Hong Kong aeroplanes.53 In short, the aircraft dispute—which was by no means the only dispute involving the two Chinese protagonists and their Western allies—showed that, whenever feeling in Congress was intense and hostile to Hong Kong, the US administration would be more inclined to bring pressure to bear on the British government. In such a situation, London would have little choice but to sacrifice the colonial interests of Hong Kong for the sake of the Anglo–American relationship.

 ‘  ’     By yielding to US pressure over the disputed aeroplanes, the British government did not worry that this would invite a Chinese attack on Hong Kong. But this was not the case if Britain cooperated too closely with the United States in confronting the PRC on three Asian fronts— Korea, Indochina, and Taiwan. British Concern over a Wider Conflict On  June , two days after the North Korean invasion of the South, Truman announced the despatch of the Seventh Fleet to the Taiwan Strait to prevent any communist attack on Taiwan, and, in the same way, air and sea operations by the Nationalists against the mainland.54 Despite its strong backing for Washington in Korea, the Labour government did not look with favour on Truman’s neutralization order in the Taiwan Strait. It would risk widening the conflict in the Far East, driving Communist China still further into the arms of the Soviet Union, alienating the Asian Commonwealth, especially India, and messages to the British during diplomatic consultations. But the congressional origins of the threat should be made clear. See Tang, Britain’s Encounter with Revolutionary China, ; Zhai, The Dragon, the Lion, and the Eagle, . 53 As a briefing paper for Acheson noted, regarding the threat made by certain Congressional members on MAP or ECA appropriations to Britain, ‘the executive branch of this Government can be expected strongly to oppose this . . .’ Briefing Paper for May Foreign Ministers Meeting, FM D C–,  Apr. , RG , CF –, Box , NA. 54 The decision was more psychological and political in nature, since initially there were not enough ships to patrol the Taiwan Strait. Memo. of Conversation,  Oct. , Papers of Dean Acheson, Memoranda of Conversations, Box , HSTL.

Meeting the Political Threat



splitting the UN-coalition against North Korea.55 The British were also concerned about the implications for Hong Kong. Despite the early British commitment of naval units to Korea, the Foreign Office discerned in early July ‘the careful avoidance so far by the Central People’s Government of any reference to British “imperialism” or to Hong Kong or Malaya’ in its propaganda. The Chinese Communists did not use it as a pretext to break off all contacts with the British government; nor did they contemplate any immediate assault on Hong Kong. But this was not necessarily the case if Britain, for one reason or another, supported the United States in defending Taiwan. ‘In the event however of our participating in the Formosan operations’, the Foreign Office warned, ‘the Central People’s Government might well regard this as constituting aggression against Chinese territory, and either by way of retaliation or because they might claim that Hong Kong was used as a base for such aggression against China, in their turn move against Hong Kong’.56 The British realized that they would be caught in a policy dilemma in the event that a communist attack on Taiwan led to hostilities between the PRC and the United States. The Minister of State at the Foreign Office, Kenneth Younger, noted in a draft Cabinet paper in late July: if we are to side openly with the Americans it would lead to a rupture of relations with China, Hong Kong would become untenable, and the Commonwealth solidarity would be affected . . . On the other hand, if we stood aside it would be a grave shock to Anglo/U.S. solidarity and would lead to a serious loss of confidence affecting the Middle East, Western Europe and our Atlantic Pact allies.

Concerned about ‘the world-wide consequences of a breach’, Younger reluctantly conceded that Britain ‘could not stand alone’, and had to give ‘at least moral support to the Americans should they desire it’. But he also suggested that Washington might be persuaded to ‘neutralise Formosa effectively’, and Beijing induced to ‘accept this neutralisation as part of a process designed to bring the Chinese People’s Government into the Security Council’.57 The British Commanders of the Far East Land Forces also believed that the government should be prepared to 55

Martin, Divided Counsel, , –; Zhai, The Dragon, the Lion, and the Eagle,

–. 56 57

FO Minute,  July , FO /, FC/, PRO. Crowe to Garner,  July , CO /, /, PRO.

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give ‘unqualified support’ to the United States. It would be ‘unthinkable and unrealistic’ for Britain to stand aside: not only would it ‘expose a rift in our common front, but we could not expect United States help in defending Hong Kong when its turn came at a later date’.58 While the Foreign Office and the Ministry of Defence attached greater importance to Anglo–American relations, the Colonial Office had to give more serious thought to the situation in Hong Kong. It was feared that any British assistance to America over Taiwan, even if limited to granting facilities in Hong Kong, would be regarded by Beijing ‘as a hostile act’. Worse still, from the Colonial Office’s point of view, the British position in Hong Kong was ‘dangerously weak’ in the summer of . In July, a number of decisions ‘unfriendly’ to the PRC had been taken by the British government: an embargo on shipments of oil to China, the imposition of controls over strategic exports to the mainland, and the continued detention of the disputed aircraft in Hong Kong. As Governor Grantham assessed the situation, this series of ‘unfriendly’ acts, all in reference to Hong Kong, had ‘a cumulative effect’ and represented ‘a decrease in the value of Hong Kong to China’, so much so that the ‘time may be near when Peking Government may decide that Hong Kong has only a nuisance value for China and that for this reason a more active policy of pressure in Hong Kong should be pursued’. For these reasons, some officials in the Colonial Office suggested that the United States be persuaded not to involve Britain in any possible conflict with China over Formosa, provided this did not lead to a breach in the alliance.59 Still engaged in a rearguard action in the first month of the Korean War, the United States itself did not want to widen the conflict and preferred to limit its commitment to Taiwan. Indeed, apart from the military neutralization of the Taiwan Strait, Truman’s June order also envisaged the political neutralization of the status of Taiwan, to be settled peacefully either in a Japanese peace treaty or by the United Nations. In view of British anxieties over a widening of the war, Truman and Acheson had to reassure their ally repeatedly that the Seventh Fleet mission was a temporary expedient for the duration of the Korean conflict without prejudice to the ultimate disposition of Taiwan.60 During the high-level US–UK discussions on the world 58

GHQ Far East Land Forces to Defence,  Aug. , ibid. Paskin to Scott,  July , ibid.; HK to CO,  July , ibid. 60 Foot, The Wrong War, –; Peter Lowe, The Origins of the Korean War, nd edn. (London, ), . 59

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situation in late July, the British representatives asked whether a communist attack on Taiwan would result in war between the United States and China, adding that they would be ‘seriously disturbed at the extension of the Far Eastern conflict which would result’. They also stated that, while Britain had sufficient forces in Hong Kong to maintain internal security and to resist a small-scale attack, it could not prevail against a major attack. The next day, the JCS Chairman, General Bradley, said that the United States ‘had no desire to carry on warfare on the Chinese mainland’, and ‘would hope to localize any hostilities arising over Formosa’. Ambassador Franks and the Marshal of the Royal Air Force, Lord Tedder, ‘expressed gratification’ for General Bradley’s view, believing that London would be reassured by this position.61 From the British point of view, their efforts to restrain the United States had achieved some success at this early stage.62 As Dening stated in his assessment of the US–UK talks, although the question of whether or not Britain would assist the United States in defending Taiwan was not directly discussed, ‘it seemed clear that they [Americans] appreciated our position in Hong Kong in the event of Chinese Communists attacking Formosa’. Thus, Dening did not get ‘the impression that the United States were expecting us to join in with them in the defence of Formosa’. Instead, the Americans, he felt, ‘were having second thoughts on the question of defending Formosa’ in view of the difficulty of localizing the conflict and the possible reaction of the US public.63 American Reactions to British Preoccupation with Hong Kong In July , British officials, it seemed, could draw some comfort from their success in impressing upon the US administration the vulnerable position of Hong Kong and thus the importance of localizing the conflict in Korea. But, by the year’s end, it was the perceived British sensitivities to Hong Kong and China that US decision-makers increasingly came to resent. As the US/UN military fortunes on the Korean peninsula continued to deteriorate after the massive Chinese intervention in November, Anglo–American differences over how to wage the war and to make a peace became serious. Fearful of driving China further into 61 Summary Notes of US–UK Conversations, – July , TP, DSR, Document File, Box , HSTL. 62 William Stueck, ‘The Limits of Influence: British Policy and American Expansion of the War in Korea’, Pacific Historical Review,  (Feb. ), . 63 COS(),  July , DEFE /, PRO.

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Russian arms, and convinced that the West should not be bogged down in Asia at the expense of Europe, the Labour government was willing to achieve a ceasefire in Korea by making concessions to the PRC, such as the Chinese seat in the United Nations or the return of Taiwan to China. To the Truman administration, however, any concessions to Communist China would only reward aggression, damage US credibility among its allies, and create a political backlash at home. In December, the prospect of a forced evacuation from Korea was not an impossibility, and the US administration, especially Acheson, was under attack by Congress and the public. There was a feeling among the Republican right and MacArthur’s supporters that the European allies had too much influence on the United States during the war. In particular, the Attlee government was seen as appeasing the PRC, while lending insufficient support to the US war effort.64 It was against this background that Clement Attlee, prompted by Truman’s remarks on the possible use of the atomic bomb in Korea, rushed to Washington in early December to discuss the critical situation.65 At the first meeting on  December, Attlee stressed the importance of negotiating with the Chinese Communists for an early ceasefire in Korea, and the futility of excluding the PRC from the United Nations. Acheson, unconvinced, replied that ‘the important question boiled down to this: “Would the Chinese act any differently if we negotiated?” “Would concessions from us alter their policy toward Hongkong, or Indochina”?’66 The next day, Attlee stated that in order to achieve a ceasefire, the offer of withdrawal from Korea and Formosa and the Chinese seat in the United Nations for Beijing, in Acheson’s words, ‘would not be too high a price’.67 The Americans, however, were not impressed by the British arguments for making concessions to Beijing at the expense of Taipei. On  December, the Defense Secretary, George Marshall, asserted at the meeting: ‘The British had Hong Kong . . . but that was hardly comparable to Formosa. It would be intolerable to the United States to lose prestige in the Western Pacific by letting Formosa go.’68 It seemed that 64 Rosemary Foot, ‘Anglo–American Relations in the Korean Crisis: The British Effort to Avert an Expanded War, December —January ’, Diplomatic History, / (Winter ), ; Foot, The Wrong War, –. 65 On the Truman–Attlee summit, see Kenneth O. Morgan, Labour in Power – (Oxford, ), –. 66 White House Minutes,  Dec. , TP, PSF, Subject File, Box , HSTL. 67 Dean Acheson, Present at the Creation: My Years in the State Department (New York, ), . 68 White House Minutes,  Dec. , TP, PSF, Subject File, Box , HSTL.

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Acheson and especially Marshall were displeased by what they perceived as the British inclination to appease the Chinese Communists for the sake of Hong Kong. With the beginning of China’s New Year offensive in early January , the US/UN forces were confronted with the renewed prospect of a forced evacuation from Korea, especially after the fall of Seoul. There were growing demands from General MacArthur, the Pentagon, and the US public for intensified operations against the PRC. The Labour government was alarmed. The British Chiefs of Staff suspected that the politically assertive MacArthur might deliberately lead his forces into a retreat from Korea in order to pave the way for an attack on China.69 On  January, Attlee wrote personally to Truman, expressing his concern that ‘the United States Government may wish to substitute for a policy of localising the conflict in Korea, a policy aimed at developing limited action against China’. He also stated his opposition to the US attempt to introduce a resolution in the United Nations condemning Communist China as an aggressor.70 Not only would such a resolution jeopardize the work of the UN Ceasefire Commission, it would also lead to the adoption of additional measures against the PRC, such as a total embargo or a naval blockade, with serious consequences for Hong Kong’s economy.71 On  January, the day when Beijing rejected a UN ceasefire proposal, the National Security Council met to consider the JCS recommendations for what amounted to a limited war with China. Acheson said that he saw ‘serious difficulty’ in three aspects of the JCS proposals: the naval and air blockade, the removal of restrictions on aerial reconnaissance, and the use of Nationalist forces against the PRC. To Acheson, a blockade of China would not be effective unless the British and Portuguese were willing to cooperate. Obviously, without direct reference to them, what Acheson had in mind was the cooperation of the Hong Kong and Macau authorities respectively. General Bradley, however, argued that there was ‘heavy popular pressure for the United States to “do something” ’—unilaterally if the United Nations failed to follow suit. Marshall agreed and pointed out ‘the potential embarrassment which will be occasioned by numerous Congressional inquiries and protests’, many of which urged the United States ‘to get out of Korea’. ‘[B]efore very long’, a somewhat furious Defense Secretary warned, ‘we 69 70 71

Lowe, Containing the Cold War in East Asia, –. Attlee to Truman,  Jan. , TP, DSR, Topical File, Box , HSTL. MacDonald, Britain and the Korean War, –.

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should be hearing such questions as “How much are we going to pay for Hong Kong?” “What price Hong Kong?” “Why do the British have so much influence on our policy?” ’ To Marshall, ‘we must consider first of all the security of the United States’.72 Traditionally, the US military had been a strong advocate of a tougher approach towards the Chinese Communists. In early , the critical situation in Korea certainly prompted Marshall and the JCS to call for more assertive measures against the PRC than the rest of the administration or US allies were willing to contemplate. By criticizing the influence of Hong Kong on Britain and thus on the United States, Marshall might have hoped to win the arguments for the JCS proposals about which Acheson had severe reservations. Throughout the Korean War, these types of disagreements between the State and Defense Departments and between London and Washington were to surface repeatedly, especially in the first year of the conflict. Although the view that London’s policy was dictated by Hong Kong might have been an exaggeration, the British eagerness to accommodate the PRC certainly irritated the Pentagon, at a time when American soldiers were being killed on the battlefield. China’s use of Hong Kong as a Wedge into the Anglo–American Alliance What made the British position in Hong Kong during the Korean conflict more delicate was Beijing’s exploitation of local events to split the Anglo–American alliance. With the stabilization of the war front in Korea in late , and the return to power of Winston Churchill in October, Anglo–American differences began to narrow. In early January , Churchill and Eden visited Washington to discuss China and Korea.73 In his address to both Houses of Congress on the th, Churchill expressed his gratitude that the United States did ‘not allow the Chinese anti-Communists on Formosa to be invaded and massacred from the mainland’, and agreed that, in case of the breakdown of an armistice in Korea, ‘our response will be frank, resolute and effective’. He concluded that ‘British and United States policy in the Far East will be marked by increasing harmony.’74 Apparently, Churchill’s demon72 Memo. for the President,  Jan. , TP, PSF, National Security Council Files, Box , HSTL. 73 On the summit, see Zhai, The Dragon, the Lion, and the Eagle, –. 74 Churchill’s Address to Congress, BBC Monitor,  Jan. , FO /, FC/, PRO.

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stration of Anglo–American solidarity in Washington also sent shock waves through the Chinese capital, Beijing. In the week following Churchill’s address to the US Congress, the British Chargé in Beijing reported that the United Kingdom ‘came in for more than its usual share of attention’ in the mainland press and propaganda.75 According to British observers, several themes stood out in the communist propaganda. First, it highlighted the ‘contradictions’ between America and Britain, and between the British government and its people.76 In addition, the Chinese Communists connected recent events in Hong Kong with Churchill’s expressed support for Truman in Washington. On  January, the Chinese Ministry of Foreign Affairs made a serious protest to the British government regarding the deportation of pro-communist Chinese film makers in Hong Kong, the poor treatment of the victims in a serious fire at Tung Tau the previous November, and the alleged infiltration of Chiang’s agents across the border for sabotage. The protest concluded with the statement that ‘these actions at Hong Kong represent serious developments of the hostile policy of His Majesty’s Government towards the Central People’s Government through the subservience of Mr. Churchill’s Cabinet to the United States Government’. As Governor Grantham believed, ‘it is not improbable that the Foreign Ministry statement has been prompted by reports of the Prime Minister’s conference in Washington as much as by recent events in Hong Kong itself’. The Assistant Under-Secretary for Far East Affairs, Robert Scott, also remarked in a brief for Eden that the intensified communist propaganda against Hong Kong was ‘doubtless intended as a retort to the Prime Minister’s visit to Washington’.77 Beijing stepped up its attack on the Hong Kong government after a riot had broken out in Kowloon on  March. The riot was triggered by the British prohibition of a ‘comfort mission’ from Guangzhou to visit the fire victims of Tung Tau. Three days later, the People’s Daily carried a commentary alleging that the British, ‘at the dictate of the United States’, sought to ‘turn Hong Kong into an imperialist base of aggression against China’. When the pro-communist Ta Kung Pao and two other local papers published the People’s Daily article, the colonial authorities charged them with sedition, which later resulted in their 75

Peking to FO,  Feb. , FO /, FC/, PRO. See NCNA Report on Churchill/Truman Talks, BBC Monitor,  Jan. , FO /, FC/; Peking to FO,  Feb. , ibid., FC/, PRO. 77 HK to CO,  Jan. , FO /, FC/; FO Minute by Scott,  Feb. , FO /, FC//G, PRO. 76

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suspension. This was followed by two months of propaganda hostile to the Hong Kong government, though of fluctuating intensity.78 On  May, the Chinese Foreign Ministry made another protest accusing the British of arresting and persecuting Chinese residents, and of ordering the suspension of the local newspapers, all of which ‘constituted a hostile and provocative act against the People’s Republic of China’.79 In assessing the Chinese press and official statements, Charles Johnston of the Foreign Office was of the view that, although the Chinese Communists had ‘carefully refrained from threatening the integrity of the Colony or from committing themselves to any specific action against the Government of Hong Kong’, they continued to charge that ‘Hong Kong is being used as a base for United States aggression against China, apparently as part of the nefarious schemes of the “Churchill administration” ’.80 It seemed that the Chinese Communists, concerned about Churchill’s apparent solidarity with Truman, had found a convenient target for attack in Hong Kong in the light of the recent events there. Indeed, British officials generally agreed that Beijing simply exploited the March riot in order to try to drive a wedge into the Anglo–American alliance.81 In the event, its anti-British propaganda did not last long; nor was it ‘uncompromisingly hostile’.82 For all his rhetorical support for Truman in Washington, Churchill did not contemplate any radical departure from Labour’s China policy. Despite his dislike of Chinese Communism, Churchill was reluctant to support additional retaliatory measures against the PRC. And despite the lack of progress in the establishment of Anglo–Chinese diplomatic relations, he did not agree to de-recognize Beijing, nor to regard Taipei as the legitimate government of China.83 The Conservative government 78 See Canton to FO,  Mar. , FO /, FC/; Peking to FO,  Apr. , ibid., FC/; Minute by Oakeshott,  Apr. , ibid., PRO. 79 FO to Peking,  May , FO /, FC/, PRO. 80 Ibid. 81 Gary Wayne Catron, ‘China and Hong Kong, –’, Ph.D. thesis, Harvard University, , –; Kevin P. Lane, Sovereignty and the Status Quo: The Historical Roots of China’s Hong Kong Policy (Boulder, Colo., ), . 82 FO Minute by Scott,  Feb. , FO /, FC//G, PRO. 83 Martin Gilbert, Never Despair: Winston S. Churchill – (London, ), –. In early , the Foreign Office undertook an extensive review of Britain’s future relationship with the Nationalist government. In the meantime, Chiang also sent his personal representative, Han Li Wu, to discuss the possibility of establishing diplomatic relations. But the outcome of the review was that the present British policy towards Taipei would remain unchanged. Steve Tsang, ‘Unwitting Partners: Relations between Taiwan and Britain, –’, East Asian History,  (June ), –; Lowe, Containing the Cold War in East Asia, –.

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would continue the policy of seeking a modus vivendi with Communist China, although Churchill would give greater consideration to the Anglo–American relationship in the policy-making process. The Truman administration, for its part, realized that the new Conservative government would not abandon outright the conciliatory approach towards China. In the State Department’s view, the United States ‘should be under no illusions that the British Government is likely to move away very far or fast in changing its position on recognition although its thinking is probably closer to ours than that of the Labor Government’.84

’        Not just in Korea, but in Indochina too the Americans realized that Britain was reluctant to cooperate with Washington if this would lead to a wider war with China. In , when the military representatives of the United States, Britain, and other allies gathered in Washington to consider possible courses of military action in meeting communist aggression in Indochina, it became clear to the Americans that the British ‘wished to defend Hong Kong and Indochina, but not to take any drastic action against Communist China itself’.85 By March , the French position in Indochina had sharply deteriorated. The Eisenhower administration hoped to rescue the French from the communist siege of Dien Bien Phu in order to prevent the fall of the whole of Southeast Asia. After consulting Congress in early April, Secretary Dulles was told that there should be ‘no more Koreas’, and that the administration should attempt ‘to get definite commitments from the English and other free nations’ before ‘a Congressional resolution could be passed, giving the President power to commit armed forces in the area’.86 Eisenhower placed great emphasis on seeking congressional and popular support for his foreign policy, especially with regard to the use

84 Negotiating Paper, TCT Memo b,  Dec. , TP, PSF, General File, Box , HSTL. 85 Historical Division of the Joint Secretariat, The Joint Chiefs of Staff and the War in Vietnam: History of the Indochina Incident –, Vol. , –. 86 Memo. for the File of Dulles,  Apr. , FRUS, –, , pt. , –; Memo. for the File of Dulles,  Apr. , ibid., .

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of military force.87 In order to secure British support for ‘united action’ in Dien Bien Phu, he sent an urgent personal letter to Churchill on  April, stating that the United States ‘would expect to be with you [the British] there’ if such action would ‘increase the jeopardy to Hong Kong’.88 Eisenhower calculated that, by offering assurances over Hong Kong, he might convince a reluctant Churchill to support air and sea intervention in Indo-China. As a military general himself, Eisenhower was well aware that Hong Kong was the Achilles’ heel of the British Empire. As he wrote to Everett Hazlett, his close friend dating back to their years at military academy: ‘The British are frightened, I think, by two things. First, they have a morbid obsession that any positive move on the part of the free world may bring upon us World War III. Secondly, they are desperately concerned about the safety of Hong Kong.’ ‘For the moment the Chinese Communists are not molesting Hong Kong’, Eisenhower continued, ‘[but] the British are fearful that if they should be identified as opponents of the Communists in the Indo-China affair, they might suffer the loss of Hong Kong at any moment’.89 Conscious of the British worries over Hong Kong’s vulnerability, Eisenhower realized that his old wartime ally had to be reassured. Hong Kong became an important, if ultimately unsuccessful, diplomatic instrument to rally British support during the Dien Bien Phu crisis. But as Eisenhower correctly believed, Churchill was so obsessed by the avoidance of war with the PRC that he turned down the US request for ‘united action’ in Indo-China.

        But it was over Taiwan that Anglo–American cooperation proved most difficult. From time to time, Hong Kong was caught up in the diplomatic row between the United States and Britain, and in the unfinished Chinese civil war that was being waged on the maritime front after . On  June , the Chinese Nationalist government announced the temporary 87 George C. Herring and Richard H. Immerman, ‘Eisenhower, Dulles, and Dien Bien Phu: “The Day We Didn’t Go to War” Revisited’, in Kaplan and others (eds.), Dien Bien Phu and the Crisis of Franco–American Relations, . 88 See Ch.  for the full quotation. 89 Eisenhower to Hazlett,  Apr. , in Louis Galambos and Daun Van Ee (eds.), The Papers of Dwight David Eisenhower: The Presidency: The Middle Way,  (Baltimore, Md., ), .

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‘closure’90 of ports under communist control and adjacent territorial waters, especially Shanghai, and later threatened to attack all shipping within these waters and lay mines along the Yangtze estuary. After Truman had announced the neutralization order in June , the Chinese Nationalists were prevented from launching large-scale air and sea operations from Taiwan against mainland China. But their regular units as well as other guerrilla forces in the offshore islands continued to raid the communist-held coastal islands, operations that did not fall within the purview of the order.91 The Truman administration gave tacit approval of the Nationalist blockade and raids against the China coast since they could help delay the consolidation of communist control of the mainland, prevent the flow of strategic materials to China, and divert Beijing’s attention from its intervention in Korea and Southeast Asia.92 The British reacted negatively to the Nationalist ‘visit and search’ of foreign vessels and harassment of the China coast under communist control. The Foreign Office regarded the attack on British ships ‘as illegal and as an unfriendly act’. The blockade increased the risks for British and Hong Kong shipping in the China trade and caused financial inconvenience to shipping companies. Also, the Nationalist operations, it was believed, would not be effective in preventing the consolidation of communist power in China, and would instead jeopardize the British policy of ‘staying put’ on the mainland.93 The British government became more apprehensive of the Nationalist sea and air operations, at least initially, after Eisenhower had announced in January  that the Seventh Fleet would no longer protect Communist China but would just defend Taiwan. While the US President regarded the deneutralization order as a psychological warfare effort to bring an honourable peace to Korea, the British Cabinet felt that it would have ‘unfortunate political repercussions without compensating military advantages’.94 It was feared that the 90 The Chinese Nationalist government declared a ‘closure’, not a ‘blockade’. In international law, a ‘blockade’ was considered an act of war, and this would imply a recognition of the belligerent status of the Chinese Communists. The Chinese Nationalists also referred to their operations as the ‘visit and search’ of vessels. 91 Decision on JCS /,  July , RG , Army Operations, General Decimal File –, Box ; Note by Secretaries to JCS, JCS /,  Aug. , RG , Geographic File –, Box ; Lewis to Barnett,  Dec. , RG , CA –, Reel , NA. 92 Garver, The Sino–American Alliance, –. 93 Memo. of Conversation,  Nov. , FRUS, , , ; Franklin to Graves,  Jan. , FO /, FC//G, PRO; Memo. of Conversation,  Feb. , ./–, RG , CF –, Reel , NA. 94 CC(),  Feb. , CAB /, PRO.

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‘unleashing’ of Chiang Kai-shek would result in an intensified Nationalist campaign of raids, blockade, and mine-laying, and, worse still, involve the United States in a world war with the PRC. The British Chiefs of Staff and the Colonial Office were particularly concerned about the impact of this change of policy on the security of Hong Kong. The Chief of the Air Staff, Sir William Dickson, argued that ‘if the Nationalist Air Force attacked targets near Hong Kong, the Communists might believe that the attacks were in fact carried out by us from Hong Kong’, and, in this case, ‘would almost certainly do everything possible to cause unrest there’.95 In view of the political and economic value of Hong Kong, the Chiefs of Staff Committee did not believe that ‘the Chinese would consider that an attack on Hong Kong would be justified as a counter to possible Nationalist action’, though they might, ‘without resorting to war, paralyse the life of the Colony’ by stopping food supplies or fomenting internal unrest. However, ‘[s]hould increased American aid, or American participation in operations, enable the Nationalists to seize Hainan or establish a foothold in China, the Communists might attack Hong Kong to prevent its use as a base for further attacks’. In view of this, Eden was requested to seek assurances from Dulles during the latter’s forthcoming visit to Europe that, ‘in putting into effect the terms of President Eisenhower’s declaration, the United States Government will have particular regard to the possible effects on Hong Kong and will do their best to ensure that the Chinese Nationalists do likewise’.96 When meeting with Dulles and other US officials in London on  February, Eden expressed the British Chiefs’ concern over the repercussions for Hong Kong of the revised orders to the US Seventh Fleet. Dulles asked whether the British considered Hong Kong to be ‘defensible’. After hearing the British military view, Dulles said that he was ‘relieved to learn that we [British] thought Hong Kong could hold out long enough for reinforcements to get in’. He also asked whether London had inquired into, and been informed of the United States attitude towards an attack on Hong Kong. In response, Eden raised the question of Nationalist attacks on legitimate British shipping. He said that ‘there would be concern in this country if these attacks were now increased’, and hoped that Washington ‘would restrain the Chinese Nationalists’. Dulles, in turn, brought up the question of some Hong 95 COS(),  Mar. , DEFE /; COS(),  Mar. , DEFE /, PRO. 96 FO Minute by Scott,  Feb. , FO /, FC/, PRO.

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Kong-registered British ships which had been sold to communist interests but were still flying the British flag. On Taiwan, he reassured Eden that the existing agreement about military supplies to the Chinese Nationalists concluded by the former administration ‘would remain in force but that no new arrangements were in contemplation’.97 As mentioned in Chapter , the British Chiefs of Staff were so impressed by Dulles’ remarks on Hong Kong that they read into it an indication of US interest in helping with its defence. But it seemed more likely that by inquiring into the defensibility of Hong Kong, Dulles hoped to reduce British worries over the effect of the ‘unleashing’ of Chiang on the one hand, and on the other to induce London to tighten controls over British shipping in the China trade. Indeed, the United States was as anxious as Britain to avoid being dragged into war with the PRC for the sake of Taiwan. Shortly after the announcement of the deneutralization order, the Eisenhower administration began to press for a Nationalist commitment not to engage in offensive action against China without prior US approval.98 For its part, the British Conservative government recognized that since the original US decision on neutralization had been taken unilaterally by Truman, there was no possibility of reversing Eisenhower’s deneutralization order. What the British regretted most was that they had not been fully consulted by the Americans in advance. They wanted to make clear to the Eisenhower administration the importance of prior consultation. After Dulles had confirmed that Washington did not contemplate further military assistance to Taipei, the Foreign Office decided not to press the matter.99 Regardless of the change in US policy, the Chinese civil war continued in the Taiwan Strait in the s. Hong Kong also fell victim to the Nationalist–Communist fighting. Caught between the two rival regimes, the British tried to maintain a neutral posture, while demonstrating non-provocative firmness from time to time. According to the US Navy, more than  incidents had occurred between  and early  involving Nationalist searching, detention, and confiscation of 97 FO to Secretary, COS Committee,  Feb. , enclosed in COS(),  Feb. , DEFE /, PRO. 98 On  April, Chiang agreed to make such a pledge to Washington. According to a Taiwanese historian, Eisenhower’s policy was to ‘leash’, rather than ‘unleash’ Chiang. SuYa Chang, ‘Unleashing Chiang Kai-Shek?: Eisenhower and the Policy of Indecision toward Taiwan, ’, Bulletin of the Institute of Modern History Academia Sinica,  (Taipei: Republic of China, June ), –. 99 Washington to FO,  Jan. , FO /, FC/; FO to CRO,  Mar. , FO /, FC/, PRO.

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Hong Kong

foreign merchant ships engaging in the China trade,  per cent of which were flying the British flag.100 In December , for instance, the British freighter Rosita—a vessel registered in Hong Kong and chartered to a Hong Kong company known to be a communist agent—was attacked by Nationalist gunboats off the Fujian Coast, during which the British captain was killed. In London, Eden was furious: ‘Are there no sanctions we can take against Nationalist authorities. Their attitude is insulting.’ The Foreign Office made strong representations to the Tamsui authorities, and tried to have the State Department bring pressure to bear on Taipei.101 A year later, Rosita, while en route to Shanghai, was again fired upon, presumably by the Nationalists, making this the thirteenth time it had come under attack since .102 While not firmly taking sides, the British government tended to be more accommodating to the Chinese Communists, or at least less sympathetic towards the Chinese Nationalists. In July , a Cathay Pacific Airways commercial aircraft, which had been mistaken for a Nationalist fighting aircraft, was shot down by a PRC fighter off Hainan Island, killing ten people including three Americans. During search operations in the area, two US aircraft were challenged, and, in the process, brought down two communist planes. The Chinese Communists immediately expressed ‘regret’ at the ‘accidental’ shooting down of the Cathay Pacific airliner and a willingness to offer compensation to the British. However, they accused Taipei of enlarging the harassment of the China coast, and Washington of invading the Chinese territorial airspace on the pretext of rescue operations.103 Despite the US administration’s desire for a stiff line towards the PRC, the British government wanted to minimize the impact of the incident.104 Indeed, this unfortunate incident occurred just a month after the Nationalist Navy had seized the Soviet tanker, Tuapse, between the Philippines and Formosa. The British, unsympathetic towards the Nationalist detention of Tuapse, lamented that the shooting down of the Cathay Pacific airliner was probably the 100 ‘Harassing the Red China Trade’, ONI Review Supplement, Jan. , Post  Jan.  Command File, NHC. 101 FO to Washington,  Jan. , FO /, FC/; FO Minute by Addis,  Jan. , ibid.; Washington to FO,  Jan. , ibid., FC/, PRO. 102 ‘Harassing the Red China Trade’. 103 Zhang Hanfu to British Chargé,  July , in Editorial Division of Shijie Zhishi (ed.), Zhonghua Renmin Gongheguo Duiwai Wenjian Ji [A Collection of Documents of Foreign Relations of the People’s Republic of China], –, Vol.  (Beijing, ), –; Peking to FO,  July , FO /, FC/, PRO. 104 Memo. of Telephone Conversation,  July , FRUS, –, , pt. , –; Memo. of Conversations,  July , ibid., –

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immediate reaction of the ‘trigger-happy’ Chinese Communist pilot to a perceived Nationalist attack on a nearby Soviet tanker around that time.105 Besides, the incident occurred against the backdrop of the upgrading of Anglo–Chinese diplomatic relations to the chargé level shortly after the Geneva conference. In the spirit of ‘peaceful coexistence’, the Conservative government wanted to see the issue settled as soon as possible, and accepted Beijing’s admission of responsibility.106 Such an accommodating attitude on the part of the British did not seriously strain the Anglo–American relationship, however. This was less so a little more than a month later when the Chinese Communists began bombardment of the Nationalist-held Quemoy and Matsu. Hong Kong as an Offshore Island Throughout the First Taiwan Strait crisis, the Conservative government had serious disagreements with the Eisenhower administration over the protection of Quemoy and Matsu, if not the defence of Formosa. Added to the difficulties in Anglo–American relations was the personal animosity between Dulles and Eden.107 More importantly, the lack of British sympathy over Quemoy and Matsu also created resentment in some quarters of the American public, which saw Hong Kong as another offshore island for which London in turn expected Washington’s support. By early , the crisis entered into another critical phase after Beijing rejected the New Zealand-sponsored UN ceasefire resolution (ORACLE), and the Chinese Nationalists withdrew from the Dachen Islands. On  February, the British Ambassador to Washington, Roger Makins, informed Dulles that Britain ‘would not support U.S. intervention in the offshore islands which were regarded as a part of China’.108 The next day, Eisenhower wrote personally to Churchill stressing that, ‘under existing conditions’, the Chinese Nationalists 105 To the British Commissioner-General in Southeast Asia: ‘There is good reason to believe that Russian tanker Batumi was in vicinity when the [Cathay Pacific Airways] aircraft was shot down, and fighters may have been giving it cover.’ Singapore to FO,  July , FO /, FC/, PRO. 106 House of Commons Debates on  and  July , in FO /, FC/, PRO. In the end, Beijing agreed to pay £, in compensation. Grantham, Via Ports, . 107 David Carlton, Anthony Eden: A Biography (London, ), –; Richard Lamb, The Macmillan Years –: The Emerging Truth (London, ), –. 108 Memo. of Conversation,  Feb. , FRUS, –, , –.

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Hong Kong

should have ‘certain assurances with respect to the offshore islands’.109 This set off a series of exchanges between Eisenhower and Churchill in order to settle the argument. On the th, Churchill wrote that the offshore islands were not ‘a just cause of war’, and thus a Nationalist withdrawal from Quemoy and Matsu would be ‘right in law, in morals and in worldly wisdom’. Resorting to historical analogy, Eisenhower replied to Churchill three days later that ‘further retreat becomes worse than a Munich’, and all the non-Communist nations of the Western Pacific would conclude that ‘they had better plan to make the best terms they can with the Communists’. At the end of his letter, Eisenhower made some remarks on Hong Kong: ‘It would surely not be popular in this country if we became involved in possible hostilities on account of Hong Kong or Malaya, which our people look upon as ‘colonies’—which to us is a naughty word. Nevertheless, I do not doubt that, if the issue were ever framed in this way, we would be at your side.’110 As suggested in Chapter , by implicitly hinting at possible US assistance to Hong Kong Eisenhower hoped to persuade Churchill to support the defence of Quemoy and Matsu. But if the US President was sympathetic towards Hong Kong, the American public was not. Throughout the crisis, informed public opinion in the United States had drawn parallels between Hong Kong and the offshore islands, and was critical of the lack of British support for the administration. As an article in the March issue of the U.S. News and World Report magazine put it: ‘Look at the map again, and about  miles south of Quemoy you find another offshore island—Hong Kong.’ While the British government was prepared to defend Hong Kong and apparently expected US assistance, the article argued, it attacked the administration for its interests in Quemoy and Matsu. The Washington Post also asked: ‘why, if the British object to American intervention in Formosa, which is around  miles from the mainland of China, they do not give up Hong Kong, which is actually within China?’ ‘[I]f the British continue to make themselves so objectionable about American policy in Formosa, why not raise the issue of Hong Kong?’, the article concluded.111

109 Eisenhower to Churchill,  Feb. , in Boyle (ed.), The Churchill–Eisenhower Correspondence, –. 110 Churchill to Eisenhower,  Feb. , ibid., –; Eisenhower to Churchill,  Feb. , ibid., –. 111 US News and World Report,  Mar. ; Washington Post,  Mar. , in Washington to FO,  Mar. , FO /, FC/, PRO.

Meeting the Political Threat

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Such critical comment on Hong Kong also carried an undercurrent of US anti-colonialist sentiment. The US News and World Report article asked: ‘What is the difference between these offshore islands—between Hong Kong and Quemoy and Matsu? The difference, as the British see it, is that Hong Kong is a British colony, a part of the British Empire . . . It is an example of what is known as “colonialism”.’112 Eden’s open plea in Parliament for a Nationalist withdrawal from Quemoy and Matsu in return for Beijing’s pledge to restrain from using forces, to be followed by discussions for a general political settlement, added to the US resentment. As the Foreign Office minuted: ‘Since the Secretary of State’s statement to the House on the coastal islands there has been a great deal of unfriendly anti-colonialist comment in the States’ of which the above article on ‘Britain’s offshore island’ was typical.113 These anticolonialist remarks became more unsettling for the British when the State Department, under pressure from Congress, published the hitherto secret Yalta Conference records in mid-March. As far as Hong Kong was concerned, the published records contained a conversation between Joseph Stalin and Franklin Roosevelt on  February , to the effect that the late US President expressed his hope of restoring the sovereignty of Hong Kong to China and making it an internationalized free port.114 The decision to publish the documents was ‘untimely’ and ‘far from welcomed’ by the British Government.115 In Parliament, questions about the status of Hong Kong were asked, and Churchill had to reaffirm that the British were ‘resolved to maintain their position in Hong Kong’.116 In his conversation with the US Consul General, Everett Drumright, a day after the publication of the Yalta records, Grantham said that the Chinese Communists had ‘no present designs on Hong Kong’ and would ‘honor agreements and treaties’ regarding its status. But ‘the greatest danger to Hong Kong’, Grantham continued, ‘would come if and when the United States re-established relations with the Communist Mainland’, which he thought seemed ‘inevitable’. As Drumright reported to Washington after the talk: ‘The Governor did not elaborate, but presumably had in the back of his mind the belief that 112 US News and World Report,  Mar. , in Washington to FO,  Mar. , FO /, FC/, PRO. 113 Hansard, House of Commons Debates,  Mar. , th Series, Session –, Vol. , col. –; FO Minute by Sutherland,  Mar. , FO /, FC/, PRO. 114 See New York Times,  and  Mar. . 115 The Times,  Mar. . 116 Hansard, House of Commons Debates,  Mar. , th Series, Session –, Vol. , col. .

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Hong Kong

the United States would at sometime [sic] side with the Chinese in an anti-colonial action against Hong Kong. Perhaps the Governor was moved to make his observation because of the disclosures in Washington’ of the Yalta Conference documents.117 In , as during the Korean War, the US public came to believe that Britain, preoccupied with Hong Kong, had the propensity to appease the PRC. American opinion shapers were critical of the lack of British sympathy over the defence of Quemoy and Matsu, and failed to understand why the British government did not see Hong Kong in the same light as the offshore islands. Both Eisenhower and Dulles were responsive to public opinion, and were eager to build up a domestic consensus over foreign policy.118 Nevertheless, as his personal letter to Churchill suggested, Eisenhower tended to see the ‘colony’ of Hong Kong in a more favourable light than did the public. Eisenhower paid a great deal of attention to the issue of colonialism.119 The holding of the Bandung conference in late April intensified Washington’s fears that Communist China and non-aligned India would manipulate the theme of anti-colonialism against the West.120 But Eisenhower also realized that a price had to be paid for British cooperation with the United States in the Cold War. Aware of the vulnerability of Hong Kong, Eisenhower was willing to hint at a greater US commitment to the British Colony, if Churchill in return supported the defence of Quemoy and Matsu. In this regard, Eisenhower hoped to utilize his intimacy and informality with Churchill in trying to influence Britain.121 This is not to deny the fact that Eisenhower’s style of management and policy-making relied more on an orderly organizational process than on personal diplomacy.122 But at a time when the relationship between Eden and Dulles was by no means cordial, Eisenhower’s personal friendship with 117

HK to State,  Mar. , G./–, RG , DF –, Box , NA. Gary W. Reichard, ‘Divisions and Dissent: Democrats and Foreign Policy, –’, Political Science Quarterly, / (Spring ), –. 119 Bowie and Immerman, Waging Peace, –. 120 Henry Williams Brands, The Specter of Neutralism: The United States and the Emergence of the Third World, – (New York, ), –. 121 As Eisenhower told Churchill in March , their ‘personal concord’ would ‘help our two governments act more effectively against Communists everywhere’. Quoted in Michael David Kandiah and Gillian Staerck, ‘ “Reliable Allies”: Anglo–American Relations’, in Wolfram Kaiser and Gillian Staerck (eds.), British Foreign Policy, –: Contracting Options (London, ), . 122 Peter Boyle, ‘The “Special Relationship” with Washington’, in Young (ed.), The Foreign Policy of Churchill’s Peacetime Administration, –; Bowie and Immerman, Waging Peace, . 118

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Churchill was an important factor in the United States’ attempt to rally British support, or at least to lessen the two countries’ differences.123 Having said that, Eisenhower’s use of the Hong Kong carrot failed to convince Churchill, let alone Eden who succeeded the aging Prime Minister in early April. Fortunately, the Chinese Communists took the initiative to defuse the crisis, thus ending temporarily the policy dilemmas Britain and America faced in defending their respective ‘offshore islands’.





,  ,   ‘  ’

Both in Indochina and in the Taiwan Strait, the British turned down the US proposals of military intervention. As has been discussed in Chapter , throughout the offshore islands crisis, British strategic planners had the painful task of reconciling British military capabilities and Cold War political objectives where Hong Kong was concerned. Worse still, by early  the short honeymoon in Sino–British relations apparent since the  Geneva conference seemed to have ended. The British Chargé in Beijing, Con O’Neill, recorded an increase in the volume of Chinese press attacks on Britain, covering such topics as British rearmament, trade restrictions on China, and colonial problems in the Middle East. In offering his observations to the Foreign Office, O’Neill said that, ‘so long as we intend to maintain possessions or influence in East or South-East Asia’, he did ‘not see how our relations with China can be other than fundamentally difficult and bad’. Commenting on O’Neill’s report, James Murray of the Foreign Office argued that, whilst the British position in Malaya was ‘not in fact likely to be much affected by our dealings with China’, Hong Kong was ‘in a different category’ since the British were ‘very vulnerable to Chinese pressure there’. ‘With the disappearance of our commercial assets on the mainland’, he continued, ‘it is the last material hostage to fortune which would make it difficult for us to follow a policy of uncompromising hostility towards China’. Thus, ‘our vulnerability in Hong Kong’ and ‘the importance of keeping the sympathy of the New Commonwealth’ made it ‘expedient 123 Eisenhower’s letter of Feb.  to Churchill did have the positive effect of cooling Anglo–American tensions over the offshore islands. As Churchill told Eden: ‘It is a much better letter . . . [I]t is [a] real and sincere attempt to make us understand the American point of view.’ Quotation from Lamb, The Macmillan Years, .

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Hong Kong

for us to follow a reasonably conciliatory line in our dealings with the Chinese’. The Head of the Far Eastern Department, Colin Crowe, agreed, but stressed that the British government could not ‘risk a break with the Americans over Far Eastern matters’. This being the case, ‘it is so desirable that there should be a greater flexibility in U.S. Far Eastern Policy which would not only enable us to collaborate more easily with them but also permit them to ease themselves in due course out of difficult positions, for example over Chinese representation, without disastrous loss of prestige’.124 Truly, the question of Chinese representation in the United Nations had been an issue which caused constant friction between Britain and the United States. It was also an issue which worried Communist China. In  and , a series of events in Hong Kong and in Asia caused Beijing to step up its attack on what it saw as the Anglo–American ‘twoChinas’ conspiracy. On  October, riots broke out in Kowloon and Tsuen Wan, with Chinese Communist sympathizers being the main victims of attack by Guomindang supporters. In response, Zhou Enlai and the Vice-Foreign Minister, Zhang Hanfu, each summoned the British Chargé in Beijing twice in protest. When meeting with O’Neill on  October, Zhou criticized Governor Grantham for attributing the riots to the disputes between Communist and Nationalist supporters in Hong Kong, thus denying the responsibility of the Guomindang agents. The Chinese Premier warned that ‘Kowloon was very very close to Canton’, and what happened there had ‘a direct bearing on peace in that area of China’. In another lengthy meeting with the British Chargé three days later, Zhou also criticized the statement issued by the Hong Kong Governor the same day which had not mentioned ‘sabotage by Kuomintang agents’. ‘Events showed’, Zhou argued, ‘that the Hong Kong authorities were willing to allow Kuomintang agents to use Hongkong and particularly Kowloon as a base to undermine the mainland and as a springboard for sabotage of the mainland. This was proved by the fact that the Hong Kong Government had not condemned the Kuomintang special agents for their activities.’ At the end of the conversation, Zhou warned: ‘You know we could cause plenty of trouble in Hong Kong easily, but we don’t want to.’125

124 O’Neill to Lloyd,  Feb. , FO /, FC/; FO Minute by Murray,  Mar. , ibid.; FO Minute by Crowe,  Mar. , ibid., PRO. 125 Peking to FO,  Oct. , PREM /; Peking to FO,  Oct. , ibid., PRO.

Meeting the Political Threat



When assessing the communist response to the riots, British officials in China and Hong Kong were concerned about the ‘most sinister features of Chou En-lai’s remarks’, including ‘the ability of the Chinese Communists to cause trouble in Hong Kong’ and ‘the threats events in Hong Kong present[ed] to the security of China’. They also took notice of ‘a stream of exaggerated and alarmist commentary’ by Beijing and Guangzhou Radios.126 The Foreign Office, however, was more complacent about Beijing’s immediate intentions towards Hong Kong, believing that a ‘Chinese decision to take aggressive action against Hong Kong whether military or non-military would be decided by overall factors not necessarily connected with conditions prevailing in the Colony itself’.127 Nevertheless, the riots in Hong Kong were deemed serious enough by Anthony Eden that he requested a note on their development, and suggested the dispatch of one or more British ships to the area ‘to show the flag’.128 This was the time when Eden, in ill health, was giving serious thought to a proposed Israeli–British–French invasion of the Suez Canal.129 In January , the Chinese Communist criticisms of the British, which had subsided for a while, were renewed when the Hong Kong government published the preliminary report on the Kowloon and Tsuen Wan disturbances. A Chinese Ministry of Foreign Affairs announcement on  January stated that, by blaming secret societies and Chinese refugees for the riots, the British continued ‘to absolve the Nationalist agents who planned and organized the Kowloon riots from blame and to shuffle off their own responsibility’. More importantly, ‘[t]he report also openly calls the Chiang Kai-shek clique “the Taiwan Nationalist Government” and refers to it on terms of equality with the Central People’s Government of the Chinese People’s Republic, thus again revealing the plot of the British Government to create “twoChinas” ’. The riots were ‘no chance occurrence’, the statement noted, as the British authorities in Hong Kong had for a long time ‘shielded and connived at activities by Nationalist agents in Hong Kong’, for example the blowing up of the CNAC aircraft in , the seizure of five Chinese fishing vessels between  and , the sabotage of the 126 Peking to FO,  Oct. , ibid.; HK to CO,  Oct. , ibid.; HK to CO,  Oct. , ibid. 127 FO to Peking,  Oct. , ibid. 128 Zulueta to Moreton,  Oct. , ibid.; Monckton to Hailsham,  Oct. , ibid. 129 Victor Rothwell, Anthony Eden: A Political Biography – (Manchester, ), esp. –.

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Hong Kong

aircraft Kashmir Princess in ,130 the release of the Nationalist F– fighter to Taiwan the same year,131 and the use of Hong Kong by Nationalist agents for training and espionage.132 From their official statements and representations to the British government, it became clear that the Chinese Communists directed their attacks against the so-called ‘two-faced’ policy of the Hong Kong government—recognizing the PRC on the one hand, and tolerating the Nationalist ‘subversive’ activities on the other. By repeatedly criticizing the involvement of the Nationalist agents in the riots—however illfounded—they hoped to exert maximum pressure on the British for eliminating the Nationalist influence in Hong Kong.133 In the meantime, Beijing also criticized London for its ‘collusion’ with Washington in creating ‘two Chinas’ on the international stage, with the aim of splitting the two allies.134 Such criticisms took place against the backdrop of the deadlock in Sino–American ambassadorial talks in Geneva since August .135 To Zhou Enlai, the Geneva talks (which were suspended by the end of ) failed mainly because the Americans just wanted to get ‘the Chinese recognition of the status quo of the U.S. armed occupation of Taiwan’, and to create ‘the so-called 130 On  April , the Kashmir Princess airliner, which was originally scheduled to take Zhou and other China delegates from Hong Kong to Djakarta, exploded in Indonesian airspace. According to Tsang, it was Nationalist agents who planted a bomb in the plane in an attempt to assassinate Zhou. The Chinese Communists had knowledge of the plot beforehand, but made no attempt to stop it. Their aims were, among other things, to compel the Hong Kong authorities to discredit the Guomindang secret network in the Colony in the aftermath of the incident. Tsang, ‘Target Zhou Enlai’, –. 131 On  Jan. , a Sabre jet (F–) belonging to the Nationalist Air Force landed at Hong Kong airport, after having been pursued by the PRC fighters. After a long period of deliberations, the British reluctantly allowed the return of the aircraft to Taiwan. But it was not until early  that the aircraft was shipped back. See Tsang, ‘Strategy for Survival’, –. 132 Peking to FO,  Jan. , PREM /, PRO. 133 British officials suspected that the Chinese Communists might want to use the technique, which had been successfully employed in the case of the Kashmir Princess incident, of giving ‘information’ to the Hong Kong government as to who the Nationalist agents were and whom the British should arrest. Peking to FO,  Oct. , PREM /, PRO. But, unlike the former case, Guomindang agents were not involved in the  riots, except for those members of the triad societies who were traditionally sympathetic to the Chinese Nationalists. 134 Especially after the Taiwan Strait crisis of –, some US officials, including Dulles himself, had begun to think seriously about a ‘two Chinas’ policy. But it was never clearly articulated nor formally implemented. See Nancy Bernkopf Tucker, ‘John Foster Dulles and the Taiwan Roots of the “Two Chinas” Policy’, in Richard H. Immerman (ed.), John Foster Dulles and the Diplomacy of the Cold War (Princeton, ), –. 135 For details of the talks, see Kenneth T. Young, Negotiating with the Chinese Communists: The United States Experience, – (New York, ).

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two Chinas situation’.136 In September , Mao criticized Britain during his meeting with the Indonesian President Sukarno. Although the British government was eager to develop diplomatic relations with the PRC, the Chinese Chairman said, it continued to vote for Chiang in the United Nations. For this reason, Beijing maintained just ‘semi-formal diplomatic relations’ with London.137 In receiving representatives of the British Board of Trade in early , Zhou pointed out that the British attitude towards UN representation was ‘unfriendly’, and their handling of the Kashmir Princess and F– aircraft incidents ‘incorrect’. That was why there had been ‘no improvement’ in Sino–British relations in the past three years.138 Since June , successive British governments, however reluctantly, had been supporting the moratorium—an annual motion to defer discussion of seating Communist China in the United Nations. By , however, the Macmillan government came to believe that China could not be excluded from the United Nations for much longer. The rapid process of decolonization had increased the number of Afro–Asian states sympathetic to Beijing in that international organization.139 Nonetheless, British decision-makers also realized that Chinese representation in the United Nations was a vital issue for the United States, both domestically and internationally.140 In May, the Eisenhower administration acquiesced in the British abolition of the China differential in the expectation that London would in turn maintain a harder stance on the issue of Chinese representation.141 So when the Americans had made a compromise on the economic front, the British felt that they had little choice but to stay close to the US position on this sensitive political issue. In addition, the Suez crisis had forcefully brought home to the Conservative government that Britain could not afford to be a colonial and world power without the backing of the United States.142 Once the Sandys Defence White Paper had been published in April, and the level 136

ZhouEnlai Waijiao Wenxuan, –. MaoZedong Waijiao Wenxuan, –. 138 The CCP Central Documentary Research Department (ed.), ZhouEnlai Nianpu, – [A Chroncile of Zhou Enlai’s Life, –], Vol.  (Beijing, ), . 139 Washington to FO,  Feb. , FO /, F/G; FO Minute by Dalton,  Mar. , ibid., F//G, PRO. 140 For an account of the importance of the international isolation of China to the Eisenhower administration, see Rosemary Foot, ‘The Eisenhower Administration’s Fear of Empowering the Chinese’, Political Science Quarterly, / (), – 141 Caroline Pruden, Conditional Partners: Eisenhower, the United Nations, and the Search for a Permanent Peace (Baton Rouge, La., ), . 142 Louis, ‘The Dissolution of the British Empire’, . 137

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of armed forces in Hong Kong decided, the Macmillan government realized that Hong Kong could not be defended against an external attack without US military assistance.143 Alignment with the US policy on China was a price that had to be paid for the preservation of Britain’s world-wide influence. Finally, British officials calculated that Beijing would not react vigorously to their continued support for Taipei in the United Nations.144 For these reasons, on  September the British delegation again cast its vote for the moratorium at the UN General Assembly. The successful launch by the Soviet Union of the first space satellite, Sputnik, in October provided a further stimulus to a closer alignment of Anglo–American policies on global issues. Concerned about the psychological shock of the apparent Soviet lead in nuclear technology,145 Eisenhower agreed to meet Macmillan in Washington to strengthen Anglo–American collaboration. On  October, the first day of the meeting at the White House, Dulles told Macmillan and the British Foreign Secretary, Selwyn Lloyd, that the China matter was one where ‘we needed closer cooperation’. He said that, since the United States had tried to accommodate the British view on the trade issue, ‘some accommodation was needed on the political side with the US views’. Apparently convinced, Macmillan replied that ‘so long as he was Prime Minister he would never agree to anything which might bring the Communists into the United Nations’.146 But the most significant moment of the Washington conference came the next day. Eisenhower agreed to revise the McMahon Act and to strengthen Anglo–American nuclear cooperation; Macmillan ‘could hardly believe [his] ears’.147 In return, Lloyd confirmed, in a letter to Dulles, that the present British government would ‘not seek or support, without prior agreement with 143 COS(),  May , DEFE /; BDCC(FE)(),  Sept. , DEFE /, PRO. 144 Victor S. Kaufman, ‘ “Chirep”: The Anglo–American Dispute over Chinese Representation in the United Nations, –’, English Historical Review, / (April ), –. Indeed, Mao himself was not eager to have the PRC admitted into the United Nations or other international bodies in which Taiwan was also represented in one way or another, lest this would create ‘two Chinas’. But the PRC would continue to press for its admission in order to ‘hold the initiative’ and put the United States on the defensive. MaoZedong Waijiao Wenxuan, –. 145 Although Eisenhower himself believed that the impact of Sputnik was more important psychologically than militarily, he had to deal with the ‘near-hysterical reaction of the American press, politicians, and public’. See Ambrose, Eisenhower, –. 146 Memo. of Conversation,  Oct. , RG , CF –, Box , NA. 147 Harold Macmillan, Riding the Storm – (London, ), .

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the United States government, any change in regard to the representation of China in the United Nations . . . and other international organisations in which this question may arise’.148 However, the Hong Kong issue was not neglected. As part of these understandings, the British and US governments agreed to set up a Working Group on Hong Kong, in addition to eight other geographical and functional Working Groups, to ‘produce an intelligence estimate of the threat to Hong Kong from Communist China’, and to ‘examine joint measures required to meet the different types of threat’.149 In reporting to the Cabinet on his visit to Washington, Macmillan said that the understandings reached at the conference represented ‘substantial and valuable concessions on the part of the United States Government’.150 The removal of restrictions over the sharing of nuclear information—together with the offer of US missiles confirmed at the Bermuda conference in March—strengthened Anglo–American nuclear cooperation to a level beyond that with any other US ally. Even the compromise over not pressing for admission of the PRC in the United Nations was seen in a rather favourable light by the Prime Minister. As Macmillan wrote in his diary, this was ‘a very small price to pay for all we have obtained. It is very carefully worded, not as an agreement but as a unilateral statement of HMG’s policy.’151 The setting up of the Working Group on Hong Kong, however, did not invalidate the existing US policy on Hong Kong (NSC ), which stipulated that Washington would not provide military assistance to the British beyond the evacuation of American civilians. When the US–UK Working Group met in mid-December, it concentrated mainly on producing an agreed estimate of the military threat to Hong Kong, which could serve as a basis for considering joint measures to meet it.152 But Macmillan certainly regarded the establishment of the Working Group as more significant than this: the United States, in his words, had ‘agreed to regard Hong Kong as a joint defence problem and discuss ways and means with us’.153 From the British point of view, the different 148

Lloyd to Dulles,  Oct. , RG , CF –, Box , NA. Ibid.; Dulles to Lloyd,  Oct. , ibid., NA. 150 CC(),  Oct. , CAB /, PRO. 151 [Original Emphasis] Diary Entry,  Oct. , Papers of Harold Macmillan, Manuscript Diaries, –, Mss. Macmillan dep. d., Bodleian Library, Oxford. 152 First and Second Meetings of Joint US–UK Working Group on Hong Kong,  Dec. , .G/–, RG , DF –, Box , NA. 153 Diary Entry,  Oct. , Papers of Harold Macmillan, Manuscript Diaries, –, Mss. Macmillan dep. d., Bodleian Library, Oxford. 149

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Hong Kong

geographical and functional Working Groups could ensure better consultation and coordination of policies between the two governments at working level. As a result, ‘for the first time since the Second World War’, there existed ‘machinery for the continuous joint examination of certain international problems’; in this way, the British would have ‘a chance of influencing American policy at its formative stages’. The US–UK Working Group on Hong Kong thus helped ensure ‘[t]he engagement of United States interest in the defence of Hong Kong’.154 In the aftermath of Suez, both Eisenhower and Macmillan saw the importance of restoring the Anglo–American relationship. This was facilitated by their long-time friendship dating back to their experiences in North Africa and Italy during the Second World War.155 After the Sputnik shock, Eisenhower was willing to strengthen Anglo–American nuclear cooperation ‘as a way of securing British support for American foreign policy in a number of areas’.156 But Eisenhower, as always, also realized that a demonstration of US interest in Hong Kong’s future was an additional price—albeit a small one—that had to be paid for British support on the more important issue of Chinese representation. It was this vital British factor, not the importance of Hong Kong per se, that influenced his thinking throughout the s.

154

SC(),  Jan. , FO /, AU//G, PRO. As Eisenhower recollected: ‘Our determination to rebuild our close understanding [at Bermuda] was aided, in part, by the fact that Harold and I were old comrades.’ After the Washington conference, Lloyd told the Cabinet that, ‘largely as a result of the personal friendship between the Prime Minister and President Eisenhower, we had now succeeded in regaining the special relationship with the United States which we had formerly enjoyed’. Dwight D. Eisenhower, The White House Years: Waging Peace, – (New York, ), ; CC(),  Oct. , CAB /, PRO. For a more critical account of the implications of Bermuda and Washington for Anglo–American relations and Britain’s world power status, see Michael Dockrill, ‘Restoring the “Special Relationship”: The Bermuda and Washington Conferences, ’, in Dick Richardson and Glyn Stone (eds.), Decisions and Diplomacy: Essays in Twentieth Century International History (London, ), –. 156 Apart from Chinese representation, the Eisenhower administration hoped to encourage the Macmillan government to reconsider implementation of the substantial cuts in British conventional forces in accordance with the Sandys White Paper, to maintain Britain’s position in the Persian Gulf, and not to undermine the progress towards European integration. John Baylis, ‘Exchanging Nuclear Secrets: Laying the Foundations of the Anglo–American Nuclear Relationship’, Diplomatic History, / (Winter ), –. 155

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 During the Cold War, the British were acutely aware of the political vulnerability of Hong Kong in the shadow of Communist China. For much of the time in the s, they estimated that an isolated Chinese attack on Hong Kong was unlikely, and generally believed that Beijing did not want to stir up trouble in Hong Kong beyond hostile propaganda. However, in a period when the PRC and the United States were confronting each other over Korea, Indochina, and Taiwan, the British worried that the Chinese Communists would attack Hong Kong in order to deny the possible US use of it as a base of operations against the mainland in the event of the spread of hostilities. Beijing might also retaliate against Hong Kong if London lent its support to Washington. Given the fact that the communist threat to Hong Kong was as much political as military in character, it was important for Britain to restrain the belligerent tendencies in US policies. Thus, the Labour government tried to impress upon the Truman administration the importance of localizing the Korean conflict in July , while the Conservative government expressed worries over the repercussions for Hong Kong of Eisenhower’s ‘unleashing’ of Chiang in early . The British also dealt with the political vulnerability of Hong Kong by pursuing a conciliatory approach towards Communist China. But despite Britain’s recognition of the PRC in , Hong Kong became a hostage to fortune, which was being used by the Chinese Communists to drive a wedge into the Anglo–American alliance. Events in Hong Kong provided Beijing with a convenient target for splitting the two allies: for example the exploitation of the  riot against the perceived Truman–Churchill solidarity, and of the  riots against the so-called Anglo–American ‘two-Chinas’ conspiracy. However, the Chinese Communist propaganda attacks on Hong Kong did not lessen the British desire to avoid further difficulties in Anglo–Chinese relations and to prevent any excuse for Chinese intervention in Hong Kong. At a time when other fundamental policy objectives, such as the maintenance of British economic interests on the mainland and the splitting of the Sino–Soviet alliance, seemed unattainable, the stability of Hong Kong became a more immediate concern for British officials in the dayto-day operations of diplomacy. Given the vulnerable position of Hong Kong, British governments were inclined to opt for compromise, rather than confrontation, with the PRC. This was the case when Churchill

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Hong Kong

gave the Anglo–American relationship increased priority in , and when the Foreign Office regarded the prospect of Anglo–Chinese relations as poor in . As far as China policy was concerned, Hong Kong was by no means a major concern for the US administration, preoccupied with domestic politics and the global struggle with the Soviet Union. But, from time to time, US decision-makers attached importance to Hong Kong not because of its own intrinsic value, but with the aim of strengthening Anglo–American cooperation in Asia. Eisenhower was well aware that a price had to be paid for maintaining Britain as a junior partner in the Cold War. As a military general himself and with his wartime experience with Churchill, Eisenhower was conscious of Hong Kong’s vulnerability. Realizing its significance to Great Britain, he saw the ‘Colony’ in a more favourable light than some quarters of the anti-colonialist US public. Thus, in  and , Eisenhower was willing to offer a possible US commitment to Hong Kong in return for Churchill’s support for ‘united action’ in Indo-China and the defence of Quemoy and Matsu. Eisenhower hoped to utilize his intimacy and informality with Churchill in securing British cooperation, but he failed on both occasions. In , Eisenhower once again tried to exploit his long-time friendship with Macmillan, who was eager to mend the Anglo–American relationship after the Suez debacle, to align their policies on China and other global issues. This time, he succeeded. Unlike Eisenhower, Truman did not enjoy an intimate relationship with Attlee. Nor did he display an interest in bargaining with the British over the defence of Hong Kong. Instead, bureaucratic role and timing dictated that General Marshall and the JCS had to see Hong Kong in the context of the military twists and turns in Korea. In early , the British inclination to appease Beijing for the sake of Hong Kong certainly annoyed them, when the critical situation in Korea necessitated more assertive measures against the PRC. How successful was the British strategy of ‘defending’ Hong Kong by diplomacy? Given the disparity in their economic and military power, Britain was undoubtedly the junior partner in the Anglo–American alliance. The Labour government had to yield to American pressure over the disputed aircraft in Hong Kong in , whilst the Conservative government could not part company with Washington on the issue of Chinese representation in . But on other matters, the United States had to accept that the British would adopt a different course, such as their recognition of the PRC in , and their refusals

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to help defend French Indo-China in  and the Nationalist-held offshore islands in . The reasons why London cooperated with Washington in some areas but not in others varied. By compromising over the aircraft dispute and Chinese representation, the British, among other considerations, did not anticipate that Hong Kong’s security would be put at risk. But this was not the case if they supported the United States in confronting the PRC in Indochina and the Taiwan Strait. It could be argued that Britain was not without influence on the United States. Although British governments more often than not could not change US policies, they were often able to resist Washington’s pressure for change in their own decisions, and sometimes had veto power over US suggestions. Referring to Hong Kong’s vulnerability during diplomatic consultations with US administrations provided some leverage for the British to justify their different approach to China. As a result, the ‘Hong Kong factor’ made its impact felt in the US policy process in two somewhat different ways. At best, this made Eisenhower realize that Churchill had to be reassured over the vulnerable Hong Kong, if British support for the United States in Indochina and the Taiwan Strait, for example, were to be obtained. At worst, General Marshall reacted negatively to the British sensitivities to Hong Kong by calling for US unilateral action in Korea regardless of Britain’s cooperation. In both cases, Britain had demonstrated ‘the power of the weak’.



Containing the Economic Warfare: Hong Kong and Export Controls against China The vulnerability of Hong Kong was not just military and political in nature. While Britain was eager to engage US interest in the defence of Hong Kong and to minimize the political impact on Hong Kong of America’s China policy, the United States was keen to involve Hong Kong in the economic containment of Communist China. Because of its proximity to the mainland and its traditional trade pattern, Hong Kong was seen as the main loophole through which export controls against China would be frustrated. Economically, Hong Kong was vulnerable to pressure from the Americans to restrict its entrepôt trade with the mainland, thus reducing its value to Beijing. Economic and political implications aside, the introduction of control measures in Hong Kong also entailed practical administrative difficulties. Above all, the enforcement of export controls in Hong Kong caused differences and strains both between and within the British and US governments, especially during the Korean War period. This chapter will focus on these various tensions resulting from the role of Hong Kong in export controls against China, and will examine their impact on Anglo–American relations. It is necessary, first of all, to give a quantitative picture of the importance of China trade to Hong Kong. Traditionally, Hong Kong had been an entrepôt where trade was conducted between China and the rest of the world. In the early s, Hong Kong’s exports to China—mainly the re-export of imported goods after being processed in the Colony1— constituted more than half of the value of its total exports. By the late s, China’s share was no longer dominant in Hong Kong’s total entrepôt trade; it nonetheless remained a significant part. In , Hong 1 Prior to , re-exports were not distinguished from exports in the Hong Kong trade statistics. But since Hong Kong’s manufacturing industry was still at an infant stage in the s, a large proportion of Hong Kong’s exports were indeed re-exports. As late as , e.g., locally manufactured products constituted just % of Hong Kong’s total exports. ADR –, .

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

Kong’s exports to China were . per cent (HK$  million) of its total exports, and they rose to . per cent (HK$ , million) the next year as a result of China’s stockpiling of raw materials prior to and during the early stages of the Korean War. After the imposition of the Western and United Nations trade embargoes on China, the figure dropped to . per cent (HK$  million) in , only to be recovered with the conclusion of the Korean conflict in . However, as Communist China was increasingly re-orienting its foreign trade towards the Soviet bloc, Hong Kong’s exports to China were reduced to merely . per cent (HK$  million) of the total in . Hong Kong’s imports from China, on the other hand, remained relatively stable, constituting about  to  per cent of the total imports between  and .2 Nevertheless, until , except for  when it ranked second, China was the main market for Hong Kong’s exports, such as textile fabrics, chemical compounds, and manufactured products. And China itself remained the principal source of supply for Hong Kong throughout this period, a large proportion of which were foodstuffs and raw materials.3 Thus, although entrepôt trade with China had lost its traditional prominence, it was still essential to the economy of Hong Kong. Apart from its exports/re-exports to China, Hong Kong was also an important transshipment centre through which goods were being carried over into the mainland. Unlike re-exports, transshipments referred to goods which were transported to China via Hong Kong without undergoing processing and clearing customs in the territory.4 Transshipped goods might be off-loaded and temporarily stored in Hong Kong before changing their mode of transportation for onward shipment, whilst in-transit goods would simply pass through the Colony. As a free port, Hong Kong provided warehousing, bunkering, and other port services 2

Edward Szczepanik, The Economic Growth of Hong Kong (London, ), . Hong Kong Statistics –, –. 4 Ronald Hsia, The Entrepôt Trade of Hong Kong With Special Reference to Taiwan and the Chinese Mainland (Taipei, ), ; Yun-wing Sun, The China–Hong Kong Connection: The Key to China’s Open-Door Policy (Cambridge, ), . It should be noted that the terms ‘re-exports’, ‘transshipments’, and ‘exports’ are sometimes used interchangeably in the US and British documents, and the technicality is brushed aside. Since this chapter focuses on the diplomatic aspect of the trade issue, I will not particularly clarify whether the goods referred to were, strictly speaking, ‘re-exports’ or ‘transshipped goods’. A clarification is needed only when I come to discuss transshipment control (as distinct from control over exports). In that case, ‘transshipments’ will be taken to mean only the carriage of goods in ships through Hong Kong to China, but not the export of goods via Hong Kong to China. 3



Hong Kong

to facilitate the transshipment. In addition, the large British shipping concerns, such as Butterfield and Swire and Jardine Matheson, and other smaller Hong Kong-registered Chinese shipping companies were actively involved in the coastal trade with China. Operating through Hong Kong, these ocean-going vessels, river steamers, and small junks carried goods from and to China and other destinations. It is difficult to gauge the exact value of transshipments and in-transit trade in Hong Kong, since they were not recorded in the official trade statistics. But as the Hong Kong government proudly stated in its annual report, Hong Kong was ‘one of the busiest ports of the world’.5 In the s, the United Kingdom also regarded China as a potentially great market, but the China trade was less critical to the metropolitan economy, than to the economic well-being of Hong Kong. In , Britain’s exports to China were about £ . million (. per cent of the total), and in , £ . million (. per cent). This was far lower than Hong Kong’s exports to China, which were £  million and £ . million respectively.6 However, the figures of direct trade between Britain and China did not include that part of British indirect trade with the mainland via Hong Kong. In , Britain’s exports to Hong Kong amounted to £  million (. per cent), and dropped slightly to £  million (. per cent) four years later.7 A large proportion of these goods were re-exported to China, rather than retained for local consumption. Since goods of British origin were exported to Hong Kong for re-export to China and the rest of Asia, any measures to restrict the Colony’s entrepôt trade would indirectly affect Britain’s overall trade balance.

   In early , the Truman administration was considering establishing a system of export controls against northern China which had fallen into communist hands. On  March, President Truman approved an NSC policy paper on US trade with China (NSC ). Rejecting the idea of outright economic warfare with China, NSC  called for embargoes on exports to China of ‘items of direct military utility’, while allowing the restoration of ‘ordinary economic relations’ between China on the one 5 7

6 HKAR , ; HKAR , diagram facing . HKAR , . Clayton, Imperialism Revisited, –.

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hand and Japan and the West on the other. By permitting the export of non-strategic goods to China, it was hoped that the United States could prevent complete Chinese Communist dependence on the Soviet Union. In addition, the development of Sino–Japanese trade, at least until such time when alternative sources of raw materials and markets were found in Southeast Asia, could help speed up Japan’s economic recovery, and reduce the economic burden on America.8 In this regard, what concerned Truman and Acheson most was not the restoration of US–China trade, but the reconstruction of Japan and the global struggle with the Soviet Union.9 These long-term objectives aside, by early  the Truman administration was also concerned about the immediate problem of preventing the flow of strategic materials via Hong Kong to North Korea and Communist China, which might eventually find their way into the Soviet Union. In early March, the US Consulate General in Hong Kong reported to Washington instances of transshipment of goods of US origin from Hong Kong to North Korea, such as petroleum, motor trucks, and steel tubes.10 Later in July, it also discerned the shipment from Hong Kong to North China of tungsten wire, laboratory apparatus, and ‘considerable quantities’ of copper.11 Thus, the Truman administration desired to have machinery in hand to guard against stockpiling and transshipment of strategic materials from China and North Korea to the Soviet Union, while indicating to the Chinese Communists the Western ability to impose further economic sanctions against them if that proved necessary later.12 In view of its proximity to the mainland and its traditional trade pattern, Hong Kong figured prominently in the American considerations. As NSC  had made plain: ‘British cooperation, with particular reference to the entrepot center of Hong Kong, would be essential to the effectiveness of United States controls.’13 Even before the approval of NSC , the State Department had begun to sound out the British about applying export controls against China. In a conversation with the Counselor of the British Embassy in Washington, Hubert Graves, in early February, the Director of the 8 Note by Souers, NSC ,  Feb. , FRUS, , , –; Souers to NSC,  Mar. , ibid., . 9 Michael Schaller, Altered States: The United States and Japan Since the Occupation (New York, ), . 10 HK to State,  Mar. , RG , HKC –, Box , NA. 11 State to HK,  July , ibid. 12 Memo. of Conversation,  Apr. , FRUS, , , –. 13 Note by Souers, NSC ,  Feb. , ibid., –.



Hong Kong

Office of Far Eastern Affairs, Walton Butterworth, raised the question of transshipment of strategic goods via China to the Soviet Union. In Graves’s view, what was uppermost in the American mind was ‘the special position of Hong Kong’. Butterworth said that among the transshipment ports in Asia, Hong Kong was ‘really the one to pay immediate attention to’. He explained that the United States was not ‘picking out Hong Kong for criticism or special treatment’, but ‘the port was so notoriously efficient’ that it was ‘being quoted by way of illustration’.14 In another consultation with British Embassy officials in March, the Americans suggested extending the R-procedure of export licensing15 to China—that the export of A items be banned, while the flow of goods on the B list be watched. Edwin Martin, the US Deputy Director of the Office of International Trade Policy, mentioned particularly ‘the problem of Hong Kong, which historically has served China as an entrepot’. In addition to controlling exports from the United Kingdom, he said, similar controls should also be established in Hong Kong to prevent transshipments to China. In response, Graves stated that ‘it would be useless to close up the loophole of Hong Kong so long as other nearby available transshipment points are available’, and asked how the United States would deal with Japan, the Philippines, and Taiwan in this regard.16 The British feared that any attempts to restrict exports to China would put their substantial economic interests on the mainland into jeopardy. In late , the Labour government had decided to keep ‘a foot in the door’ in China. Although British trade in China was ‘at a standstill’ as a result of the civil war, the Foreign Office felt that it would be ‘unwise to abandon what remains of our position in China until it becomes abundantly clear that it is untenable’. Moreover, it was believed that the Chinese Communists would ‘require many essential commodities from non-Russian sources if they were to raise the standard of living in China’, and thus ‘every endeavour should be made to maintain trade with China’.17 In addition, Britain disagreed with the 14

Washington to FO,  Feb. , FO /, F//, PRO. R-procedure was a legal device whereby all goods to the ‘R’ category of countries (all European countries and the Soviet Union) required export licences to be determined by the US Department of Commerce. It classified strategic goods into two categories: A – goods which directly contributed to the war-making capability of the Soviet bloc (equipment and supplies other than arms and ammunition); B – items which were less critical but still of important strategic value (such as steel, locomotives, and machine tools). 16 Memo. of Conversation,  Mar. , RG , HKC –, Box , NA. 17 CP(),  Dec. , CAB /; CM(),  Mar. , CAB /, PRO. 15

Containing the Economic Warfare

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United States that trade should be used as a lever to influence the political orientation of the Chinese Communists. But for all its reservations about exerting economic pressures against Communist China, the British government did not disagree that control on certain strategic materials, such as petroleum, would be necessary, although ‘only as a last resort’.18 Indeed, a system of export licensing had already been in place in the United Kingdom, in that licences were required for the export of A goods and short supply items to all destinations except the United States, the British Colonies, and the Commonwealth, as well as the Organization of European Economic Cooperation countries. While export licences were denied to the Soviet Union and Eastern Europe, there was no restriction with respect to China, except the supply of munitions. To London, the extension of control to cover China would not be too great a problem: what was needed was to add China to the list of destinations where licences would not be granted.19 In essence, most of the difficulties faced by the British regarding the US proposal for export controls centred on Hong Kong. For one thing, there would be administrative difficulties in imposing fresh controls on transshipments in Hong Kong, a free port. For such controls to be effective, all cargoes passing through Hong Kong would have to be checked, and this would require a large staff. Even with additional staff, it would still be difficult to prevent all smuggling, for much of this barter trade was conducted by small Chinese craft. Secondly, the imposition of controls in Hong Kong alone was seen as unlikely to be effective, as this would only lead to diversion of goods to other transshipment ports in the Far East. Besides, it was feared that Hong Kong would be hard hit economically by any restrictions on its entrepôt trade. Lastly, there was also the political risk that British cooperation with the United States might provoke the Chinese Communists into retaliation against Hong Kong. This fear was magnified by the US intention to publicize the control measures in order to bring pressure to bear on them.20 After their preliminary talks in February and March, the Truman administration continued to exert pressure on the British. In a memorandum to the British Embassy in Washington in late April, the State Department argued that the rapid communist advance along the 18

Memo. by British Embassy to State,  Apr. , FRUS, , , –. FO to Washington,  June , FO /, F, PRO; Douglas to Acheson,  June , FRUS, , , –. 20 SAC(),  July , CAB /; HK to CO,  June , FO /, F//; HK to CO,  Nov. , FO /, F//, PRO. 19



Hong Kong

Yangtze required ‘prompt action’.21 The Foreign Office, however, did not feel that the level of exports to China of strategic materials was such as to materially benefit the Soviet Union. More importantly, at the time, a ministerial decision on export controls against China had yet to be reached in London. As far as trade controls were concerned, responsibility fell onto several departments. The Foreign Office, the Board of Trade, the Colonial Office, the Ministry of Transport, and the Hong Kong authorities had to be consulted, and inter-departmental consultations contributed to delay.22 It was more than a month later that the Labour government gave its ‘provisional views’ to the Truman administration. The adoption of controls over the direct export of strategic goods from Britain to China, a memorandum by the British Embassy in May noted, would pose ‘no serious administrative difficulties’. But to institute licensing controls over re-exports from Hong Kong would present ‘practical administrative problems of considerable difficulty’. Besides, unless other potential transshipment points in the Far East were included, the extension of controls to Britain and its colonies alone would only ‘divert trade away from Hong Kong and Singapore to their more accommodating neighbours’. On receipt of the memorandum, Butterworth remarked that the British position ‘did not seem to be much of an advance’ over that in their earlier conversations. What they could agree on was the need to hold joint technical discussions in London to coordinate their policies.23 After a series of technical discussions between representatives of different departments in June, the British realized that the Americans intended to control weapons and military items, A strategic materials, and goods of particular importance to the Chinese economy, such as petroleum and some of those on the B list. What the Truman administration envisaged was controls in the United States, Britain, Hong Kong, and Singapore in the first place, to be expanded progressively through negotiations to other Western European countries, Japan, the Philippines, and so forth.24

21

Memo. by State to British Embassy,  Apr. , FRUS, , , –. FO to Washington,  May , ibid.; Dening to Owen,  May , ibid.; FO to Washington,  May , FO /, F//, PRO. 23 Memo. by British Embassy to State,  May , FRUS, , , –; Memo. of Conversation,  June , ibid., –; Washington to FO,  May , FO /, F//, PRO. 24 FO to Washington,  June , FO /, F, PRO; Douglas to Acheson,  June , FRUS, , , –. 22

Containing the Economic Warfare

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Once Washington had made clear its proposals, and with consultations in Whitehall basically completed, British ministers then came to a decision. On  July, the Cabinet’s China and South-East Asia Committee endorsed Bevin’s recommendations on control of exports to China. The British Embassy immediately informed the State Department of the decision, which was later put forward in an aidememoire dated  August. Accordingly, Britain would not at present extend controls over export of A goods to cover transshipments in Hong Kong and Singapore until ‘definite assurances’ had been obtained from Belgium, France, the Netherlands, and Japan regarding their adoption of similar measures in their metropolitan and colonial territories. In addition, in view of the ‘considerable political and administrative difficulties’ involved, items on the B list would not be controlled either from Britain or Hong Kong, although their flow to China would be kept under scrutiny. Lastly, the British government would cooperate with major oil companies to ensure that the supply of oil to China would not be in excess of quantities needed for ‘normal civilian requirements on short-term basis’.25 The State Department read with ‘disappointment’ the British reply to the US proposals. Acheson instructed Oliver Franks to reopen the matter with the British government ‘at [the] highest level’, and ‘in [the] context [of the] broad question [of] US–UK cooperation in the Far East’. Two days after the British reply, the Counselor of the American Embassy, Julius Holmes, presented an aide-memoire of  August to his British counterpart. It was the US view that the introduction of control on A goods alone would have no ‘leverage in dealing with Chinese Communists’, since they depended relatively little upon these items at present. Nor would control of petroleum shipments to China by itself have any ‘symbolic value’, for this would be achieved not by governmental policies, but through informal arrangements with oil companies. On the other hand, the movement of selected B goods to the A list was vital. The aide-memoire concluded that it was ‘difficult for the Department of State to understand what “political and administrative difficulties” might be so great as to outweigh the importance of solidarity in the adoption of a strategy for the maximum protection of United States–United Kingdom mutual vital long-range interests’. On receipt 25 SAC(),  July , CAB /; SAC()th Meeting,  July , ibid., PRO; Aide-memoire from British Embassy to State,  Aug. , enclosed in Acheson to Douglas,  Aug. , FRUS, , , .

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Hong Kong

of the US aide-memoire, the British Minister of State, Hector McNeil, said that the proposed extension of the A list would require fresh interdepartmental consultations and a ministerial decision.26 With the impending communist victory on the mainland, Britain and the United States made further efforts to coordinate their policies on the China problem. In the course of the Washington talks on  September, Esler Dening told Butterworth that the British government had reconsidered its position on trade controls in the light of the American aidememoire, but had decided to uphold its previous decision. Dening stated that the shipment of military equipment and arms to China had already been prohibited from Britain and Hong Kong earlier in the year, and that the imposition of controls on petroleum at present would be of particular importance. Butterworth expressed the hope that Britain would act in concert with the United States in the approach to France, Belgium, and the Netherlands for the introduction of strategic controls, and that it would ‘take the lead’ with Hong Kong and Singapore.27 At Washington, there was no major breakthrough in moving either Britain or America closer towards the other’s preferred position on export controls, despite a greater degree of understanding on the issues of recognition and the defence of Hong Kong. Events related to Europe, however, provided a final push to a formal agreement in this policy area. The successful explosion of the Soviet atomic bomb in August facilitated the passage by the US Congress of the Mutual Defense Assistance Act in early October. The promise of military aid made US allies more receptive to Washington’s pressure for strategic trade controls.28 After the establishment of the PRC in October, an agreement between Britain and the United States was finally struck. The British government agreed to exercise licensing controls on the export of A goods to China and North Korea, and to institute similar controls in Hong Kong, contingent upon the adoption of similar measures by France, Belgium, the Netherlands, and Japan. Besides that, the sale of petroleum to China would be controlled through informal arrangements with major oil companies, and the flow of B items would 26 Acheson to Douglas,  July , ibid., –; Aide-memoire from American Embassy to FO,  Aug. , FO /, F//; McNeil to Strang,  Aug. , ibid., PRO. 27 Memo. of Conversation,  Sept. , FRUS, , , –; Conversation between Dening and Butterworth,  Sept. , FO /, F//G, PRO. 28 Helen Leigh-Phippard, Congress and US Military Aid to Britain: Interdependence and Dependence, – (New York, ), –.

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come under scrutiny.29 This did not represent any major change in the British position. But the Truman administration recognized that further negotiation was unlikely to bring more fruitful result, and that imposition of controls when the level of trade with China remained low would be less difficult than when trade was to be revived after the end of the Chinese civil war.30 The extension of strategic export controls to China was a slow process. In October, the Truman administration finally secured an agreement from the Labour government, after a series of intensive consultations and enormous pressure on the British Embassy. But it took another eight months and a North Korean attack for export controls to be actually implemented in Britain and Hong Kong.

  - With the conclusion of the October agreement, discussions between Washington and London then focused on the timing of the approach to the French, Belgian, and Dutch governments to secure their cooperation for the institution of export controls. It turned out to be a protracted and difficult process. Frustrated by the slow progress, the Truman administration unilaterally took steps to tighten US exports to mainland China and adjacent areas.31 By April , France, Belgium, and the Netherlands—now founding members of the Paris-based Coordinating Committee (COCOM) of the Consultative Group created in the winter of – to coordinate strategic exports to the Soviet Union and Eastern Europe—had been approached, and had agreed in principle on the desirability of establishing export controls against China. But before further actions could be taken, North Korea invaded the South on  June. Four days later, the American Embassy in London approached the British government requesting it to impose immediately, without awaiting the concurrence of other governments, strategic controls on Communist China and North Korea.32 29

State to HK,  Oct. , RG , HKC –, Box , NA. Forsberg, America and the Japanese Miracle, . 31 In December , the Department of Commerce tightened its control over exports to China by adding A and B items to the Positive List (goods in short supply in the United States). In the following March, the R-procedure was extended to China and adjacent areas, thus bringing export controls on China into line with those on the Soviet Union. 32 FO Minute by Scott,  June , FO /, FC/; Aide-memoire from American Embassy,  June , ibid., FC/, PRO. 30

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Hong Kong

On  July, the British Cabinet met to consider a memorandum by the Minister of State, Kenneth Younger, recommending this course of action. The memorandum made it clear that the importance of the issue at this particular moment was ‘more psychological than practical’, since the flow of strategic goods from Britain to China and North Korea had already ceased, although there were still ‘limited re-exports from Hong Kong’. In the absence of Bevin, who was in the London Clinic, ministers felt that ‘the political and psychological disadvantage of declining to co-operate with the United States Government’ had to be ‘balanced against that of appearing to offer an affront at the present juncture to Communist China’. The action taken by the United States in response to the North Korean attack in the past few days, they argued, had ‘increased the potential threat to Hong Kong’, and thus it was ‘not the moment’ for Britain to make ‘a gesture which might alienate the Communist Government of China’ for ‘no practical advantage’. The Cabinet concluded that, while strategic exports to North Korea would be stopped immediately, action to prevent exports to China, whether from Britain or Hong Kong, should be deferred.33 When Bevin saw the minute of the Cabinet meeting he was ‘disturbed’ at the possible consequences, especially for Anglo–American relations, and brought the matter up with Attlee.34 In his memorandum to the Prime Minister, Bevin argued that the decision to defer strategic controls on China would lay Britain open to ‘an accusation of bad faith’ by the US administration, which was aware of the Cabinet’s July  decision to prevent strategic exports to China. He said that the ‘possibility of adverse repercussions in China’ appeared to be ‘negligible’, since export licences were already denied to the European Soviet bloc, and the imposition of controls would involve ‘no overt discrimination against China’. Also, the economic impact of controls on Hong Kong would not be great, for the flow of strategic goods to China was at present ‘of negligible proportions’. However, ‘the psychological effect of our refusing to impose the controls proposed by the United States’, Bevin stressed, would ‘create resentment out of all proportion to the 33 The Cabinet, however, requested the Colonial Office to make arrangements for the Hong Kong and the Singaporean governments to ‘take general powers’ to control the export of strategic goods to any destination, including China. But the ‘exercise of those powers’ against China, which might increase the risk to Hong Kong’s security, should be deferred. CP(),  July , CAB /; CM(),  July , CAB /, PRO. 34 CM(),  July , CAB /, PRO.

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question of their practical effect’.35 Certainly, Bevin was more anxious to demonstrate Anglo–American solidarity at a time of crisis than were other Cabinet ministers. Differing opinions within the British government confused the US administration, however. Earlier on  July, the American Embassy in London had reported to Washington the view of the Counsellor of the British Embassy, F. S. Tomlinson, that, in the light of the ‘favourable response’ of France, Belgium, and the Netherlands, arrangements had been made ‘to ask Hong Kong and Singapore [to] apply controls immediately’, and similar controls were ‘already in force in UK’.36 But after Bevin had expressed reservations about the  July Cabinet decision, the Foreign Office instructed the British delegates to COCOM that, when the issue of export controls on China was discussed at the forthcoming meeting, they should ‘say nothing more than that the matter is still under consideration in London’.37 The COCOM meeting took place on  July. The State Department was ‘astonished’ at the statement by the British representatives that the United Kingdom could not at this stage introduce export controls on China, and was ‘greatly disturbed’ to learn that Hong Kong had not been instructed to apply controls. Acheson requested Ambassador Franks to seek clarification of the ‘inconsistency’ in the British position, and, in the event the British statement at the COCOM meeting was correct, to make representations to London ‘in strongest terms and at highest level’.38 As a result of Bevin’s opposition to deferring strategic controls on China, the Cabinet reconsidered the issue on the same day of the COCOM meeting. Attlee reiterated Bevin’s views that the United States would regard the absence of strategic controls on China as ‘a breach of faith’ on the part of Britain, and that the imposition of controls would involve ‘no overt discrimination against China’. At the meeting, the Cabinet reversed its previous decision and agreed to take steps immediately to prevent strategic goods going from Britain to China.39 This left 35

Minute by Bevin to Attlee,  July , FO /, FC//G, PRO. London to State,  July , FRUS, , , . In an aide-memoire to the Foreign Office, the American Embassy acknowledged that the British ‘instructions’ to Hong Kong and Singapore regarding the imposition of trade controls were ‘very gratifying to the United States Government’. Enclosed in London to State,  July , ibid., –. 37 FO to Paris,  July , FO /, FC/, PRO. 38 Bruce to Acheson,  July , FRUS, , , –; Acheson to Douglas,  July , ibid., –. 39 CM(),  July , CAB /, PRO. 36

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Hong Kong

unresolved, however, the question of controls in Hong Kong. Although ‘Hong Kong and Singapore were not specifically mentioned’ at the meeting, Tomlinson minuted later, ‘the Cabinet intention was to reverse their previous decision in respect of strategic exports from Hong Kong and Singapore as well as from the United Kingdom’. ‘Hong Kong, in particular, is, of course, the root of the matter’, he stressed. The problem was that some ministers, such as the Chancellor of the Exchequer, Sir Stafford Cripps, still worried about ‘the possibility of adverse local reactions, particularly in respect of action in Hong Kong’.40 It was not until  July that a final decision on Hong Kong was reached. At the Cabinet Defence Committee meeting, Younger pointed out that the question of the institution of strategic controls in Hong Kong was likely to be raised in the forthcoming COCOM meeting. It would be ‘embarrassing’ if the British delegates were not in a position to announce that controls had already been exercised from Hong Kong as they had from Britain itself. The Defence Committee concluded that, although the Cabinet had previously felt that the exercise of strategic controls from the Colony ‘might increase the risk of local trouble by Communists in Hong Kong or might provoke the Chinese Government to attack Hong Kong’, it was now believed that ‘these considerations were outweighed by the difficulties of refusing to exercise these controls’.41 On  July, the Cabinet confirmed that Britain and Hong Kong would start applying licensing controls over the export of strategic goods to China.42 At the COCOM meeting the same day, it was agreed that an embargo on export to China of goods on the International List I (IL I) and quantitative control on International List II (IL II) items would be imposed.43 Hong Kong, however, would only watch IL II to prevent abnormal shipments by administrative action. The British government also decided to requisition all oil stocks in Hong Kong with a view to preventing their transshipment to China. But in order to ‘avoid the appearance of unilateral British action in cooperation with the United States’, the British secured the support of Washington for adding petro40

FO Minute by Shattock,  July , FO /, FC/, PRO. DO(),  July , CAB /, PRO. 42 CM(),  July , CAB /, PRO. 43 Bruce to Acheson,  July , FRUS, , , . During the winter of –, COCOM began to draw up three international lists. IL I contained embargoed goods which could directly contribute to the military capability of the Soviet bloc. IL II included items which might contribute to the war potential of the enemy if being supplied in substantial quantities, and were under quantitative control. IL III was a list of items under surveillance, in that they could be brought under control when necessary. 41

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leum products to IL I, thereby enlisting other COCOM countries to place an oil embargo on Communist China.44 From August  onwards, Hong Kong was applying controls on a large number of strategic items including petroleum products, machinery, and chemicals, as a result of the North Korean invasion.45 This was seen by London, especially by Bevin, as an opportunity to display Britain’s value as the principal ally of the United States.

          Shortly after the massive Chinese intervention in the Korean War in November , the United States intensified its economic warfare against the PRC and sought the cooperation of its allies. On  December, the Department of Commerce announced that validated licences were required for all US shipments to mainland China, Hong Kong, and Macau, the latter two being included because of their ‘importance [as] possible transshipment points’.46 While no export licences would be granted for China, applications for shipments to Hong Kong would be considered on a case-by-case basis. But given the international and domestic situation after the Chinese intervention, the United States had to impose a de facto embargo on Hong Kong for the time being. At stake was not just the matter of US export policy for Hong Kong. It also begged the wider question of Hong Kong’s role in enforcing export controls against the PRC. The US announcement immediately created much uncertainty, if not panic, in Hong Kong. Hong Kong depended heavily on US raw materials, such as tinplate, blackplate, and especially raw cotton, for its

44 Memo. of Conversation,  July , ibid., –; Web to Sawyer,  Aug. , ibid., –. 45 On  August, the Hong Kong government issued an Order under the Importation and Exportation Ordinance No.  of . Accordingly, export of strategic goods to any destinations would be prohibited except under licences, which by administrative practice would not be granted for China and the Soviet bloc. The published Order listed all items on IL I, but omitted the international list numbers in order to maintain the secrecy of the functioning of COCOM. FO Minute by Ramsbotham,  Aug. , FO /, FC/; FO to Washington,  Dec. , FO /, FC/, PRO. 46 State to HK,  Dec. , RG , HKC –, Box , NA. In addition, the Truman administration also placed under control all PRC’s dollar assets within American jurisdiction, and prohibited all US–registered ships from calling at Chinese ports.

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Hong Kong

domestic industry and re-exports.47 Concerned that the supply of essential raw materials would be cut off, both official and commercial circles demanded greater clarification of the licensing procedure from the administration. With the promise by the US Consulate General in Hong Kong to press for more information from Washington, local reaction was still relatively mild at this early stage.48 But by the middle of the month, Governor Grantham reported to the Colonial Office that public concern over the ‘illogical nature of the control’ was growing. To Grantham, unless fresh supplies from America were forthcoming, Hong Kong would soon face ‘an unemployment problem of the first magnitude’, which, in a place flooded with refugees and without a system of social security, would be exploited by the Chinese Communists.49 The British government also harboured ‘grave concern’ about the ‘serious effect’ of the unilateral US action on the ‘security and stability’ of Hong Kong. The Foreign Office instructed the British Embassy in Washington to take ‘the earliest opportunity’ to make representations to the US administration for ‘an immediate relaxation of the virtual embargo’.50 But before it took any action to make these representations, on  December the British Embassy received a memorandum from the State Department. This stated that the mere existence of the US licensing machinery might ‘cause some inconvenience for the economic life of friendly areas of the Far East, particularly at Hong Kong’; but, due to the fact that controls in respect of China were not at present parallel to those of the United States, the administration had ‘no alternative but to proceed cautiously in licensing exports for Hong Kong’. In order to facilitate the US licensing process, it was suggested, the British government was invited to furnish information about Hong Kong’s requirements for US imports which were essential for domestic consumption and transshipment to friendly destinations, and to come forward with procedures whereby the administration could be assured that goods of 47 In , the United States came second (behind China) as the principal source of Hong Kong’s imports, totalling about HK$  million. In particular, Hong Kong depended on US raw cotton for its infant textile industry. Hong Kong Statistics –, ; Edward K.Y. Chen, ‘The Economic Setting’, in David G. Lethbridge (ed.), The Business Environment in Hong Kong, nd edn. (Hong Kong, ), . 48 HK to State,  Dec. , RG , HKC, –, Box ; HK to State,  Dec. , ibid., NA. 49 HK to CO,  Dec. , FO /, FC/, PRO. During the latter half of , despite the growing number of people employed in registered factories, around half a million of the population, mostly refugees, was still unemployed and underemployed. Tsang, Democracy Shelved, . 50 FO to Washington,  Dec. , FO /, FC/, PRO.

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US origin would not be transshipped to Communist China. In discussing the memorandum with the Assistant Secretary of State, Livingston Merchant, Graves felt that the United States was ‘trying to be as helpful as they can within the limitation of policy of attempting to deprive Communist China of US material’.51 About a week later, British Embassy officials had a further meeting with representatives from the State and Commerce Departments. Robert Barnett, who was in charge of economic affairs at the Office of Chinese Affairs, said that it was important ‘to establish an automatic licensing policy and to eliminate a case-by-case review of each application’. In the meantime, the Commerce Department had prepared for the British a note about information on the requirements of Hong Kong, which might help the colonial authorities furnish relevant material in this regard.52 As Graves reported to John Shattock of the Far Eastern Department of the Foreign Office, the State Department was indeed opposed to the imposition of an embargo on Hong Kong, but had ‘little chance of resisting it in view of the heat of public opinion’.53 Truly, the feeling in the US Congress and among the public was intense as a result of the PRC’s military offensive in Korea and the perceived British inclination to appease the Chinese Communists.54 Nevertheless, ‘we have good allies in the United States Consul-General (McConaughy) and the Far Eastern Bureau’, Graves said, and ‘[s]taunch efforts . . . have been made to limit the effects which these measures will have on the economy of Hongkong’. For these reasons, it was important that the British and Hong Kong governments should be as cooperative as possible by providing the United States with the statistical information, so that US export licensing for Hong Kong could be put on a programmed, rather than on an ad hoc, basis.55 By early , however, the US export licensing policy for Hong Kong had shown no sign of relaxation. Indeed, in order to obtain the release of US supplies, the Hong Kong government had introduced in the previous December a scheme whereby special Essential Supplies Certificates would be issued to local importers for transmission to their 51 State to HK,  Dec. , RG , HKC, –, Box , NA; Washington to FO,  Dec. , FO /, FC/, PRO. 52 Memo. of Conversation,  Dec. , RG , HKC –, Box , NA; Washington to FO,  Dec. , FO /, FC/, PRO. 53 Graves to Shattock,  Dec. , FO /, FC/, PRO. 54 On US domestic opinion, see Daily Opinion Summary, Department of State,  Dec. , TP, PSF, Subject File, Box , HSTL. 55 Graves to Shattock,  Dec. , FO /, FC/, PRO.

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Hong Kong

suppliers in the United States, guaranteeing that the imported goods would be used locally and not be re-exported to China.56 Although the American Consulate in Hong Kong and the governments of Canada and Japan supported the Essential Supplies Certificate scheme, the Truman administration took over a month to provide its official view. In the meantime, there were cases in which licences were not granted for local importers, despite being supported by the Essential Supplies Certificates.57 The Director of Commerce and Industry of the Hong Kong government rushed to Washington to discuss ways of obtaining the release of raw materials for the besieged local industries.58 It was not until mid-January  that the Department of Commerce announced an interim licensing policy for Hong Kong, setting out strict criteria and procedures for US exports to the Colony.59 In order to persuade the US administration to relax the licensing of exports to Hong Kong, the British concentrated on devising a better system of import certification and end-use verification in Hong Kong. They sought suggestions from the State Department, which was more sympathetic towards Hong Kong than was the Commerce Department. Generally speaking, Britain and the United States were divided over three technical issues. In essence, these issues also reflected their different expectations of Hong Kong’s roles in the enforcement of export controls against China. First, the State Department insisted that no goods fabricated from US raw materials be allowed to be exported to China. To the British, however, this would mean that Hong Kong had to ban the export of a whole range of commodities whose US ingredients might be negligible, and which might be of no strategic value at all. In other words, Hong Kong had to apply a complete embargo on China as far as American goods were concerned. This would ‘go beyond’ the present policy of the British government, and the colonial authorities should not be asked to do more than London had adopted in export controls. Nevertheless, realizing that the existing Essential Supplies Certificate scheme could only guard against the re-export of US raw materials, but not exportation of finished products made from those materials, the British agreed that the scheme should be extended to guarantee against 56

Clinton to Hunt,  Dec. , RG , HKC –, Box , NA. HK to CO,  Jan. , FO /, FC/A; HK to CO,  Jan. , FO /, FC/, PRO; HK to State,  Jan. , RG , HKC –, Box , NA. 58 HK to State,  Jan. , RG , HKC –, Box , NA; Washington to FO,  Jan. , FO /, FC/, PRO. 59 State to HK,  Jan. , RG , HKC –, Box , NA. 57

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the export to China of goods which were fabricated wholly or mainly from materials of US origin. Secondly, there was the problem of substitution. The Commerce Department worried that the supply of certain US materials to Hong Kong would enable the Colony to reexport to China identical materials imported from other sources. On this issue, the British were adamant and objected strongly to making any guarantee on goods coming from non-US sources. To have done so, they argued, would mean ‘hand[ing] over to the United States virtual control over Hong Kong’s export policy’. The final issue concerned the shipment by the United States of non-strategic goods to Hong Kong. The colonial authorities hoped that, while goods on the US positive list60 would be given a case-by-case consideration, all items on the nonpositive list would not be controlled, but freely licensed. But under US insistence, the British did not disagree that a certain limit had to be set on licensing the export of non-positive list goods to Hong Kong.61 After extensive consultations with Washington, and further deliberations in Whitehall, the British Embassy produced an aide-memoire dated  February for the State Department, as a basis for discussion of the relaxation of the US embargo. While admitting that no export control could be ‘made completely water tight in practice’, the colonial authorities would institute all measures to guard against the transshipment to China of US exports ‘either in their original form or as the sole and substantial constituent of goods fabricated in Hong Kong’. The aide-memoire called for the institution of an automatic licensing policy for US exports to Hong Kong. While positive list goods would be regulated on a case-by-case basis pending more satisfactory arrangements, it was suggested that items on the non-positive list would be licensed automatically for up to  per cent of Hong Kong’s overall imports in .62 After nearly a month, however, the British government still did not obtain agreement from Washington. In late February, the British 60 Since Sept. , the Truman administration had restricted a number of items that were in short supply domestically and placed them on the Positive List. With the intensification of the Cold War in – and the establishment of COCOM in , the United States continued to license materials for shipment to the communist bloc based on the Positive List, which was more extensive than the International Lists. 61 Washington to FO,  Jan. , FO /, FC/; FO to Washington,  Jan. , ibid., FC/; HK to CO,  Jan. , FO /, FC/; Washington to FO,  Feb. , ibid., FC/, PRO. 62 The British estimated that % represented the volume of imports in  for local use or for transshipment to destinations other than China. Washington to FO,  Feb. , FO /, FC/, PRO.

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Hong Kong

Embassy in Washington reported to London Grantham’s view that the deadline by which shipments had to start leaving US ports was early March, if widespread closures of Hong Kong industries dependent on those materials were to be avoided. The British Embassy estimated that, even if a favourable decision could be reached in principle, this would not result in an ‘early movement of goods’.63 The Foreign Office was ‘gravely concerned’ about this estimate. It was feared that the continued US embargo would have ‘a most serious effect’ not only on Hong Kong’s economic viability, but also on its internal security if it brought about serious unemployment, thus presenting the Chinese Communists with ‘an almost irresistible temptation to fish in those troubled waters’. The British Embassy was requested to make ‘an immediate approach’ to the State Department for an early relaxation of the American embargo.64 On  March, the British Counsellors met with Dean Rusk and his advisers. They expressed the view that, ‘however prosperous Hong Kong may appear to the casual eye, its exposed position and heterogeneous population rendered it far less able to withstand serious social and civil disorder than a normal community’. In reply, the US officials said that ‘these factors were indeed sympathetically understood by the whole State Department’, but resistance to the British proposals came from the Commerce Department, partly because of the ‘theoretical and inevitable loopholes in our [British] assurances’, and partly due to the unresolved question of substitution. Rusk concluded that ‘this was a serious matter which would have to be tackled at a high level’. In receiving yet another UK representation later, Rusk again said that ‘the problem of Hong Kong was receiving urgent study within the United States Government’, but ‘differences of views were sufficiently deep that resolution of the problem might not be achieved short of formal exchanges of correspondence at the Cabinet level’.65 In essence, the Truman administration was greatly divided over US export licensing for Hong Kong: whilst the State Department was pressing for a more liberal policy, both the Commerce and Defense Departments wanted more rigid control over these exports. Their disagreement centred on three aspects of the British proposals: the acceptability of the Hong Kong government’s guarantees, the question 63 HK to CO,  Feb. , FO /, FC/; Washington to FO,  Feb. , ibid., FC/, PRO. 64 FO to Washington,  Mar. , FO /, FC/, PRO. 65 Washington to FO,  Mar. , FO /, FC/, PRO; Memo. of Conversation,  Mar. , RG , CA –, Reel , NA.

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of substitution, and automatic licensing of non-positive list goods.66 But, at a deeper level, it reflected different concerns and priorities demanded by their bureaucratic roles—differences which were further exacerbated by the military twists and turns on the Korean peninsula. The primary concern of the State Department was to maintain allied solidarity in the course of the Korean conflict. To secure greater support from Britain in Korea thus underlay its demand for a liberal licensing policy for Hong Kong. By encouraging the British to come up with a more positive solution to the problem of Hong Kong’s control measures, the State Department could also build arguments against the more rigid and aggressive suggestions of other departments. On the other hand, charged with the responsibility of administering export controls (except arms and ammunition), the Department of Commerce was eager to ensure that US goods would not find their way into China via Hong Kong. The Defense Department, too, had to make sure that the military capability of the PRC would not be augmented by the acquisition of US origin goods through Hong Kong, at a time when American soldiers were being killed in Korea. As a result, Hong Kong became another battleground where different departments fought for their bureaucratic interests. Unable to reconcile their differences at the working level, Acheson appealed to the highest levels of the Commerce and Defense Departments. In separate letters to Charles Sawyer and George Marshall on  March, Acheson admitted that the British proposals would entail the ‘risk of some marginal transshipment of non-strategic goods of US origin to Communist China’. But against the risk of that small leakage was set ‘far greater risks to the internal security and safety of Hong Kong’, whose loss to the Chinese Communists would have ‘serious divisive effects upon US–UK relations not only with respect to Asia but also within the NATO structure’. In view of this, ‘trade leakages to Communist China through Hong Kong’, Acheson continued, would not ‘justify the damage to US–UK amity which would result from an attempt to compel the cooperation necessary to eliminate it completely’.67 In his reply to Acheson later in the month, Sawyer set out the Commerce Department’s view that ‘the most serious consideration’ was ‘the evident need to maximize the effectiveness of the embargo upon the shipment of U.S. goods to China’. ‘Because of its 66 Bonbright to Acheson,  Feb. , RG , CA –, Reel ; State to HK,  Mar. , RG , HKC –, Box , NA. 67 Acheson to Sawyer/Marshall,  Mar. , FRUS, , , pt. , –.

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peculiar position as a major port of entry for Chinese imports’, he stressed, ‘Hong Kong is necessarily affected by our Chinese embargo policy.’68 Marshall agreed with Sawyer that the existing stringent licensing policy for Hong Kong had to be maintained. Writing to Acheson in early April, the Secretary of Defense said that ‘the British statements on the influence of the United States restrictions on trade with Hong Kong are greatly exaggerated’. On the other hand, the increasing volume of imports into China via Hong Kong from non-US sources was ‘providing increasing military assistance to Communist China, and thereby constitutes a direct threat to the security interests of the United States and to the UN forces fighting in Korea’.69 Thus, the two Secretaries were not moved by Acheson’s appeal. When considering in early April a policy paper on US export controls in general, and with respect to Hong Kong and Macau in particular, the NSC concluded that the section on US exports to Hong Kong should be left out, pending further study.70

          While the Labour government was calling for the relaxation of the US embargo on Hong Kong, the Truman administration was pressing for the adoption of additional economic sanctions against Communist China in the light of the deteriorating situation in Korea. On  February , the United States successfully persuaded its allies and other friendly countries to vote for a resolution in the UN, branding Communist China an aggressor in Korea. With the passage of the aggressor resolution, the UN General Assembly set up two offices—the Good Offices Committee, which was charged with responsibility for arranging negotiations with the Chinese Communists, and the ad hoc Additional Measures Committee under the Collective Measures Committee, which concentrated on making recommendations to the General Assembly for additional political and economic sanctions against the PRC. Even before the passage of the aggressor resolution, the British Far Eastern (Official) Committee had set up in mid-January the inter68 69

Sawyer to Acheson,  Mar. , RG , CA –, Reel , NA. Marshall to Acheson,  Apr. , G./–, RG , DF –, Box ,

NA. 70 Lay to NSC,  Apr. , FRUS, , , pt. , –; Memo. by Linder to Acheson,  Apr. , ibid., –.

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departmental Working Party on Economic Sanctions Against China, to examine possible courses of action which might be proposed by the United States, such as a naval blockade and total economic embargo on China. To begin with, a naval blockade of the China coast, it was believed, would ‘[put] Hong Kong on the wrong side of it’, since all cargoes passing through Hong Kong had to be certified as goods for local use or for re-export to destinations other than China. Besides, a complete embargo on China would not be effective in stopping the fighting in Korea, while affecting the greater part of Hong Kong’s legitimate trade with the mainland. With regard to control over strategic goods, it was felt that the existing policy was not sufficient. As of February , both the British and Hong Kong governments were embargoing or restricting a wide range of strategic goods on IL I and IL II.71 But certain strategic goods on the quantitative control list (IL II), and other items of direct military use (the Korean List)72 could still reach the mainland. Thus, an extension of the existing strategic embargo to cover all goods on IL II and the Korean List, it was believed, would have ‘an appreciable effect on China’s war potential without completely paralysing the commercial relations’ between China on the one hand, and Britain and Hong Kong on the other. In its report of  February, the Working Party recommended an embargo on all strategic goods, if additional economic measures against the PRC were to be adopted.73 At a time when the Good Offices Committee was exploring every avenue for peace, the State Department also sought to rally British support for political and economic sanctions against the PRC. At a desk-level meeting with the British Counsellor, Gerald Meade, on  February, U. Alexis Johnson of Northeast Asian Affairs and Robert Barnett of Chinese Affairs made plain that the United States regarded ‘a partial embargo’ as an ‘irreducible minimum’, and wanted a resolution by the 71 While both Britain and Hong Kong embargoed IL I goods, the list of the former (the so-called Tripartite List as a result of the extension of ILs I and II agreed at the tripartite talks between Britain, America, and France in September ) was longer than the latter’s (the pre-Tripartite List). Also, whilst London imposed quantitative control on IL II items, the colonial authorities only kept surveillance over their flow. 72 The Korean List contained goods not on ILs I and II, but were unilaterally placed under control by Britain in September , as an emergency measure to prevent North Korea from acquiring through China goods of immediate use to its military operations. 73 It was estimated that about a hundred items (such as non-ferrous metals, chemicals, and machinery), which were at present under quantitative control, had to be included in this strategic embargo. FE(O)(WP)(),  Jan. , CAB /; FE(O)(WP)(),  Feb. , ibid.; FO Minute by Rumbold,  Mar. , FO /, FC/, PRO.

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General Assembly recommending the immediate imposition of an embargo on petroleum, atomic energy materials, arms and ammunition, implements of war, and items useful in the production of the above materials. Although Johnson and Barnett disagreed with the British view that a complete embargo would not be effective, they realized that support for such an action might not be forthcoming in the General Assembly under the present circumstances. Meade reacted favourably to the US suggestion, but did not commit officially.74 When reviewing the desklevel talks later in March, the new British Foreign Secretary, Herbert Morrison, felt that ‘[o]ur stalling tactics have thus far been successful’, but ‘the time has now come’ for the government to make clear to the administration its official position on sanctions against China. In a draft memorandum for the Cabinet, he recommended an embargo on strategic goods, but no political sanctions against Communist China. The Additional Measures Committee should make no report to the General Assembly ‘until the Good Offices Committee fails’, and the report should contain no recommendation beyond a selective embargo.75 To the State Department, the British view that the Additional Measures Committee should not report to the General Assembly ‘until the Good Offices Committee fails’ was in conflict with the UN resolution of  February, which ‘merely authorized the Additional Measures Committee to defer its report if the Good Offices Committee reported satisfactory progress’.76 Nevertheless, no progress had been made regarding the opening of peace talks with the Chinese Communists. By late April, the beginning of another major communist offensive in Korea, as Acheson saw it, had ‘rendered obsolete much of argumentation hitherto used by Britain and France in resisting our proposal for selective embargo in AMC [Additional Measures Committee]’, and showed the urgency of increasing the ‘effectiveness of existing controls by inducing other states to apply them and to eliminate loopholes’.77 The changing situation in Korea notwithstanding, the Truman administration was also compelled by domestic political factors to press for additional economic sanctions against China at this juncture. On  April, Truman relieved General Douglas MacArthur as the Commander of the UN forces in Korea. After his hero-return to Washington, 74

Memo. of Conversation,  Feb. , FRUS, , , pt. , –. FE(O)(),  Mar. , CAB /; FE(O)()th Meeting,  Mar. , ibid., PRO. 76 Memo. of Conversation,  Apr. , FRUS, , , pt. , –. 77 State to US Mission at UN,  Apr. , ibid., –. 75

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MacArthur made his first appearance before Congress on  April, thus marking the beginning of his onslaught on the administration which culminated in the joint hearings in May and June. The Congressional hearings and public sympathy for MacArthur made it politically undesirable for the Truman administration to appear soft towards the Chinese Communists.78 The British, too, realized that Washington was under strong domestic pressure for action in the United Nations.79 Ironically, the hearings in the US Congress, together with the Opposition’s criticisms in the British Parliament itself, also put Attlee’s government in such an embarrassing situation that the adoption of additional economic measures could be delayed no longer. On – May, MacArthur testified before the Senate Armed Services and Foreign Relations Committees. Besides directing his attack on Truman and Acheson, the General also criticized Britain for its ‘token’ contribution to the UN war effort on the one hand, and its trade with China on the other.80 Citing a report from the American Consulate General in Hong Kong, MacArthur read out a ‘very compendious list’ of ‘strategic materials’ which were exported from Hong Kong to China during the period between  February and  March , such as chemicals, steel bars, machinery, and petroleum products. Asked by the chairman of the Committees if these materials totaling HK$  million (US$  million) would have been of ‘substantial assistance to the Communist force’, MacArthur replied: ‘There is no question about it, especially petroleum, gasoline, and things of that sort. It is the very essence of the movement of an army and armed troops.’81 MacArthur’s testimony gained much sympathy and support at home. Indeed, US opinion had long been critical of British trading with China, believing that Hong Kong merchants were only interested in making money when American soldiers were fighting with the Chinese Communist forces in Korea.82 After MacArthur’s revelation, public feeling was running high against Britain and Hong Kong. The New 78

William Stueck, The Korean War: An International History (Princeton, ), . Memo. of Conversation,  Apr. , FRUS, , , pt. , –. 80 MacArthur might well have believed that his dismissal was attributed to the British influence on Truman and Acheson. For a critical assessment of the ‘British factor’ behind the dismissal of MacArthur, see Peter Lowe, ‘An Ally and a Recalcitrant General: Great Britain, Douglas MacArthur and the Korean War, –’, English Historical Review, / (July ), –. 81 US Congress, Senate, Committee on Armed Services and Committee on Foreign Relations, Military Situation in the Far East, nd Congress, st Session,  (DC, ), Part , –, –. 82 FO Minute by Franklin,  Jan. , FO /, FC/, PRO. 79

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York Times, hitherto a critic of MacArthur, supported the General by urging an immediate halt of shipments of strategic materials to China. Particularly referring to Hong Kong, the newspaper wrote: ‘This is not a field for partisan dispute. This is a point at which [the] integrity and commonsense of the United Nations is involved . . . No one in his senses can urge that the way to deal with aggression is to arm it.’ Republican Congressmen joined MacArthur in the onslaught against the Democratic administration and the British Labour government. James T. Patterson of Connecticut accused the British of ‘trading with the enemy’, which was ‘clear evidence that our present policy of not attacking the Chinese Reds in Manchuria and of maintaining a blockade of Formosa is a product of British minds’. Clarence Brown of Ohio, who was a close associate of Senator Robert Taft, called for an investigation of the ‘scandalous situation’ by the Senate Armed Services and Foreign Relations Committees. Referring to MacArthur’s statement on shipments of strategic materials from Hong Kong to China, Brown said: ‘The source of General MacArthur’s information was the American Consul in Hongkong—a member of Mr. Dean Acheson’s own department.’ It was ‘tragic enough’ for the British government to permit its own and the UN troops to be ‘sold out to Red China’, he continued, ‘[but] it is beyond belief that the U.S. State Department should be “in accord”. The Congress must put a stop to this betraval [sic].’83 All this reflected the resentment among some Congressmen and the US public that Britain, whose policy was seen to have been dictated by Hong Kong and the China trade, had too much influence on the United States during the Korean conflict. If MacArthur’s testimony incited public feeling against Britain and Hong Kong in the United States, it caused a storm of protest and denial in the Colony. In his report to the Colonial Office, Governor Grantham said that ‘MacArthur’s statement is at least a gross distortion and in so far as petroleum products are concerned, is completely untrue.’84 As a matter of fact, the report from which MacArthur had quoted at the hearings was an enclosure to a confidential despatch from the US Consulate in Hong Kong to the State Department. The enclosure (to the so-called Strategic Materials Bulletin) contained information furnished at fortnightly intervals by the colonial authorities to the US Consulate for the purpose of scrutinizing the flow of goods to China. It 83 84

The South China Morning Post,  May , in RG , HKC –, Box , NA. HK to CO,  May , FO /, FC/, PRO.

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listed a wide range of ‘strategic materials’ which were believed to be of interest to the United States, but might not necessarily be of strategic importance in the strictest sense. In other words, the Hong Kong government’s list of ‘strategic materials’ was not equivalent to (indeed was longer than) the international lists of strategic goods under embargo and quantitative control. At the Senate hearings, MacArthur cited these ‘strategic materials’ out of context, by leaving out the volume of their exports to China which was indeed very small or, in the case of petroleum products, was nil (except for paraffin wax).85 Nevertheless, MacArthur’s criticism triggered strong reaction from the British government. In order to counter the General’s accusations, Oliver Franks requested figures on Japan’s exports to China, levels of which were believed to be sanctioned by the Occupation authorities under MacArthur.86 In countering MacArthur’s attack, Britain found a willing listener in the American Consulate and the State Department. The US Consul General, Walter McConaughy, put out a public statement to the effect that ‘he could only assume that General MacArthur had been misinformed or had made an error’ in alleging that Hong Kong had exported petroleum products to China.87 However, more needed to be done. During his conversation with Secretary Morrison, the US Ambassador in London, Walter S. Gifford, said that ‘[t]he replacement of General MacArthur had helped, but there were still possible sources of friction in regard, for example, to Hong Kong, which was a difficult and embarrassing question’. Morrison replied that the apparent US public view that important strategic war materials were finding their way into China through Hong Kong was an ‘exaggeration’. Gifford agreed, but expressed the hope that the British would understand ‘how helpful it would be in America if we [British] were to show determination against China’. ‘[T]he timing was of very great importance so far as opinion in the United States was concerned’, he continued, for there was ‘a very strong wave of anti-British feeling in the United States at the moment, whipped up by the reports they were hearing about Hong Kong and by what they regarded as our [British] unco-operative attitude in regard to economic sanctions.’88 85 For the full text, see HK to State,  Mar. , RG , Hong Kong Consulate General, Records Re Hong Kong Trade with Communist Controlled Areas, –, –, Box , NA. 86 Washington to FO,  May , FO /, FC/, PRO. 87 Memo. of Conversation,  May , RG , CA –, Reel , NA. 88 Morrison to Franks,  May , FO /, F/G, PRO.

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Adding to US pressure was the Conservative Opposition in the UK Parliament. On  May, a somewhat inadequately briefed Attlee responded to a series of questions about the export of strategic goods to China from Britain and Hong Kong with incomplete and at times contradictory answers. Four days later, the President of the Board of Trade, Hartley Shawcross, gave a more complete account. Shawcross argued that it was untrue that Britain had increased its exports to Hong Kong for re-export to China. Indeed, the total exports from Hong Kong to the mainland in the first quarter of  had dropped, and included no petroleum products or other items of direct strategic or military importance. Exports of Malayan rubber to China through Hong Kong, however, had increased substantially, reaching a total of , tons during this period. As a result, steps had been taken earlier in April to restrict the export of rubber to China to about , tons per month. Speaking as the Opposition leader, Winston Churchill asked whether the government could assure the House that rubber would be used for civilian consumption only, and was answered in the negative by Shawcross. Churchill then suggested stopping all exports of rubber to China, thus ‘reach[ing] a satisfactory solution with our Great Ally’. On  May, Churchill opened a lengthy debate on exports to China. He stated that the United States had ‘a valid complaint on the admitted fact that rubber is an indisputable strategic material’. While sharing ‘every sympathy with our fellow-subjects in Hong Kong’ if rubber had to be embargoed, Churchill said that ‘the greatest disservice that we could do them would be to allow a rift to open between us and the United States as a result of our bowing to Communist threats and blackmail’. He reiterated his call to stop all exports of rubber to China, and to ‘reach an agreement with the United States on the general question of trade with China in a spirit which will make the United States feel that their cause is our cause’. No doubt, Churchill attached great importance to the maintenance of close relations with the United States. In response, Shawcross announced that, in view of the ‘abnormally high’ imports of rubber into China in the first quarter of , there would be no further exports to China for the rest of the year. He also devoted much time to the ‘very special problem of Hong Kong–China trade’. Referring to the document which had been misquoted by MacArthur in the joint hearings, the President of the Board of Trade claimed that it would be ‘difficult to find better evidence of our desire to co-operate closely with the U.S. authorities in the appli-

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cation of these controls and in supplying them fully with information of what was going on’.89 In view of the strong pressure exerted by the Truman administration, and the embarrassment caused by MacArthur’s revelations and Conservative criticisms, the Attlee Cabinet agreed on  May that the time was now ripe for the Additional Measures Committee to submit a selective embargo resolution to the General Assembly.90 Indeed, the assertiveness of the Labour left wing in the Cabinet in the last few months of Bevin’s illness had been contained by early May: the Minister of Labour, Aneurin Bevan, had resigned over the scale of the British rearmament programme and its implications for the National Health Service; and Younger’s prominent position in the Foreign Office had been held back by Morrison who succeeded Bevin.91 On  May, Morrison informed Acheson of the British decision to support a selective embargo, stressing that it was ‘not on the substance of the proposals, but on the timing’ that the two countries had ‘hitherto not seen eye to eye’. But he also took the opportunity to remind Acheson forcefully of the danger to Hong Kong of any proposals for political sanctions or a complete economic embargo. ‘To go to the extreme limit of cutting off trade between Hong Kong and the mainland in ordinary consumer goods and foodstuffs’, Morrison said, ‘would make no difference whatsoever to the fighting in Korea’, and would instead give rise to ‘the gravest internal problems of unemployment, starvation and unrest’ and risk ‘the loss of an important center of free speech and western ideas’.92 With the backing of their main allies, US representatives put forward a draft resolution to the Additional Measures Committee, and secured its approval for submission to the General Assembly. On  May, the UN General Assembly voted in favour of a resolution recommending an embargo on strategic goods to Communist China and North Korea.93 According to the UN resolution, it would be up to the member countries to decide which items fell under the categories of embargoed strategic goods. After further deliberations in June, the British government gave substance to the implementation of the UN resolution: all munitions, goods of primary importance for waging war (IL I), 89 See , , and  May , Hansard, Fifth Series, Session –, Vol. , column –, –, –. 90 CM(),  May , CAB /, PRO. 91 MacDonald, Britain and the Korean War, ; Stueck, The Korean War, . 92 Minute by British Embassy in Washington,  May , TP, PSF, Subject File, Box , HSTL. 93 See Stueck, The Korean War, –.

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goods of military and strategic importance (IL II), other goods which might contribute to the military and strategic strength of China (Korean List), petroleum products, as well as rubber would be subject to export licensing control and embargo by Britain and Hong Kong.94 The Hong Kong government issued several orders to extend controls to some two hundred strategic items including rubber and pharmaceuticals, and to punish those who attempted to evade the embargo.95 In asking the British Embassy to inform the State Department of the decision, the Foreign Office wanted to make clear that these import and export control measures were ‘a generous interpretation of what is required of us under the United Nations Resolution’, and represented ‘the most we can do in present circumstances’. The Americans, in the words of British officials, expressed the view that they had ‘not expected so much so quickly’.96 Reluctant though it was, Britain turned out to be the closest of all US allies in the economic containment of China.

        The relief of MacArthur from his Command of UN forces and the imposition of the UN strategic embargo did not remove all difficulties in Anglo–American relations with regard to Hong Kong. On the contrary, one of the consequences of the MacArthur hearings was the suspension by the Hong Kong authorities of economic information to the US Consulate General. Before that, the US Consulate was being furnished with statistics of trade returns, a copy of the Hong Kong government’s list of strategic exports to China attached to the fortnightly Strategic Materials Bulletin (but not the Bulletin itself), as well as manifests of ships from and to China through Hong Kong.97 But the Hong Kong Governor and the Colonial Office were furious that this material had been passed into MacArthur’s hands, and was being used for political purposes. Shortly after MacArthur’s disclosure, the Hong Kong 94

FE(O)(),  June , CAB /; FE(O)(),  May , ibid., PRO. ADR –, ; Lu Dong Qing and Lu Shou Cai, Xianggang Jingji Shi [A History of Hong Kong Economy] (Hong Kong, ), –. 96 FO to Washington,  June , FO /, FC/; Washington to FO,  June , ibid., FC/, PRO. 97 HK to CO,  Feb. , FO /, FC/, PRO. 95

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authorities stopped furnishing economic information to the US Consulate. Before there could be any resumption of supply, the British wanted assurances from Washington that any classified material, especially the ship manifests, would not be made public without their consent. Nor should the material be attributed to official British sources if the administration deemed it necessary to release it to Congress in the future.98 The problem came up again when Kenneth Hansen, an employee of the Senate Sub-Committee on Export Controls and Policies under Democratic Senator Herbert O’Connor of Maryland, was due to visit Hong Kong in June–July to investigate the question of allied trade with China. Since Hansen was only an employee of the Senate, the British were reluctant to provide him with any confidential unpublished material including the Economic Bulletin (formerly Strategic Materials Bulletin) during his investigation in Hong Kong. In the meantime, the Foreign Office instructed the British Embassy in Washington to express to the State Department its ‘surprise and concern that the Senate should have taken the somewhat dubious step of sending an employee to investigate the affairs of a friendly country’.99 Neither the US Consulate in Hong Kong nor the State Department welcomed Hansen’s visit. To US consular officials, Hansen’s investigation carried the implications that their ‘own very full reports on this subject were discounted as reliable evidence’. The State Department did not seem to have been fully consulted about Hansen’s mission. Rusk was surprised by ‘the highly unorthodox action taken by the Senate’, whilst Acheson expressed ‘astonishment and concern’.100 When the O’Connor Senate Sub-Committee requested that the State Department pass over classified economic information sent by the US Consulate to facilitate the investigation, US officials were caught in a dilemma between ‘British sensitiveness about the use of these reports on the one hand, and the advantage of cooperating with a Congressional Committee, on the other’.101 To be certain, Congress had become increasingly assertive in the formulation of US trade control policy. In May, the Kem Amendment was passed by both Houses, and was signed into law, albeit 98 HK to State,  May , TP, DSR, Topical File, Box ; State to London,  July , ibid., HSTL. 99 HK to CO,  May , FO /, FC/; FO to Washington,  June , ibid., PRO. 100 HK to CO,  May , ibid.; Washington to FO,  June , FO /, FC/, PRO. 101 Perkins to Merchant,  July , RG , CA –, Reel , NA.

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reluctantly, by Truman the next month, stipulating a mandatory ban on aid to allies which exported strategic materials to the communist bloc. Four months later, the Kem Amendment was replaced by the less restrictive Battle Act, which came into effect in early . It made US assistance to allies contingent on their compliance with the US embargo policy.102 The result of Hansen’s investigation in Hong Kong turned out to be more favourable than expected from the British perspective. While critical of the lack of control over transit trade, Hansen was generally satisfied with the export licensing control in the Colony, and was sympathetic about the negative impact on Hong Kong of the American embargo.103 Senator O’Connor also discerned ‘the fine spirit of cooperation’ which Hong Kong had shown by making economic sacrifices in the implementation of the UN embargoes.104 In addition, by late  the Hong Kong government had obtained assurances from the State Department with regard to the use of classified economic information. Indeed, both the British and the Americans were eager to resolve their dispute over this issue. To Grantham, ‘it is better that United States authorities receive reliable statistics from us rather than work on possibly inaccurate figures compiled by themselves from inadequate sources, and to resume supply would be helpful in maintaining cordial working relationship which exists with United States Consulate General’. As for McConaughy, the agreement ‘eliminates a principal complaint against Hong Kong Government and should considerably raise level of cooperation’.105 Just as the Hong Kong government suspended the supply of economic information to the US Consulate, the State Department had to stop pressing for the liberalization of US export licensing policy towards Hong Kong in the light of the prevailing sentiment in Washington.106 Throughout , the release of US goods, especially raw cotton, to Hong Kong continued to be held up or delayed by the cumbersome bureaucratic machinery in Washington. Although Hong Kong’s textile manufacturers had successfully found alternative sources of supply of raw cotton, such as from Pakistan, they had to pay higher prices, thus 102 See Jerome Alan Cohen, Robert F. Dernberger, and John R. Garson, China Trade Prospects and U.S. Policy (New York, ), –. 103 HK to CO,  Aug. , FO /, FC/, PRO. 104 Paskin to Ringwalt,  Oct. , FO /, FC/, PRO. 105 HK to CO,  Aug. , FO /, FC/, PRO; HK to State,  Dec. , RG , HKC –, Box , NA. 106 Memo. from Barnett to Allison,  Jan. , RG , CA, –, Reel , NA.

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weakening the competitiveness of their textile products.107 Officials in Whitehall believed that, although Britain had gone a long way towards meeting the American demands for import and export controls against China, its action was not reciprocated by an equally cooperative attitude on the part of the administration regarding the relaxation of its embargo on Hong Kong. Much of their disagreement still centred on the question of guarantees. The Defense Department insisted that Hong Kong should take steps to prevent transshipments of US goods and identical items from other sources, either before or after fabrication, to mainland China. The British government, however, was unwilling to make guarantees beyond those proposed in the February Aide-memoire. Underlying the British reluctance to make further compromise was their resentment over the perceived US ‘discrimination’ against Hong Kong in favour of Japan.108 To them, it was nothing new that the Truman administration was less enthusiastic about restricting Sino–Japanese trade. In , somewhat exaggerated reports reaching Whitehall showed that the United States had allowed cotton exports to Japan, which then exchanged cotton textiles for China’s raw materials.109 Although the British might have exaggerated the level of Sino–Japanese trade, they certainly had genuine grievances about the rigid US licensing policy for Hong Kong. It was not until early  that the US export licensing policy for Hong Kong began to relax. By that time, the emotion surrounding the MacArthur hearings had cooled. The numerous protests by the British government, the administrative burden of licensing exports, as well as the complaints by American businessmen over the loss of the Hong Kong market all contributed to the necessity for a review of the existing policy. After nearly a year of deliberations, on  February the NSC finally approved a statement on US export licensing policy for Hong Kong and Macau (NSC /). In making sure that the aims of denying strategic and critical commodities to the Soviet bloc would not be frustrated, the United States would permit Hong Kong to receive US exports to meet ‘essential minimum short-term requirements for local consumption’, and for ‘mutually beneficial transshipment or resale of 107

HK to State,  Oct. , RG , HKC, –, Box , NA; ADR –, . HK to CO,  Aug. , FO /, FC/, PRO; Sedgwick to Hunt,  Dec. , RG , HKC –, Box , NA; HK to State,  Jan. , TP, DSR, Topical File, Box , HSTL. 109 On differences between the British and US estimates of Sino–Japanese trade, see FO to New York,  May , FO /, FC/, PRO; State to HK,  Oct. , RG , HKC –, Box ; McConaughy to Clinton,  Oct. , ibid., NA. 108

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Hong Kong

United States commodities to non-Soviet bloc areas’. Strategic goods which had been embargoed to China by the colonial authorities would be allowed into Hong Kong, whilst non-strategic goods would be licensed automatically. But if significant quantities of goods of US origin or identical items from other sources were transshipped, or were utilized as raw materials in the production of goods for exports to the Soviet bloc, no further US export licensing of those goods for Hong Kong would be permitted.110

        During the autumn of , the United States and its allies had become increasingly concerned about the slow progress of the armistice talks in Korea. In September, Acheson met with Morrison to consider possible courses of action that might be taken if the armistice talks should fail. On the occasion of the North Atlantic Council meeting in Rome in late November, Acheson and General Bradley discussed with Eden specific courses of action under the ‘Greater Sanctions’ statement, such as a naval blockade or the bombing of Manchuria.111 In considering what additional economic measures against Communist China should be taken, the Conservative government, like its Labour predecessor, opposed a complete economic embargo and a naval blockade, not least because of their implications for Hong Kong. Instead, it was believed that the existing embargo policy should be made more effective and watertight. Transshipment in Hong Kong stood out as the main loophole through which the existing export controls against China could be frustrated. Since November , transshipment control had been applied to Britain, but not to any of its colonies. The Hong Kong government was particularly unwilling to interfere with cargoes in transit, since the ships might easily evade the controls by bypassing Hong Kong. Apart from control over transshipments and transit trade in Hong Kong, the British government also considered the possibility of prohibiting ships registered in the United Kingdom and the Colony from carrying strategic materials to China. The Ministry of Transport 110 Memo. for NSC,  Jan. , TP, PSF, National Security Council Files, Box , HSTL; Note by Acting Executive Secretary to NSC, NSC /,  Feb. , RG , NSC Policy Paper File, Box ; Minutes of th NSC Meeting,  Feb. , RG , NSC Meeting, Box , NA. 111 For details, see Foot, The Wrong War, –.

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opposed in principle any control on shipping. The Colonial Office and the Hong Kong authorities also felt that the proper place to apply control was not on the ship, but at source. The Foreign Office, however, was more inclined to establish a system of voyage licensing control in view of the American complaints about transshipment. After a series of consultations in December, the UK Working Party on Additional Economic Measures Against China came up with the recommendation that, whilst transit trade should not be controlled, the government would be willing to prohibit British and Hong Kong-registered ships from carrying strategic goods to China through voyage licensing if other countries agreed to adopt similar controls.112 The problem of British shipping in the China trade commanded attention at the highest level during Churchill’s visit to Washington in early . At a meeting over dinner on board the yacht Williamsburg on  January, Truman raised with the Prime Minister ‘a matter which had been troubling him greatly’. Truman reported that, between November  and December , as many as  British ships had entered mainland China from different ports, including Hong Kong, carrying about , tons of cargo monthly. The British ships accounted for a little over half of all non-communist flag ships trading with China, and altogether they constituted as much as the total volume of the whole trans-Siberian railroad transport. According to the President, ‘this was a contribution to the Chinese military power in Korea and was an indirect way of furnishing the enemy material with which to carry on the war’. Both Churchill and Eden expressed ‘surprise’ at these figures, stating that they were just nine weeks in office and had no knowledge about this. Truman asked Acheson to prepare a memorandum for Eden on this matter. The following night, Churchill said that he had been ‘much disturbed’ by Truman’s comment the previous day, and asked on ‘an urgent basis’ for the memorandum which Truman had promised. If evidence showed that British ships were carrying so much, including strategic materials, to China, Churchill continued, the situation would be ‘stopped immediately’. On  January, Acheson presented to Eden a memorandum on this matter, which had been drawn up by the Chief of Naval Operations in the Navy Department.113 112 FE(O)()(Revised),  Dec. , CAB /; FE(O)()th Meeting,  Dec. , ibid.; FO Minute by Scott,  Dec. , FO /, FC//G; FO Minute by Johnston,  Dec. , ibid., PRO. 113 Memo. of Dinner Meeting, Jan. , , RG , CF –, Box ; Memo. of Dinner Conversation,  Jan. , ibid., NA; Memo. for Eden by Acheson,  Jan. , TP, DSR, Topical File, Box , HSTL.

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In fact, the problem of British shipping trade with China through Hong Kong might not have commanded the attention of Truman had it not been for the ‘hidden-hand’ of the Navy Department. As Admiral Radford recollected in his memoirs, the idea of bringing up this matter at the highest level came from his staff in CINCPAC. Their intelligence suggested that British flagships were frequently entering Chinese Communist ports. What was unclear was the exact character of the cargoes involved. The British government and the Hong Kong authorities claimed that their ships had carried virtually nothing into, but had simply brought out normal raw materials from China. To Radford, ‘our British allies were not playing fair with us concerning their trade with our mutual enemy’, while ‘our State Department was, to a great extent, aiding and abetting them’. According to the Navy Department’s ‘plan’, a memorandum on British shipping in the China trade was prepared and given to the White House Naval Aide. It was hoped that the Naval Aide could then get the President to raise the issue with Churchill during the latter’s forthcoming visit to Washington, thus bringing pressure to bear on London to stop the maritime trade. This led to the conversation between Truman and Churchill on board Williamsburg.114 Acheson was not pleased to see the Navy Department’s involvement in diplomatic matters of this kind.115 Indeed, this was another example where the State Department and the Defense Department were at cross purposes during the Korean conflict. Intelligence which showed continuing British and Hong Kong shipping trade with Communist China certainly displeased the Chief of Naval Operations, Admiral William Fechteler. This led the US Navy and the Defense Department to favour a naval blockade as one of the best means to stop this maritime trade. To the US admirals, Hong Kong ‘can survive economically without that type of traffic’. But the State Department worried that a naval blockade, which had to include Port Arthur, Dairen, and Hong Kong in order to be effective, would trigger a world war with the Soviet Union or Chinese retaliation against the Colony. Also, Acheson understood that Hong Kong authorities had already imposed ‘[v]ery strict controls’, and ‘there are certain limits to what can be done there’.116 In this regard, 114

Jurika (ed.), From Pearl Harbor to Vietnam, –. According to Radford, after Truman had mentioned the problem of British shipping, Churchill’s reaction was ‘rather violent’, and Acheson had to ‘calm things down’. Later, ‘the Navy Department had been told to keep out of diplomatic exchanges of this type’. Acheson also ‘dressed him [Walter Bedell Smith] down for having participated in this “plot”, about which he had in fact known nothing’. Ibid. 116 Military Situation in the Far East, Part , , ; Part , . 115

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the differing approaches between State and Defense also reflected their different perceptions of the role of allies in US policy-making. On the one hand, Acheson believed that the allies, especially the British, had to be consulted, and their reactions taken into account. General Marshall and Admiral Fechteler, on the other hand, felt that US security interests should come first, and the allies should follow America’s lead.117 Thus, when the Navy Department took the matter into its own hands, the State Department was concerned that its own efforts to secure British cooperation in shipping control might be jeopardized by action which failed to take into account the wider aspects of Anglo–American relations. In the meantime, the State Department dismissed the Navy’s figures on British shipping trade with China as ‘overstatement and statistical manipulation’. The Navy memorandum, it claimed, also failed to highlight the changes in the volume of trade since the imposition of export controls in June , as well as the proportion of strategic materials in the overall trade.118 Particularly embarrassing for the State Department was the fact that a joint US–UK intelligence study in May showed that the actual volume of China’s imports by sea was not as extensive as the memorandum for Eden had suggested. Unable to come up with sufficient evidence that strategic goods being carried to China in British and Hong Kong ships was serious enough for immediate attention, Acheson suggested to Truman in late September that an approach to London not be made for the time being.119 The next occasion at which the question of the British ships in the China trade was brought up was during the Eisenhower administration. During his visit to London in February , John Foster Dulles told Anthony Eden that the British flag was being abused in Far Eastern waters. He mentioned that certain British ships which had been sold to Polish interests were still flying the British flag; so were some Hong Kong-registered ships owned by the Chinese Communists. To the British, this raised the question of the whole system of shipping registration. Because of the inadequate number of their own ships and the fear of Nationalist interference, the Chinese Communists had been using Hong Kong-registered British and Chinese ships to carry goods from Hong Kong to the mainland, and between the Chinese ports. Some 117

Foot, The Wrong War, –, –, . Memo. for Acheson,  Jan. , RG , INR –, Box , NA; Culbert to Moline,  Jan. , TP, DSR, Topical File, Box , HSTL. 119 Memo. for Acheson from Truman,  Sept. , TP, PSF, Subject File, Box ; Memo. for Truman from Acheson,  Sept. , ibid., HSTL. 118

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of these ships belonged to genuine British companies; others were chartered by Chinese Communist agents, or owned by companies controlled by Beijing.120 Although these ships were operating on behalf of communist interests, they were still under the British registry in Hong Kong. It was British policy not to expel ships from the register in order that they could remain subject to British law. To London, there was no evidence that the British flagships were carrying strategic goods through Hong Kong to the mainland. Apart from this, the Americans also complained about the provision of warehousing services in Hong Kong to foreign vessels carrying strategic goods for China. The Conservative government recognized that, although Britain and Hong Kong had adopted full export control measures against China, the continued provision of shipping and storing services to Chinese Communist interests would be seen as ‘anomalies’ in British practices that were bound to be subject to American criticisms.121 The Conservative government, in the end, decided to impose controls on shipping as a demonstration of the closeness of the Anglo–American relationship. Indeed, before Dulles had mentioned the problem of British shipping in London in February, he had raised with Eden the question of the defensibility of Hong Kong. Dulles’s interest in the Colony, together with other indications, prompted the British Chiefs of Staff to believe that the United States might be willing to assist in its defence. As the Assistant Under-Secretary in the Foreign Office, Robert Scott, assessed it, ‘the new Administration were taking an interest in Hong Kong which had not been taken by their predecessors’. Thus, ‘in considering new restrictions’ on British shipping, ‘we should bear in mind that the evident interest in Hong Kong of the new American Administration was something to be encouraged’.122 In addition, both Churchill and Eden felt that some concession on shipping control was necessary in order to avoid other more drastic US proposals in bringing an end to the Korean War, such as a naval blockade. As Eden told the Cabinet, ‘the United States Administration would be anxious to secure from their Allies some assurance that, if they could not make any more 120 In , it was estimated that of  ships larger than  tons on the Hong Kong register or managed from Hong Kong,  ships with a tonnage of , tons were actively engaged in trade with China.  of them were at one time or another chartered or owned by Chinese Communist interests. Scott to Makins,  Feb. , FO /A, FC/; COS(),  Feb. , DEFE /, PRO. 121 FE(O)()nd Meeting,  Feb. , CAB /; Scott to Coulson,  Feb. , FO /, M//G, PRO. 122 FE(O)()nd Meeting,  Feb. , CAB /, PRO.

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direct contribution towards the war in Korea, they would at least cooperate in applying more effective economic sanctions against China’.123 This was especially so since Washington expected London to play a leading role in establishing multilateral strategic controls. Likewise, the United Kingdom also wanted to demonstrate its role as a valuable ally of the United States. ‘There is a tendency among other Departments in Whitehall to take the line that we should only take measures that can be agreed for multilateral action by all the Western countries concerned’, a Foreign Office brief for Eden noted, but ‘the Americans expect more from us than this, and we must be prepared to take the lead if we are to maintain our position of moral ascendancy among the Western European powers’.124 On  March, the Cabinet decided to institute a system of voyage licensing in Britain and Hong Kong to prohibit the carriage in British flagships (over  tons) of strategic cargoes to Communist China. In addition, Britain would join with the United States in persuading other maritime powers to adopt similar measures. But it was decided not to prevent non-British ships from using storing and other services at Hong Kong, except for bunkering.125 As a result, Britain had gone one step further to make the export control system watertight for the sake of Anglo–American solidarity.

    ’   With the relaxation of international tensions following the death of Stalin in March  and the signing of the Korean armistice in July, Eisenhower’s National Security Council came to recognize the efforts made by the Hong Kong authorities to operate export and import controls. When reviewing the policy statement on US economic defence policy (NSC /) in November, the Assistant Secretary of Commerce, Samuel W. Anderson, told the NSC that ‘the Government of Hong Kong was now acting in a much more effective manner in exercising the necessary controls over trade with Communist China’—a view shared by the Director of Foreign Operations Administration, Harold Stassen. For this reason, it was suggested that the existing US export 123 124 125

PRO.

CC(),  Feb. , CAB / Part , PRO. FO Minute by Crawford,  Mar. , FO /, M//G, PRO. C(),  Feb. , CAB /; CC(),  Mar. , CAB /, Part I,

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Hong Kong

licensing policy towards Hong Kong (NSC /) be further relaxed, so as to enable the Colony to develop legitimate trade with the outside world. The Defense Secretary and the JCS, however, believed that Hong Kong’s and Macau’s ‘peculiar geographic situations and traditional status as entrepot ports serving China’ made special and rigid US export licensing policies ‘indispensable to avoid frustration of the current U.S. policy of complete embargo on transactions with Communist China’. As a free trader, Eisenhower was opposed to ‘blindly adhering to a rigid set of rules and methods of dealing with trade with Communist China’. Instead, he believed that the criterion of ‘the net gain’ should be employed to determine whether strategic controls should be maintained or relaxed.126 Despite the Pentagon’s opposition, as Hong Kong’s export control measures had become more effective, the prevailing view within the administration was to put US export licensing for the Colony on a more flexible basis. On  November, the NSC amended NSC / as NSC /, which also superseded NSC / with regard to Hong Kong. ‘Hong Kong and Macao are colonies of friendly countries’, it stated, ‘and their economic needs should be viewed in that light.’ Thus, in applying strategic controls, the United States should ‘accord to Hong Kong treatment consistent with that generally accorded cooperating countries, while employing such special care as may be necessary to prevent frustration of economic defense controls on transactions with Communist China’.127 Between August  and April , as the progress report on NSC / noted, there was ‘a substantial relaxation in licensing shipments to Hong Kong’.128 The US administration estimated that COCOM export controls and the UN embargoes were generally effective in slowing down the rate of China’s industrialization and making the acquisition by the PRC of necessary materials more expensive and less efficient.129 In consequence, 126 Memo. of th meeting,  Nov. , EPAWF –, NSC Series, Box ; Memo. for NSC,  Nov. , WHO, SANSAR –, NSC Series, Policy Papers Subseries, Box , DDEL. 127 Note by Executive Secretary to NSC, NSC /,  Nov. , RG , NSC Policy Paper Series, Box , NA. 128 Memo. for Lay,  Aug. , WHO, SANSAR –, NSC Series, Policy Papers Sub-Series, Box , DDEL. 129 HK to State,  Apr. , RG , The Murphy Collection on International Communism, –, China, Box , NA; Memo. for Secretary of Navy for Office of Naval Intelligence,  Oct. , Strategic Plans Division Records, OP–S/OP–S Subject & Serial Files (Series XVI) , Box , NHC. Indeed, as Zhang has argued, the effects of the Western economic sanctions on China were more indirect and long-term

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Hong Kong’s exports to the mainland dropped substantially from the latter half of  to little more than  per cent of its total trade by . As a matter of fact, however, the decrease in the level of China’s trade with Hong Kong and the West was also the result of the Chinese Communist policy to build a planned economy with a view to creating a revolutionary socialist state. Although the Chinese Communists had stated their willingness to trade with all countries, including the capitalist ones, their ultimate objectives were to put foreign trade under state control and to re-orient the Chinese economy towards the Soviet bloc.130 Thus, whilst trade with the Soviet Union and Eastern Europe constituted about . per cent of China’s total foreign trade in , by  it reached  per cent, and stood at about the same level through the end of the s.131 The PRC also deliberately bypassed Hong Kong as a source of imports, although it maintained stable supplies of foodstuffs in order to maintain the economic well-being of the Colony and to earn foreign exchange.132 Beginning with the Moscow economic conference in April , and the one in Beijing a year later, the Chinese Communists attempted to purchase Western capital goods through the channel of East Berlin, thus eliminating the established British firms and Chinese merchants in Hong Kong as middlemen.133 By the late s, Hong Kong was increasingly less dependent on entrepôt trade with China, at a time when its own manufacturing industry was beginning to take off.

        Since the end of the Korean conflict in July , the Conservative government had been pressing for the relaxation of export controls against than immediate, and their purposes as much political as economic in nature. In the longterm, the embargoes did push Beijing further into the arms of Moscow, increase the former’s expectations of the latter, and create bitterness and differences that finally contributed to the collapse of the Sino–Soviet alliance. See Zhang, Economic Cold War. 130 Chen Jueren (et al.), Dangdai Zhongguo Duiwai Maoyi [Contemporary China Foreign Trade], Part  (Beijing, ), –. Despite the reorientation of the Chinese economy towards the Soviet bloc in the s, Mao and other Chinese leaders continued to press for the end of the Western embargoes on China. Like the issue of Chinese representation in the United Nations, Mao regarded it as a ‘diplomatic offensive’ to exploit the ‘contradictions’ within the US camp. See MaoZedong Waijiao Wenxuan, –, –. 131 Chen (et al.), Dangdai Zhongguo Duiwai Maoyi, . 132 Collar to Allen,  Nov. , FO /, FC/, PRO; HK to State,  Jan. , G.(w)/–, RG , DF, –, Box , NA. 133 See Shao, China, Britain and Businessmen, –.

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China that were more restrictive than those operating against the European Soviet bloc, or the so-called China differential.134 After COCOM had agreed in August  on ‘a gradual and moderate relaxation’ of trade with the European Soviet bloc,135 items decontrolled from the three international lists were added to the specific embargo list for the PRC, thus widening further the China differential. From the British perspective, it did not make strategic sense to treat China and the Soviet Union differently, if embargoed items could be diverted to the mainland through the Soviet and Eastern European ports.136 In December , Anthony Eden, then Prime Minister, threatened to act unilaterally in relaxing the China differential. In the following May, the Conservative government announced that greater use would be made of the exceptions procedures with regard to goods of marginally strategic significance.137 By , the new Conservative government under Harold Macmillan was convinced that the maintenance of the China differential could no longer be justified either on strategic or economic grounds. At the Bermuda Conference in March, the Foreign Secretary, Selwyn Lloyd, told the Americans that ‘it was becoming extremely difficult to explain the “China differential” in Parliament’, and that ‘the British people regard the Russians as their principal enemies rather than the Chinese’. The existence of the China differential, he continued, ‘brings the whole system of trade controls into disrepute’, while ‘increasing the possibility of the disintegration of the entire system’. With regard to the impact on the colonies, Lloyd said that his government ‘foresaw little chance that a free Malaya or Hongkong would be willing to operate under a control system in which the China differential was maintained’. In reply, Dulles said that ‘feeling about China was emotional rather than rational’ 134 In Sept. , the China Committee was set up within the framework of COCOM to coordinate strategic controls on the PRC. All member states agreed to put under embargo all items on ILs I, II, and III. While only IL I goods were embargoed in the case of the European Soviet bloc, the China embargo list contained all goods on the three international lists, plus some supplementary items proposed by Britain, thereby creating a difference in terms of number of items and rigidity of treatment which came to be known as the China differential. 135 See Robert Mark Spaulding, Jr., ‘ “A Gradual and Moderate Relaxation”: Eisenhower and the Revision of American Export Control Policy, –’, Diplomatic History, / (Spring ), –. 136 FO to Washington,  Dec. , PREM /; FO to Washington,  May , PREM /, PRO. 137 Qing, ‘The Eisenhower Administration and Changes in Western Export Policy Against China’, –.

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in the United States, and the American public ‘recoiled instinctively from any suggestion of weakening towards China’. While considering relaxing the China differential, the US administration had first ‘to test the Congressional temperature’ before coming up with a more concrete position. Dulles suggested that ‘this shift in United States economic policy towards Communist China should be matched by a shift in the British political approach to that country’. He hinted that if London could ‘come closer’ to US policy on Chinese representation in the United Nations, it might be ‘easier’ for Washington to meet British demands on the question of trade controls. Although Britain had been supporting the moratorium, Dulles explained, it had ‘given the impression that it had done so reluctantly’, and thus ‘[a] more willing acceptance in the future would be of help to him’.138 Truly, the maintenance of trade restrictions against China did not receive any sympathy in Hong Kong. Both official and commercial circles, however, did not harbour optimism about a rapid revival of entrepôt trade with the mainland even if the China differential was removed.139 Nevertheless, there was a strong feeling that Hong Kong had suffered serious economic hardship in implementing the UN embargoes on China, at a time when its trading competitors in Europe were benefiting from the relaxation of East–West trade. As Grantham had more than once lamented, Hong Kong ‘had faithfully carried out its obligations towards the United Nations in the control of exports to China, at considerable cost to Hong Kong’. The Chairman of the leading Hong Kong and Shanghai Banking Corporation echoed that view: ‘Hong Kong is, of course, still suffering seriously from the continuation of the embargo, and it is indeed only too aggravating to know that others are benefitting from the relaxation of restrictions on trade with the Soviet bloc.’ The fear was that the trade lost would never be regained if the existing controls remained in force for much longer.140

138 Memo. of Conversation,  Mar. , RG , CF –, Box , NA; Record of Meeting,  Mar. , FO /, F/G, PRO. 139 Financial Times,  Sept. ; Edward Szczepanik and Ng Kwok Leung, ‘The Embargo Problem’, in The Hongkong Exporter and Far Eastern Importer –, –. 140 The Times,  and  Mar. ;  Mar. . Some economic historians have argued that the impact of the Western and UN embargoes on Hong Kong’s economy should not be exaggerated: they merely reduced the level of trade to that which prevailed in the late s before the Korean War boom. And a great deal of smuggling between Hong Kong and China still took place despite the embargoes. Schenk, Hong Kong as an International Financial Centre, –.

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Hong Kong

Ministers in London were well aware that Hong Kong’s interests were ‘seriously affected’ by the existing export controls on China. Because of its dependence on China trade, Hong Kong had been ‘harder hit by the embargo than almost any other free world country’.141 As Eden had told Eisenhower during their summit in early , British trade with China was ‘not really important’, but ‘the trade of British Colonies was more important’. This was particularly so in the case of Hong Kong, ‘where the population has been greatly swelled by the movement of refugees and where the whole life of the colony and its ability to feed this large population depended on foreign trade’.142 Notwithstanding Eden’s comment, it seemed that the China market was becoming more important to the United Kingdom than to Hong Kong. Since , Britain’s direct exports to China had surpassed those of Hong Kong, although its imports from the mainland were still far below the Colony’s. British manufacturers and businessmen were eager to make sure that they would not be left behind their European competitors in the race for the potentially great China market. In Parliament, over two hundred questions about the relaxation of the trade embargo on China were asked between the signing of the Korean armistice in  and early .143 On the other hand, despite the economic impact on Hong Kong of the China embargoes, Whitehall generally believed that Hong Kong businessmen had been successful in finding new markets, mostly in Southeast Asia, and that the Colony was ‘wealthy’.144 Thus, in pressing for the abolition of the China differential, the British apparently were motivated as much by the interests of the metropole as by the interests of Hong Kong. Hong Kong was not uppermost in the mind of the Macmillan government in policy deliberations and diplomatic consultations with the US administration in . This is not to suggest that Hong Kong was not a factor at all, only that the revival of Hong Kong’s entrepôt trade with China was not as decisive a factor as parliamentary opinion and pressure from British manufacturing industry. 141 CM(),  May , PREM /; FO Brief for Washington Talks Jan.–Feb. , FO /, M/, PRO. 142 Memo. of Conversation,  Jan. , FRUS, –, , –. 143 FO Brief for Bermuda Conference, March , FO /, ZP//G, PRO. See, e.g.,  Feb. , Hansard, th Series, Session –, Vol. , column ;  May , Session –, Vol. , column –;  Mar. , Session –, Vol. , column –. 144 Draft Minute to Prime Minister, enclosed in FO Minute by Dalton,  Feb. , FO /, FC/; DC(),  Jan. , CAB /, PRO.

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At Bermuda, Dulles’s hint of a bargain probably encouraged Britain to proceed with the abolition of the China differential, without the risk of triggering a vigorous response from the United States.145 In May, the China Committee met in Paris to discuss the relaxation of the China differential. When the discussions became deadlocked, the Macmillan government announced at the end of the month that Britain would unilaterally abolish the China differential, a decision immediately followed by other Paris Group members. Before the British announcement, Eisenhower had made several last minute attempts to persuade Macmillan to reconsider. But, in Macmillan’s view, Eisenhower’s language was ‘mild . . . more in the nature of an appeal than a reproach’. After the British government had publicly announced the abolition of the China differential, the State Department expressed disappointment, but did not respond vigorously. In his letter to the Prime Minister in early June, Eisenhower wrote that ‘while there was some unfavourable comment here in the States, both political and editorial, I am relieved to note it [the abolition of the China differential] has not caused the furore that could have taken place’.146 In , Eisenhower acquiesced in the British abolition of the China differential in the expectation that London would in turn align with Washington on the more important issue of Chinese representation in the United Nations.

 The United States perceived an important role for Hong Kong in the economic containment of Communist China, especially after the start of the Korean War. To the British, however, the enforcement of export controls in Hong Kong entailed great administrative, economic, and political difficulties. Given the free port status of Hong Kong, the colonial authorities were particularly unwilling to institute controls over transshipments and transit trade. Restricting Hong Kong’s trade with China, it was feared, would lead to serious unemployment and social disorder, which, in a place flooded with refugees and without proper social security, would be exploited by the communists. This would provide an excuse for intervention by the PRC, when it found Hong Kong no longer useful economically. Indeed, the main British worry was not 145

Foot, The Practice of Power, .

146

Macmillan, Riding the Storm, –.

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a ban on strategic goods, but a complete economic embargo which would jeopardize the legitimate trade between Hong Kong and the mainland. Subsequently, it became plain that the COCOM and UN embargoes on China were a blessing in disguise for Hong Kong, which was forced to develop its manufacturing industry. And even without the Korean War, Hong Kong’s entrepôt trade with China might still have decreased because of the reorientation of China’s economy to the Soviet bloc. But the transformation of Hong Kong from an entrepôt to an industrial centre was a painful and long-term process, which no official or businessman could take for granted at the time. Also, one should bear in mind that it was the success of Britain in containing the scope of the economic warfare that made possible Hong Kong’s transformations. Until June , the Labour government had been resisting US pressure for the introduction of export controls in Hong Kong. It was only after extensive consultations with and diplomatic representations from Washington that an agreement was struck in October . But the actual implementation of control measures had to be delayed for another eight months. Once the Korean War started in the summer of , the British adopted a more cooperative attitude towards introducing strategic controls against Communist China. The enormous pressure from the Truman administration was undoubtedly an important reason, but Britain also saw itself as the closest and the most valuable of all US allies, especially true for Bevin, Churchill, and Scott. Thus, in July , an ailing Bevin appealed to Attlee to reverse the earlier Cabinet decision by introducing immediately export controls against China. The following May, Churchill as the Opposition leader pressed for further restrictions on strategic exports to the PRC for the sake of Anglo–American solidarity. In , Scott, who had a clear understanding of Anglo–American relations, was inclined to tighten controls over British shipping in the China trade. By taking a leading role in applying strategic controls against China, Britain hoped to demonstrate its closeness to the United States, and, in the process, contain other more aggressive US proposals, while finding opportunities to justify its legitimate trade with the PRC. Nevertheless, some British officials lamented that their cooperation in operating export controls against China was not reciprocated by an equally cooperative attitude on the part of the administration regarding the licensing of raw materials to Hong Kong. In particular, the Colonial Office and the Hong Kong authorities resented what they saw as US ‘discrimination’ against Hong Kong in favour of Japan. On the issue of

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export controls, there was a potential conflict between the Colonial Office, which put Hong Kong interests first, and the Foreign Office, which gave greater consideration to Anglo–American relations. In the course of the Korean War, London more often than not had to subordinate the interests of Hong Kong to wider concerns about the Korean situation and US domestic politics. As a consequence, Hong Kong was forced into the role of a ‘reluctant Cold Warrior’. For the United States, the Korean War provided an impetus to the intensification of economic warfare with the PRC. The military twists and turns in Korea and US domestic politics made additional economic measures against China all the more important. But for all the efforts made by Hong Kong to impose export controls, the US Congress and public remained critical of allied trading with the enemy. In , public feeling was incited by MacArthur’s accusations in the Senate hearings about Hong Kong’s strategic exports to the mainland. Nevertheless, Britain could still find an important ally in the State Department and the American Consulate in Hong Kong. The State Department took the lead in pressing for the liberalization of export licensing for Hong Kong, while the US Consulate stood up to help counter MacArthur’s criticisms about the level of trade between Hong Kong and China. Through extensive economic reporting of the US Consulate, the State Department got a more accurate picture of the control measures in Hong Kong, and thus developed a more sympathetic view on its economic plight. But there was another major reason that explained the State Department’s sympathy and support for Hong Kong. By encouraging the British to be more cooperative over the introduction of strategic controls, and then by referring to British cooperation during internal debates, the State Department could add significant weight to its arguments against the more drastic proposals of the Defense and Commerce Departments, such as a naval blockade and a complete economic embargo. Throughout the Korean conflict, State and Defense were at cross purposes over additional retaliatory measures against China. This was due, in no small part, to their different perceptions of Britain’s role in the US policy-making process: whilst Acheson believed that the reaction of Britain had to be taken into full account in order to maintain the solidarity of the UN coalition, Generals Marshall and Bradley felt that US national security interests should come first at a time when American soldiers were losing their lives on the Korean peninsula. Thus, the disagreement between the State and Defense Departments

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Hong Kong

over export controls in Hong Kong also reflected their wider differences about how the Korean War should be waged. With the easing of international tensions following the death of Stalin and the conclusion of the Korean War in , Britain and other Western European countries began to press for the relaxation of East–West trade. By the mid-s, Hong Kong’s entrepôt trade with the mainland had decreased substantially. Both official and commercial circles in Hong Kong and Britain did not expect its rapid revival even if the China differential was removed. But they all felt that the existing stringent restrictions on China could no longer be justified on strategic and economic grounds. In pressing for the abolition of the China differential in , the Macmillan government was motivated as much by demands from British manufacturing industry as by the economic interests of Hong Kong. To some officials in Whitehall, Hong Kong was a wealthy colony.



Controlling the ‘American diaspora’ in Hong Kong: Intelligence, Covert Action, and Propaganda The Cold War marked the ‘globalization of America’ and the ‘Americanization of the globe’.1 In order to contain worldwide communism, the United States established extensive diplomatic presence, military facilities, and cultural missions throughout the world. With the closure of all their embassies and consulates on the mainland in –, the Americans moved their operations to Hong Kong (and Taiwan), which was then turned into an important centre for intelligence gathering, overt propaganda, and covert action. Gradually, there developed the presence of a disproportionate number of consuls, information officers, military personnel, and covert specialists, who, together with sojourning voluntary workers, missionaries, and businessmen, constituted the ‘American diaspora’ in Cold War Hong Kong. It has been well known among scholars that Hong Kong was used by the Americans—indeed, by the Chinese Communists and the Nationalists alike—for overt and covert operations. What is relatively unexplored, however, is the extent to which American and British officials cooperated with one another in the field. In a sense, the presence of the ‘America diaspora’ in Hong Kong compromised the authority of the colonial administration. Throughout the s, the British estimated that internal unrest instigated by Beijing posed a greater threat to Hong Kong than did an external attack. What intensified the British worries over possible communist subversion were US overt and covert operations in Hong Kong, which would provide Beijing with a pretext for intervention in the Colony. From the point of view of internal security, then, the ‘American diaspora’ had to be controlled, and the United States should not be allowed to construct an 1 The two phrases are borrowed from Akira Iriye’s The Cambridge History of American Foreign Relations, Vol. : The Globalizing of America, – (Cambridge, ), which, however, focuses on the inter-war period.

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‘informal empire’ in Hong Kong. This chapter will examine the Anglo–American cooperation or conflict over the strategic use of Hong Kong, and its implications for the Colony’s internal security.

         In the fields of intelligence-gathering, covert action, and overt propaganda, Anglo–American cooperation in Hong Kong was complex. Not one but several US agencies were involved, and maintained links with their respective British counterparts. As Richard Aldrich has argued, it is misleading to speak of a ‘Western intelligence community’, since intelligence cooperation usually ‘took place in a narrow functional context, resulting in a number of largely separate, but parallel, Anglo–American–Commonwealth communities of human intelligence collectors, signals intelligence collectors, analysts, domestic security officials, and covert action specialists’.2 In general, the US Consulate General in Hong Kong dealt with the colonial authorities concerning all issues of common interest. Although technically part of the Consulate, the CIA station in Hong Kong functioned separately in covert intelligence collection, and liaised with representatives of the British Secret Intelligence Service (SIS, or MI) and of the Security Service (MI). In terms of propaganda and information policy, USIS Hong Kong maintained ties with the Public Relations Office of the colonial authorities on the one hand, and with the Hong Kong representative of the Regional Information Office (RIO) at Singapore on the other. These multiple links between different British and American ‘intelligence communities’ meant that, whilst collaboration between agencies in a particular field might be close, this might not necessarily be the case in other functional areas. What further complicated Anglo–American relations in Hong Kong was that liaison did not always take place: the Americans sometimes took unilateral action, without consulting the host government. In addition, the Hong Kong government responded differently to US activities in the territory, depending on whether they were covert or overt in nature. Nevertheless, the extent of Anglo–American cooperation in Hong Kong 2 Richard Aldrich, ‘British intelligence and the Anglo–American “Special Relationship” during the Cold War’, Review of International Studies, / (), .

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was not determined by the colonial authorities alone. At times, the attitudes and policies of the British government proved more decisive, however different Hong Kong’s views might be. By the same token, US officials on the ground might not necessarily share the same political agenda of their home government. In their day-to-day operations, they were caught between staunch implementation of Washington’s Cold War policy and sympathetic understanding of Hong Kong’s precarious position.

     In Asia, Anglo–American intelligence cooperation had not been smooth. During the Second World War, the British intelligence service rivaled and competed with its US counterpart (whose personnel were recruited from the competitive commercial sector), their differences being centred upon the future of imperial territories and China. In the immediate post-war years, the intelligence communities of the two countries did not see an urgent need for collaboration in the Far East.3 But with the intensification of the Cold War, there was a great demand for information on the PRC by the US and British intelligence communities. In the late s and early s, however, the amount of intelligence on China remained inadequate, and its quality poor. A report of the US Joint State–Defense Mutual Defense Assistance Program Survey Mission to Southeast Asia noted in December  that the information on developments in China and Indochina was ‘inadequate’, its interpretation ‘faulty’, and the intelligence officials concerned, with ‘only a few honorable exceptions’, ‘not qualified to discharge their responsibilities’, with the result that ‘the situation approaches malfeasance’.4 At the time, the CIA had few resources of its own in Asia, and had to depend on the intelligence services of friendly countries, such as Nationalist China.5 The Department of State recognized in  that there were ‘many problems’ in trying to improve the collection of intelligence because of the ‘already over-burdened Foreign Service staffs in Far Eastern posts’, as well as the ‘[b]udgetary limitations’ imposed on them 3 Aldrich, ‘ “The Value of Residual Empire” ’, –; Maochun Yu, OSS in China: Prelude to Cold War (New Haven, ), . 4 Final Report of the Joint MDAP Survey Mission to Southeast Asia,  Dec. , FRUS, , , –. 5 Aid, ‘US Humint and Comint in the Korean War’, .



Hong Kong

by Washington.6 On the other hand, the British Joint Intelligence Committee was aware of ‘the very limited information at present available on Communist China’ in the early s.7 These intelligence inadequacies and deficiencies on the part of both the United States and Britain made better cooperation and coordination in the Far East all the more important. Both countries believed that they would benefit from a pooling of expertise and resources. In Hong Kong, Anglo–American cooperation in intelligence gathering was generally close. As has been mentioned, Hong Kong was a principal listening post for the United States because of its proximity to the mainland, the availability of Chinese refugees with first-hand observations, as well as the difficulties of running human agents in a totalitarian state. Intelligence was obtained by interrogating the Chinese refugees and other nationals who had reached Hong Kong. The Hong Kong government interrogated most of the Chinese refugees, who came mainly from the Guangdong Province. Unless by special arrangement with the British, the US Consulate General in Hong Kong was not allowed to interrogate the Chinese nationals; its proposals for a joint interrogation team were consistently rejected. The only Chinese interviewed by the Americans were some incidental ‘walk-ins’, who voluntarily approached the Consulate to offer information.8 The US Consulate interrogated mainly Westerners who were allowed to leave the mainland, such as missionaries, travellers, and journalists, and exchanged copies of interrogation reports with the British.9 The fact that most of the Chinese had fled the mainland because of their dislike of communist rule did not prevent Beijing from exploiting the refugee issue.10 The British saw no advantage to allowing US interrogations of Chinese refugees on a large scale. Moreover, the Chinese refugees themselves, as the US Consul General believed, had ‘reservations about 6

Carroll to Heck,  Dec., , RG , DAD –, Box , NA. JIC()th Meeting,  Jan., , CAB /, PRO. 8 The CIA station in Hong Kong (technically different from the American Consulate) was perhaps secretly involved in interrogating the Chinese refugees, although direct evidence on this is lacking. 9 Carroll to Heck,  Dec. , RG , DAD –, Box ; Zwolanek to Carroll,  Jan. , ibid., NA; Paul Kreisberg Oral History Interview,  Apr. , FAOHP, GU, –. 10 From time to time, Beijing criticized the Hong Kong government for neglecting the well-being of Chinese refugees in the squatter areas, and tolerating US assistance to the pro-Chiang refugees for ‘clandestine’ activities. See Canton to FO,  Jan., , FO /, FC/; Peking to FO,  Aug. , FO /, FC/, PRO; Grantham, Via Ports, –. 7

Controlling the ‘American Diaspora’



talking to Americans’ owing to their fear of communist reprisals against their relatives on the mainland.11 Thus, an exchange arrangement with the British was still beneficial to Washington, and indeed the US Consulate did provide guidance requirements to British interrogators in order to obtain the information it desired.12 As John Holdridge, an interrogation officer in the US Consulate in the s (and later the US Ambassador to the PRC), recollected, the Consulate had ‘a good working arrangement with the Brits’, and there was ‘a healthy exchange’ of interrogation materials.13 In the field of intelligence collection from open sources, the Americans also enjoyed close cooperation with the British. In , the British proposed that the State Department organize a network of monitoring services for the Chinese and vernacular press in Southeast Asia in US diplomatic posts throughout the area. The State Department, on the other hand, believed that effort should be concentrated on Hong Kong in monitoring the Chinese mainland press.14 But as the State Department’s proposal involved the expansion of the US Consulate in Hong Kong, at first the colonial authorities had reservations, and discussions between the British and the Americans dragged on for a while. Nevertheless, under the spirit of Anglo–American cooperation in information policy achieved in mid- (discussed later in this chapter), arrangements were finally worked out for an extensive monitoring operation in Hong Kong. A Press Monitoring Unit was set up within the US Consulate to translate into English and publish a daily digest of Hong Kong Chinese language press, Survey of China Mainland Press, and Current Background Series. The Consulate then exchanged its monitoring output with the translation service of the Hong Kong branch of the British Regional Information Office, which was responsible for anti-communist propaganda.15 As the translations of the mainland press were an important source of intelligence for propaganda operations, both British and US information officers benefited from their frequent exchange of materials.16 11

HK to State,  Dec. , FRUS, , , pt. , –. Carroll to Heck,  Dec. , RG , DAD –, Box , NA. 13 John H. Holdridge Oral History Interview,  July , FAOHP, GU, . 14 Nordbeck to Hummel, Oct. , RG , DAD –, Box , NA. 15 The US translation service was more extensive than that of the British. Zwolanek to Pope,  Jan., , RG , DAD –, Box ; Harris to Cook,  Aug. , RG , CA –, Reel , NA. 16 State to Diplomatic Missions,  July , in FO /, PR//G; Minutes by Smith,  Dec. , enclosed in Cox to Wright,  Jan. , FO /, P/, PRO. 12



Hong Kong

If the British and the Americans maintained good working relations in overt intelligence collection, they sometimes found themselves at odds over intelligence gathering by covert means. The Hong Kong government did not look with favour on the running of secret agents by US officials in the territory. In a number of surprise raids against both Communist and Nationalist organizations in early , for example, the Hong Kong Police incidentally uncovered an unknown Chinese contact of the US Consulate, and detained him for ‘intensive questioning’. The State Department commented that this showed ‘the sensitiveness with which the British view our several activities in Hong Kong and their concern over what they may suspect we may or would like to undertake’.17 Despite this incident and other disputes, the US Consulate generally were keeping on good terms with the local authorities, at least at a personal level between the US Consul General and the Hong Kong Governor.18 Relations between the CIA representatives in Hong Kong and their British counterparts were less close, however.19 US intelligence officers suspected that the British had ‘much more information on Chinese Communist activities [in Hong Kong] than they have been willing to pass [on]’. Requests by the CIA representatives to their British counterparts for this information often met with the reply that it ‘could be made available only with the approval of the Governor—and nothing more happened’.20 As Joseph B. Smith, who served as a CIA covert action specialist in Singapore in the mid-s, recollected, ‘it was our Hong Kong [CIA] station, with its guy lines trailing across the Straits of Formosa, that really set their [British] teeth on edge’, for ‘Hong Kong existed on the sufferance of the Chinese Communists’. The British insisted that intelligence be exchanged in Singapore, where the Office of the Commissioner-General in Southeast Asia was housed. This procedure thus ‘kept our [CIA] Hong Kong station at arm’s length from their 17 HK to State,  Feb. , G./–, RG , DF –, Box ; Strong to Clubb,  Mar. , G./–, ibid., NA. 18 McConaughy to Johnson,  Oct. , RG , CA –, Reel ; Drumright to McConaughy,  June , RG , CA, –, Miscellaneous File , Box , NA. 19 Released archival materials on the British and US intelligence services in Hong Kong are very thin. For a brief account, see Luo, Zhengzhibu Huiyilu, –; Tom Bower, The Perfect English Spy: Sir Dick White and the Secret War – (London, ), ; Stephen Dorril, M: Fifty Years of Special Operations (London, ), . 20 Higgs to Drumright,  Oct. , RG , INR –, Lot D , Box , NA.

Controlling the ‘American Diaspora’



[British SIS] people on the ground in that sensitive spot’.21 As the location of the Office of the Commissioner-General in Southeast Asia, the regional headquarters of the British defence forces east of Suez, as well as the home of the Joint Intelligence Committee (Far East), Singapore was seen by Britain as the centre of political, defence, and intelligence policies covering the whole of Southeast Asia.22 It was desirable that the location of liaison between the British and American intelligence services should be Singapore, and that the United States should establish a similar regional organization there. But the contemplated expansion of the US Consulate in Hong Kong in early  led the CommissionerGeneral in Southeast Asia, Malcolm MacDonald, to worry that Washington might use Hong Kong as ‘the headquarters of an American Organisation for South East Asia as a whole’. He was concerned that ‘there would be a tendency for such an organisation to rely on liaison not with my organisation, but with [the] Hong Kong Administration, on questions on which the latter might not be aware of all the facts and implications which it is the function of my office to study’.23 Truly, the US Consulate General in Hong Kong, including the United States Information Service, the Armed Service Attachés and their supporting staffs, as well as representatives of other US agencies, such as Agriculture and the Treasury, had grown greatly in size since . In October of that year, the Consulate had two consuls and six vice-consuls; in February , the number rose to four and thirteen respectively; and by June, five more vice-consuls were added, bringing the total number of US personnel (excluding locals) to sixty-seven.24 In February , the contemplated expansion of the Consulate staff to ‘something in the nature of a  or more’ worried Grantham, for this would lead to ‘charges that Hong Kong is serving as a base for American “imperialism” ’. But ‘more dangerous’ was that, by allowing the presence of such a large US establishment in Hong Kong, the colonial authorities would find it difficult to decline similar requests by Beijing for ‘extensive representation’ in the territory. In expressing his worries to the Colonial Office, Grantham stressed that although ‘[t]he importance of 21 Joseph B. Smith, Portrait of a Cold Warrior: Second Thoughts of a Top CIA Agent (New York, ), . 22 Clyde Sanger, Malcolm MacDonald: Bringing an End to Empire (Liverpool, ), . 23 Singapore to FO,  Mar. , FO /, FC/, PRO. 24 HK to CO,  June , FO /, FC//G; Trench to Anderson,  June , ibid., PRO.

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Hong Kong

Anglo–American solidarity is fully appreciated’, he insisted that the Americans be told that it was ‘in our joint interests their consulate staff in Hong Kong should be kept within reasonable limits’.25 Both the Foreign Office and the Colonial Office agreed and decided to bring their concern to the notice of the US administration.26 During his conversation with the Deputy Assistant Secretary for the Far East, Livingston Merchant, in March, the Counsellor of the British Embassy in Washington, Hubert Graves, requested that the US Consulate staff in Hong Kong ‘should be kept within fairly modest limits’. Merchant replied that he ‘fully understood the position’, and suggested that there be an increase of ‘three or four officers only’.27 The Americans realized that the host government had to be pacified, if they were to be allowed to operate in Hong Kong. They were not unaware of the embarrassment caused by the size of their Consulate in Hong Kong. That an article by the pro-communist Wen Hui Pao on ‘Imperialist Espionage Activities’ in Hong Kong appeared ‘almost simultaneously’ with the expansion of the press monitoring unit in the US Consulate was ‘probably not accidental’.28 In June, the State Department supplied to the British Embassy in Washington detailed figures concerning the size of the US Consulate in Hong Kong, and downplayed the contemplated expansion of its size on the grounds of the unavailability of funds. Nevertheless, the size of the American Consulate continued to be a source of grievance for the British in the s. By September , the total number of US personnel in the Consulate had reached ninety-six, including five consuls and no less than twenty-four vice-consuls. To the Colonial Office, ‘it is quite obvious that  officials are not needed to look after a United States community scarcely exceeding ’, and that ‘if these officials in fact earn their pay, they must be doing other work— i.e. work concerned with China’.29 The embarrassment caused by Acheson’s testimony during the MacArthur hearings in June was still fresh in British minds. ‘To have Hong Kong fall into the hands of the Chinese Communists’, Acheson argued, ‘would have a very adverse influence on the United Nations interests and on ours in the Far East. 25

HK to CO,  Feb. , FO /, FC/, PRO. Singapore to FO,  Mar. , FO /, FC/; Shattock to Graves,  Mar. , ibid., PRO. 27 Graves to Shattock,  Apr. , FO /, FC/, PRO. 28 HK to State,  May , RG , Department of States Central Files, China Internal Affairs, –, Reel , NA. 29 Hall to Trench,  Sept. , FO /, FC/, PRO. 26

Controlling the ‘American Diaspora’

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It is an important point for observation . . . [and] a point from which a great deal of important work can be done in China’. Although appreciating ‘the generally helpful tone of Acheson’s remarks’, the Foreign Office was concerned that his comments ‘can be interpreted as open evidence that Hong Kong is being used for espionage purposes against China’. The British Embassy in Washington raised the matter with Assistant Secretary Rusk. Acheson later responded, through Rusk, that he ‘certainly had no intention of implying that Americans were using Hong Kong for subversive activities’, and ‘regretted any embarrassment he had caused’30 This was illustrative of the British concern over a constantly growing US establishment in Hong Kong, which might be involved in covert action against China, or seen as such by Beijing.

      It was covert action by the US secret intelligence service that rendered Anglo–American relations in Hong Kong most problematical. This was especially the case when London differed from Washington over general policy towards the PRC. In late , the CIA made a request to the Hong Kong government for the Agency to be allowed to establish a radio station in Hong Kong. Despite the efforts by Acheson to disengage from the Chinese Nationalists and to ‘wait for the dust to settle’, the CIA was undertaking a covert operation to assist anti-communist guerrilla forces in mainland China. But communications posed a major problem.31 The establishment of a wireless transmitting station in Hong Kong, it was hoped, would enable the Agency to maintain contact with its agents in China. In view of ‘the delicate situation at Hong Kong’, however, Governor Grantham rejected the CIA request. In a conversation with Merchant in late December, Graves pointed out that since ‘the British government had itself not established a radio station at Hong Kong to broadcast propaganda to the China mainland in order to avoid giving any excuse to the Chinese Communists which they might utilize to their own advantage’, it was ‘understandable’ that the Hong Kong Governor had not acceded to the US request for a radio station.32 Truly, 30 FO Minute by Paton,  June , FO /, FC/; FO Minute by Lloyd,  June , ibid.; Washington to FO,  June , FO /, FC/, PRO. 31 For details, see Prados, President’s Secret Wars, –; Leary, Perilous Missions, –. 32 Memo. of Conversation,  Dec. , RG , INR –, Box , NA.



Hong Kong

the British had to adopt an impartial stance towards both communist and American activities in the territory. Political implications for Hong Kong aside, the proposed CIA radio station did not serve the policy objectives of the Labour government. In Whitehall, there was ‘fairly reliable information that the Americans are now putting agents into China to carry on subversive activities there’, and the establishment of a CIA radio station in Hong Kong was aimed ‘to assist them in maintaining contact with their agents in China’.33 In , the Attlee government hoped to seek an accommodation with the Chinese Communists. Certainly, it did not see any interest in allowing the Americans to use a precarious Hong Kong to subvert a regime with which it desired to establish relations. In view of British sensitivities to provoking Beijing, the US intelligence service sometimes chose to take unilateral action. In the course of the Korean War, the CIA’s Office of Policy Coordination34 perceived Hong Kong as a convenient location for covert operations in order to assist the war effort, however unsuccessful they eventually turned out to be. One example was the attempt to prevent the shipment by a communist-chartered Norwegian ship (Hoi Houw) of medical supplies from India via Hong Kong to China in January–February .35 The Truman administration was concerned that these medical supplies would indirectly contribute to the military capabilities of the PRC to the detriment of the UN forces in Korea. In a meeting with officials of the British Embassy in early February, Merchant expressed the Department of Defense’s view that, since the delivery of medicines to China ‘would produce seriously adverse effect upon the military position of the United Nations forces in Korea’, their denial to the PRC ‘became a measure of military necessity rather than merely a new and different extension of the economic warfare measures for Communist China’. For that purpose, Merchant suggested that the British government give ‘urgent consideration to any possible measure’, such as administrative delay if 33

CO Minute by Paskin,  Dec. , CO /, , PRO. Before their merger in , two largely separate offices—the Office of Policy Coordination (OPC) and the Office of Special Operations (OSO)—existed within the CIA. Until then, covert actions fell mainly into the domain of the more independent OPC, while OSO was charged with the duties of intelligence collection. But no distinction between the CIA and the OPC is made here for the sake of simplicity. For an account of the institutional differences and cultural gap between the OPC and the OSO, see Peter Grose, Gentleman Spy: The Life of Allen Dulles (Amherst, Mass., ), –. 35 William B. Breuer, Shadow Warriors: The Covert War in Korea (New York, ), –; Prados, President’s Secret Wars, –. 34

Controlling the ‘American Diaspora’

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the ship docked in Hong Kong waters, inclusion of the medical supplies on the Hong Kong embargo list, denial of bunkering to the vessel, and so forth. In response, Graves said that ‘the British involvement in the transaction was almost nil’, except for the fact that ‘the vessel might pass through British Far Eastern waters’. He stated that there might be ‘certain objections’ to the US suggestions, as Hong Kong was a ‘free port’ which ‘did not ordinarily interfere with watering operations’, while there was ‘no precedent for placing medicines on the prohibited list’.36 Indeed, the British hoped that Hong Kong would not be involved in the Hoi Houw affair, and that the Norwegian ship would bypass Hong Kong harbour. As Grantham lamented to the Colonial Office: ‘This case is a good example of the unreasonable attitude which the Americans are prepared to adopt when any matter regarding Hong Kong’s “co-operation” in furthering their own interests is involved . . .’37 In short, the British were unwilling to lend a helping hand to the Truman administration in stopping the shipment of medical supplies to Communist China. With the British reluctance to cooperate, the Americans resorted to unilateral covert action. The CIA instructed the station chief in Japan and other Far Eastern stations to stop the shipment at all costs, and approved a million dollars for the operation, code-named Stole. Alfred Cox, the CIA station chief in Hong Kong, also ‘made preparations for sabotage under the noses of British authorities in case the Norwegian ship docked there’.38 A veteran of the Office of Strategic Services during the Second World War, Cox was a man of action. Believing that the vessel would soon approach Hong Kong, he ‘collected a large supply of explosives and prepared to blow up the freighter, even in a port of a friendly nation, Great Britain’.39 As it turned out, however, the Norwegian ship bypassed Hong Kong. The CIA had no problem in finding an enthusiastic Chiang Kai-shek to finish the job. With Cox and other CIA agents hidden aboard, a small fleet of Nationalist gunboats intercepted the Norwegian vessel north of Formosa, the whole operation being disguised as a pirate raid.40 The British, it seemed, were not completely ignorant of the US hidden-hand behind the whole operation. Despite the insistence by the US Embassy that it had ‘no advance information’ on the interception, the British Consulate in Tamsui 36

Memo. of Conversation,  Feb. , RG , CA –, Reel , NA. HK to CO,  Feb. , FO /, FC/; Washington to FO,  Feb. , FC/; S.O.(I) HK to C.S.O.(I) F.E.S,  Feb. , FC/, PRO. 38 Prados, President’s Secret Wars, . 39 Breuer, Shadow Warriors, . 40 Ibid. 37

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Hong Kong

expressed to the Hong Kong Political Adviser that the US military authorities ‘might not have been . . . so unconcerned with the incident’.41 It is unknown whether the colonial authorities had any knowledge of Cox’s contingency plan to ‘sabotage’ the freighter in Hong Kong harbour. But it is fair to say that covert action of this kind would trigger strong reaction from the British. Another example where Hong Kong was being used as a base for unilateral covert action concerned the Truman administration’s efforts to support the so-called Third Force Movement in China between  and . After the communist takeover in , a large number of anticommunist, anti-Chiang Third Force Chinese became refugees in Hong Kong.42 These Third Force Chinese were of diverse background, ranging from former south China warlords to ex-Nationalist soldiers, and from Chiang’s political rivals to liberal intellectuals. Some of the Third Force leaders claimed that there were still hundreds of thousands of anti-communist guerrillas on the mainland waiting for their leadership and US support. With the twists and turns in the US/UN military position in Korea, the Truman administration hoped that covert support of the Third Force guerrillas on the mainland would divert Beijing’s attention from Korea and indirectly assist the US war effort. According to a National Intelligence Estimate in January , there were as many as , men on the mainland who ‘may be engaged in active resistance operations, ranging from local banditry to organized guerrilla warfare’. By supplying the active anti-communist forces with ‘effective communications, military equipment, and logistical support’, it was estimated, ‘Communist military strength could be sapped, and their capabilities for operations elsewhere could be reduced’.43 The State Department agreed that ‘it would appear advisable that the U.S. view sympathetically and covertly support the development of any resistance movement on the mainland’ since it would be both ‘a potential threat against the Peiping 41

Tamsui to HK,  Feb. , FO /, FC/, PRO. According to the Hong Kong government, the exact number of Third Force Chinese in the Colony was ‘entirely a matter of speculation’. In , there was an estimate of about , Third Force die-hards, with approximately , followers of varying degrees of conviction. HK to FO,  Aug. , CO /, HKP//, PRO. 43 NIE–,  Jan. , FRUS, , , pt. , –. Later, a Special Intelligence Estimate put the number of guerrillas as ,. Special Intelligence Estimate, SE–,  May , ibid., –. On the Chinese side, Mao estimated in mid– that there were as many as , ‘bandits’, a number which was cut in half by Zhou later. Nevertheless, throughout , the PRC undertook numerous operations to suppress ‘bandits’ and anti-communist guerrillas. Prados, Presidents’ Secret Wars, –. 42

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regime’ and ‘a natural influence exercising pressure on the Nationalist Government on Formosa to adopt more effective policies’.44 In May, the National Security Council approved a re-statement of US strategy in the Korean War (NSC /), one course of action of which was to ‘[f]oster and support anti-Communist Chinese elements both outside and within China’.45 From late , the Truman administration began to pay more attention to the Third Force Chinese in Hong Kong, hoping, for one thing, to obtain accurate information on guerrillas in mainland China.46 The Third Force elements themselves also tried to secure US support for their cause. In early , the US Consul General in Hong Kong, Walter McConaughy, reported that a former Guomindang general named Xu Chongzhi ‘continued assiduously [to] cultivate [the] Consulate General’ for financial assistance.47 In the United States, the ex-Acting President of the Republic of China, Li Zongren (Li Tsungjen), and his ally, Gan Jiaxin, discussed with the Director of the Office of Chinese Affairs, Edmund Clubb, the difficulties faced by their Third Force supporters in Hong Kong. They claimed that, owing to the lack of weapons and finance, they had rejected earlier requests by guerrillas in China to send officers from Hong Kong to lead the resistance movement on the mainland. Worse still, the Third Force in Hong Kong was now ‘not in a position to organize’, they said, and would see ‘no reason to organize without American support’, since they would in those circumstances become ‘a target for the Chinese Communists, for the Kuomintang and for the Hong Kong Government itself’.48 Not only did the British have reservations about the possible use of Hong Kong for anti-communist activities, the Chinese Communists and Nationalists alike also had reasons to worry about a Third Force alternative to their rule. In his personal letter to Truman, Li claimed that Chiang had even set up ‘a bogus third force organisation’ under Xu Chongzhi in order to penetrate and immobilize the real Third Force movement in Hong Kong.49 To Li, US support for the genuine Third Force in Hong Kong seemed urgent. 44

Memo. by Merchant to McWilliams,  Feb. , FRUS, , , pt., –. Quoted in Garver, The Sino-American Alliance, . 46 Memo. by Strong to Clubb,  Dec. , FRUS, , , –. 47 HK to State,  Feb. , G.(w)/–, RG , DF –, Box , NA. 48 Memo. of Conversation,  Jan. , RG , CA –, Reel , NA. 49 HK to State,  Mar. , G./–, RG , DF –, Box ; Li to Acheson,  May , G./–, ibid., NA. 45

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Hong Kong

Against this background, an American named Hartman, who represented ‘an organ of the United States government’, began to contact the Third Force elements in Hong Kong. After several conversations with Zhang Fakui, a former Guomindang general, Hartman agreed to give ‘a substantial amount of fund[s]’ to Zhang’s Third Force group in Hong Kong, and promised ‘a base of operation’ for the liberal leaders in the Philippines.50 Whether Hartman represented the State Department or the CIA is unknown, since the Agency’s officers were usually under diplomatic cover. What is clear is that US support for the Third Force was a secret operation. Chiang, ostensibly Washington’s ally, had to be kept in the dark. Even the State Department did not have full knowledge of the activities of other agencies.51 Nevertheless, the available evidence suggests that the United States lent its support to the Third Force movement through two main channels. Despite its initial interest, the State Department was gradually convinced that the Third Force in Hong Kong was nothing but a weak, divided, and unorganized movement. The Deputy Director of the Office of Chinese Affairs, George Perkins, noted in mid- that ‘there is no indication that any individual leader [in Hong Kong] has sufficient ability or commands a sufficient number of Chinese to organize an effective Third Force Movement’. The pro-Chiang US Chargé in Taipei, Karl Rankin, agreed: ‘The so-called Third Force in Hong Kong seems to have neither organization, program nor money, except for what financial support some of our people may be giving them.’52 But what lessened the State Department’s enthusiasm about supporting the Third Force movement was its concern over Nationalist China. The Bureau of Far Eastern Affairs made plain in December : ‘The overt support of any Chinese “Third Force” group would . . . be inconsistent with existing diplomatic relations with the Chinese National Government and

50 Li to Acheson,  May , G./–, RG , DF –, Box ; HK to State,  Mar. , G./–, ibid., NA; Yang Tianshi, ‘The Third Force in Hong Kong and North America During the s’, in Roger B. Jeans (ed.), Roads Not Taken: The Struggle of Opposition Parties in Twentieth-Century China (Boulder, Colo., ), –; Zhou Shuzhen, : Piaoyao Gangdao [: The Shaking Hong Kong Island] (Beijing, ), . 51 According to a memorandum by the Executive Secretariat of the State Department, ‘The Department . . . is unaware of the extent of aid provided by other governmental agencies or even if such support exists at the present time’. Kitchen to Johnson,  Aug. , RG , CF –, Reel , NA. 52 Perkins to Merchant,  Aug. , FRUS, , , pt. , –; Rankin to Rusk,  Aug. , ibid., –.

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with United States policy directed toward strengthening that regime’. In other words, the State Department saw no advantage in seeking a political alternative to Chiang; instead, ‘greater use’ should be made of the talents of the Third Force Chinese in the field of anti-communist propaganda.53 Their language skills and knowledge of China could be utilized in the production of propaganda material. The United States Information Service in Hong Kong employed some of these qualified Chinese for its information programmes,54 and provided financial support to other Third Force groups. The China Youth Party under Xie Chengping, an ex-Nationalist minister, was given US$ , monthly, thus enabling it to publish a bi-weekly, Free Front, run a publishing house, the Freedom Press, and engage other intellectuals for writing projects. With US assistance, Zhang’s group published a weekly, The Voice of China, and the Union Press under Chen Zhuosheng also produced a number of anti-communist books.55 While the State Department concentrated its effort on utilizing the Third Force Chinese for anti-communist propaganda, the CIA secretly recruited them to organize a resistance movement in mainland China. Based on intelligence from Hong Kong and elsewhere, Frank Wisner, the head of the OPC, and Richard Stilwell, his Far East chief, believed that there were as many as , guerrillas on the mainland waiting for US support to overthrow the communist regime. The CIA Third Force project focused on training Chinese agents at the $ million CIA complex on Saipan, a Pacific island, and then parachuting them into the two Manchurian provinces of Liaoning and Kirin to undertake various paramilitary actions. In , the CIA started recruiting Third Force Chinese in Hong Kong under the guise of working for the Far East Development Company in Guam. Between  and , the CIAcontrolled Civil Air Transport airdropped  Chinese agents into the mainland, and the Agency spent $  million on weapons and ammunition for the guerrillas in China. As it turned out, however, most of the Chinese agents who had been parachuted into China were either killed or captured, and, despite the earlier optimistic predictions, there were 53 Allison to Barrett,  Dec. , RG , CA –, Reel ; Perkins to Finks,  July , ibid., Reel , NA. 54 Clubb to Rusk,  Jan. , RG , CA –, Reel ; HK to State,  Mar. , RG , USIS HK –, Box , NA. 55 Yang, ‘The Third Force in Hong Kong’, ; Taipei to State,  Jan. , G./–, RG , DF –, Box , NA; Zhou,  Piaoyao Gangdao, –, .

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Hong Kong

no signs of extensive guerrilla activities that could challenge Beijing. In short, the Third Force project was a total failure.56 The British were keeping a close watch on Third Force activities in Hong Kong. They were not entirely unaware that the Americans were secretly providing financial support to some of the anti-communist groups. The Hong Kong Police’s Special Branch knew that the Third Force elements were in contact with US organizations in the territory in order to secure ‘financial aid in exchange for supposed information’ on guerrilla activities in mainland China. But some anti-communist groups admitted to the Special Branch that they had ‘greatly exaggerated their past history’ and ‘supplied false information to American organisations in the Colony, in return for financial assistance’.57 As one writer has argued, ‘Hong Kong, like the German DP camps, had its share of Cold War entrepreneurs who would make up convincingsounding intelligence for a fee’.58 Thus, the CIA Third Force project failed partly because of faulty intelligence from Hong Kong. US efforts to cultivate the Third Force groups in Hong Kong were obviously not welcomed by the British, especially since the Americans resorted to covert means. The Colonial Office lamented that ‘we dislike its [US] under-cover activities—e.g. its habit of purchasing fictitious “intelligence” from Third Force elements who make their living by concocting intelligence for United States benefit’.59 The British were sensitive to the possible use of Hong Kong by anti-communist elements against the PRC. Although lacking firm evidence, the Special Branch believed that some of the anti-communist cliques had sent ‘groups of two or three men’ into the border area to carry out ‘anti-communist acts together with local bandit forces’.60 As a result, the active Third Force leaders were under close surveillance by the colonial authorities, and were subject to interrogations and deportation if their activities were

56 Worse still, during an operation to pick up Chinese agents from the mainland in Nov. , a Civil Air Transport aircraft was shot down, and pilots John T. Downey and Richard Fecteau were captured by the PRC. See Thomas, The Very Best Men, –; Breuer, Shadow Warriors, –. 57 HK to CO,  Feb. , CO /, HKP//, PRO. 58 Thomas, The Very Best Men, . Ralph Clough, who headed the Political Section of the US Consulate in Hong Kong in the early s, recollected that the CIA ‘had money to pay people for intelligence. We didn’t. [Thus] what you got for money was less likely to be genuine.’ Ralph Clough Oral History Interview,  Apr. , FAOHP, GU, . 59 Hall to Oakeshott,  Feb. , FO /, FC//G, PRO. 60 HK to CO,  Feb. , CO /, HKP//, PRO.

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seen as a threat to Hong Kong’s stability.61 As for the Foreign Office, if a Third Force alternative was to be successful, it had to arise inside the mainland. Thus, any support given to the Third Force movement outside mainland China would be futile.62 During the Korean conflict, then, the OPC/CIA found Hong Kong a geographically convenient, if not politically desirable, base of operations against Communist China. Under Wisner’s leadership, Stilwell and his deputy, Desmond FitzGerald, were enthusiastic about fighting a covert war in Asia, a main battleground of the Cold War.63 Their romantic belief in covert action was not necessarily shared by the more cautious State Department and the American Consulate in Hong Kong. Nevertheless, as US/UN military fortunes fluctuated in Korea, the Truman administration was keen to weaken the PRC by all means; but given British sensitivities in Hong Kong, the Americans had to plan and undertake their operations secretly and unilaterally. For the rest of the s, the US intelligence service did not cease contemplating taking advantage of Hong Kong’s location for covert action against China. In April , when the Asian–African conference was scheduled to be held at Bandung, CIA field operatives proposed that a bomb be planted on a chartered Indian airliner (Kashmir Princess) in Hong Kong supposedly carrying Premier Zhou Enlai to Indonesia. But Eisenhower made clear at an NSC meeting that he ‘would approve of any methods up to but not including assassination of the hostile delegates’.64 It was a Guomindang secret agent in Hong Kong who arranged to have the plane blown up, although missing the main target, Zhou. This did not result in a diplomatic row between London and Washington, for the Hong Kong Special Branch had found no evidence of US involvement.65 In short, except for a brief period during the Korean War, the United States utilized Hong Kong mainly for intelligence gathering, rather than covert action against the PRC.66 The 61 Rankin to Rusk,  Aug. , FRUS, , , pt. , –; HK to State,  Dec. , G./–, RG , DF –, Box , NA; Zhou,  Piaoyao Gangdao, –. 62 FO Minute,  July , FO /, FC//G, PRO. 63 Thomas, The Very Best Men, –; John Ranelagh, The Agency: The Rise and Decline of the CIA (New York, ), . 64 Scott Lucas, Freedom’s War: The US Crusade against the Soviet Union – (Manchester, ), ; Memo. of th NSC Meeting,  Apr. , EPAWF –, NSC Series, Box , DDEL. 65 See Tsang, ‘Target Zhou Enlai’. 66 Paul Kreisberg Oral History Interview,  Apr. , FAOUP, GU, ; Thomas, The Very Best Man, .

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Hong Kong

British would not allow the ‘American Cold Warriors’ to turn Hong Kong into a base for subversion.       In the field of propaganda and information policy,67 American officials in Hong Kong also needed to secure the cooperation of the British. USIS Hong Kong played an important role in the production of anti-communist materials for ‘white’ propaganda—the ‘overt’ dimension of US psychological warfare against China.68 American information officers liaised chiefly with the Public Relations Office of the colonial authorities. As the Public Relations Office was involved mainly in the publicity work of the Hong Kong government and other local affairs (even the work of ‘projecting Britain’ came second in the light of the available resources),69 as far as anti-communist propaganda was concerned it was the Hong Kong branch of the Regional Information Office in Singapore with which USIS Hong Kong cooperated. In , the Information Research Department (IRD) was created within the Foreign Office as a secret Cold War machine for the production of anti-communist materials and the undertaking of covert psychological operations, both at home and abroad.70 Established as an offshoot of the 67 During the Cold War, the distinctions between ‘propaganda’, ‘information policy’, and ‘publicity’ are extremely blurred. Due to their negative connotations, the terms ‘psychological warfare’ and ‘propaganda’ are often used interchangeably with ‘information policy’ by contemporary officials and scholars. Simply put, ‘psychological warfare’ employs all kinds of weapons to influence the minds of enemies, such as ‘propaganda’, ‘covert action’, and ‘subversion’. ‘Propaganda’ can be divided into ‘white’ (‘overt’), ‘grey’, and ‘black’ (‘covert’) propaganda, depending on the technique of distribution—whether the source is attributable—and the kind of materials—whether they are positive (projection of Britain or America), defensive (replying to communist attacks), or offensive (attacking communism) in nature. ‘Information policy’ usually refers to ‘white’ or ‘overt’ propaganda, which is acknowledged by government. It carries materials from ‘positive’ to ‘defensive’, but rarely of an ‘offensive’ and ‘subversive’ nature. Of course, one can still draw a line between the purely ‘informational’ work, such as library centres or educational exchange, and other ‘propaganda’ with a clear Cold War objective in mind. But in this chapter, as in most US and British documents, ‘propaganda’ and ‘information policy’ are used interchangeably. 68 Streibert to Smith,  Mar. , FRUS, –, , pt. , –. 69 HKAR , –; Clark to Evans,  Jan. , CO /, INF//; Evans to Clark,  Jan. , ibid., PRO. 70 See Lyn Smith, ‘Covert British Propaganda: The Information Research Department: –’, Millennium / (/), –; W. Scott Lucas and C. J. Morris, ‘A Very British Crusade: the Information Research Department and the beginning of the Cold War’, in Richard J. Aldrich (ed.), British Intelligence, Strategy and the Cold War – (London, ), –; Paul Lashmar and James Oliver, Britain’s Secret Propaganda War – (Phoenix Mill, Stroud, ).

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IRD in , the Regional Information Office in Singapore was responsible for planning, producing, and distributing materials, both anticommunist and positive, for Asian consumption.71 In addition to the Singapore headquarters, a separate branch was created in Hong Kong in  ‘[t]o make researches into and to provide for the Foreign Office material on Communist activity in the area suitable for use in antiCommunist publicity . . .’72 It is worth noting that the United States and Britain had different approaches to propaganda. Whilst USIS operations were basically overt in nature, the British believed that if propaganda and information work were to be effective in Asia, materials had to be disseminated unattributably via indigenous channels. The Assistant Secretary of State of the Information Policy Department in the Foreign Office,73 Christopher Warner, realized that the Asians were extremely sensitive to Western influence, and ‘any Western-issued anti-Communist material was automatically mistrusted’. To John Rayner, who headed the Regional Information Office in Singapore, it was essential ‘to talk to Asians through Asian mouths and therefore indirectly’.74 In other words, rather than disseminating anticommunist materials directly, the British sought to cultivate local newspapers and writers to incorporate these materials unattributably into their publications. In this aspect, the Regional Information Office played an important part in ‘transmut[ing] this material into forms acceptable to Asian publics’, and in ‘finding channels for the dissemination of antiCommunist propaganda which does not ostensibly come from a European source’.75 Britain did not regard this as a ‘covert’ operation, but rather as an ‘indirect’, ‘discreet’, and ‘personal’ approach.76 71

Rayner to Murray,  Oct. , FO /, /G, PRO. Minute by Hebblethwaite,  June , FO /, P//G, PRO. 73 The Information Policy Department (IPD) was the ‘overt’ branch of the British information service. Unlike the secret Information Research Department, which was mainly responsible for anti-communist or ‘negative’ propaganda, the IDP concentrated on ‘positive’ programmes, or the projection of Britain. Nevertheless, both departments maintained close links and exchanged materials with each other. 74 Note of st Meeting between Warner and Barrett,  May , FO /, P//G; Rayner to Murray,  Feb. , FO /, PR//G, PRO. 75 Blackburne to Murray,  May , FO /, PR//G, PRO. 76 FO Minute by Moberly, Dec.  , FO /, P//G; Rayner to Murray,  Feb. , FO /, PR//G, PRO. It could be argued that the British approach fell into the realm of ‘grey’ propaganda. Although the British did engage in ‘overt’ publicity, mainly through the British Council and the British Broadcasting Company, the ‘overt’ branches of British information machinery had suffered from financial retrenchment after , at a time when ‘covert’ propaganda operations were flourishing during the Cold War. See J. M. Lee, ‘British Cultural Diplomacy and the Cold War, –’, Diplomacy & Statecraft, / (March ), –. 72

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Hong Kong

In , Anglo–American collaboration in the whole field of propaganda and information policy was intensified in response to the Soviet propaganda offensive. When the Foreign Ministers of the Atlantic Powers met in mid-May, Acheson and Bevin agreed that an increased publicity effort was needed to counter the policies of the Soviet bloc. They also hoped to avoid duplication of each other’s propaganda activities. To US information officers, the British were experienced in propaganda, and their technique superior.77 The British, for their part, did not have a high opinion of US propaganda, but were impressed by, and wanted to exploit, Washington’s huge resources.78 Shortly after the Foreign Ministers’ meeting, the US Assistant Secretary of State for Public Affairs, Edward Barrett, met with his British counterpart, Christopher Warner, in London to explore means of strengthening Anglo–American cooperation. They covered such topics as coordination of information policy and ideas, exchange of materials, techniques of distribution, and cooperation in the field. Warner explained Britain’s ‘grey’ technique of disseminating unattributed anti-communist material through indigenous channels. While stressing that the US effort was ‘strictly overt’, Barrett stated that ‘there was room for more exchange of ideas’ between Britain and the United States about the different techniques of distribution. Barrett also tried to secure British agreement to an expanded press-monitoring service in the US Consulate General in Hong Kong for propaganda purposes.79 It was agreed that, while the British and US governments would ‘retain complete freedom of action’, they would maintain ‘close consultation and cooperation’ as well as ‘continuous exchange of ideas’, both at headquarters and in the field, ‘with a view to developing common lines of information policy, planning and conduct of activities’. Liaison officers would be appointed to each other’s capitals for these purposes.80 No sooner had a general agreement been reached in London than British and US information officers on the ground began to ‘explore practical ways and means of increasing cooperation while retaining full freedom of action’.81 In July , the Public Affairs Officer of USIS 77 Rayner to Murray,  Feb. , FO /, PR//G; Hoyer-Millar to Warner,  Feb. , FO /, PR//G, PRO. 78 Minute by Warner to Strang,  June , FO /, P//G, PRO. 79 Younger to Diplomatic Missions,  July , ibid.; Hoyer-Millar to Warner,  Feb. , FO /, PR//G; Note of st Meeting between Warner and Barrett, FO /, P//G; Note of rd Meeting between Warner and Barrett, ibid., PRO. 80 Memo. by Barrett,  Oct. , RG , INR –, Lot D , Box , NA. 81 State to Diplomatic Missions,  July , RG , USIS HK –, Box , NA.

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Hong Kong and the Hong Kong representative of the Regional Information Office met on several occasions to coordinate their efforts, especially regarding the translation and publication of Chinese-language books, and information work among labour unions in Hong Kong. They were concerned about the duplication of certain titles in their book translation programmes. In view of the available funds and manpower, they saw the need for closer coordination so that the number of books or other materials for translation and distribution could be increased. They agreed to provide each other with lists of major materials to be translated. In addition, they discussed ‘plans for more effectively reaching labor unions in the Colony’, as Communist agents ‘have been actively at work for some months and have recently increased their activities to a considerable degree’. In this regard, the Hong Kong representative of the Regional Information Office insisted that ‘subtle means’ be used since the colonial authorities were ‘reluctant for any official activity to be too obvious’. Materials distributed by the Regional Information Office were thus unattributed. The US Public Affairs Officer, on the other hand, said that USIS Hong Kong had begun to distribute, ‘through friendly elements in certain industrial concerns’, magazines and pamphlets, most of which were attributable. They agreed to continue to ‘develop cooperative relations’.82 Constraints on USIS Information Work in Hong Kong Despite the agreement at the top, US information officers in Hong Kong continued to face difficulties with the British during the s. Relations between USIS Hong Kong and the colonial authorities were lukewarm, sometimes hostile. The Hong Kong government simply acquiesced in USIS activities, but did not actually cooperate with the Americans in a significant way. The main factor which hampered Anglo–American cooperation in Hong Kong was British sensitivity to ‘anti-Chinese communist propaganda’.83 The US Consulate General had been told repeatedly that Hong Kong should not be employed as ‘a production or distribution point for material which would in any way antagonize Communist China and, thereby, jeopardize the future safety of the Colony’.84 Grantham did not permit ‘immoderate criticism of the Peking Government’: whilst USIS ‘apparently can distribute material in 82 83 84

HK to State,  July , ibid. Memo. of Conversation,  Feb. , RG , CA –, Reel , NA. Frillman to Steiner,  Dec. , RG , USIS HK –, Box , NA.

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Hong Kong

Hong Kong critical of the Soviet Union or communism’, it ‘must be “moderate” in its criticism of the Peking regime, at least in material distributed in Hong Kong’.85 But the crux of the problem lay not simply in differences over the tone of propaganda, but rather in divergence in policies towards China. As Britain and the United States had different perceptions and policies in dealing with the PRC, it was not surprising that their differences would also be manifested in propaganda and information policy. ‘[W]hile American policy towards China remains so inept’, the British Embassy in Beijing observed, ‘it is perhaps too much to expect that its propaganda should not suffer similarly.’86 One instance in which Anglo–American differences over China spilled over into USIS operations was the Hong Kong government’s sudden decision to stop the Voice of America (VOA) broadcasts over Radio Hongkong in January . In his letter to USIS Hong Kong on  January, the Public Affairs Officer of the Hong Kong government, Jack Murray, said that the relay of VOA in Cantonese would be immediately replaced by the British Broadcasting Company (BBC) Overseas Services news in Kwoya. Apart from the technical reason of making a wider use of BBC material in Chinese, Murray stressed that ‘it is essential that our broadcasting services should talk with “one voice” ’. But as a result of the Chinese Communist military offensive in Korea in early January, Anglo–American differences over how the war should be waged had become more serious, and these differences of view were also reflected in their overseas broadcastings. Whilst it was the British policy ‘to keep the door to peaceful but honourable settlement open as long as possible’, Murray argued, official US policy seemed to be ‘tending towards shutting the door against Peking (and perhaps opening it again towards Taipeh)’.87 From the British point of view, the Voice of America had been ‘extremely belligerent’ in its recent broadcasts, so much so that Rediffusion, a private wire service in Hong Kong, warned its news staff that ‘nothing but harm would come if they continued to carry them’.88 In justifying his decision to the Colonial Office, Grantham claimed that his authorities had for some time been considering making wider use of BBC material in Chinese over Radio Hongkong, and finally decided ‘to make the change as unostentatiously as possible’ by stopping the relay of VOA broadcasts ‘without any special advance announce85 86 87 88

HK to State,  Feb. , G./–, RG , DF –, Box , NA. Peking to IPD,  Feb. , FO /, PB/, PRO. Murray to Frillman,  Jan. , FO /, PB/, PRO. Smith to Rayner,  Jan. , ibid.

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ments’. More importantly, Grantham stressed that the United States had been ‘well aware of our policy not to use Hong Kong as a base for propaganda against the Central People’s Government’, and had expressed ‘full understanding of our action’, if not ‘complete agreement’. However, recent VOA broadcasts on China had been taking ‘a line widely divergent from the policy of His Majesty’s Government’, hence, the decision to stop the relay of VOA broadcasts in Chinese over Radio Hongkong.89 The United States reacted strongly to Hong Kong’s decision. The State Department instructed the US Consulate to deliver ‘an aggrieved protest to the Governor about absence of prior warning’. In meeting with the Hong Kong representative of the Regional Information Office, Leslie Smith, the Public Affairs Officer of USIS Hong Kong, Paul Frillman, stated that while he ‘did not question the right of the Hongkong authorities to carry out this action’, he felt that ‘it had been done in a most uncooperative manner’. Ambassador Franks reported from Washington that the State Department had ‘represented to us informally but in strong terms’ its resentment over the stopping of VOA broadcasts without prior consultation. This ‘lack of courtesy’ on the part of the Hong Kong government, Franks said, was particularly embarrassing for the State Department, which was trying to persuade the Department of Commerce to relax the strict licensing of raw materials to Hong Kong. Besides, although the State Department as a whole realized the ‘advantages of not openly provoking Chinese Communists in Hong Kong’, Britain could not count on ‘such a sympathetic attitude from the American public’. With the military twists and turns in Korea, US domestic opinion was intensely hostile to Communist China. It had been reported that, having learnt of the Hong Kong government’s failure to notify the United States beforehand, the correspondent of Time was writing ‘a strong Story’ on this incident.90 As usual, Franks was keen to remind London of the wider context of the Anglo–American relationship. Nevertheless, both the Truman administration and the Labour government wanted to close this episode as soon as possible without further discussion. The British believed that the US complaint centred not especially on the Hong Kong Governor’s decision to stop the VOA broadcasts itself, but rather on the lack of prior notification. 89

HK to CO,  Feb. , ibid. Washington to FO,  Feb. , ibid.; Rayner to Murray,  Mar. , FO /, PB/; Washington to FO,  Jan. , ibid., PB/, PRO. 90

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Hong Kong

And some officials in the State Department did realize that ‘the Voice of America was perhaps sailing too close to the wind’.91 In January , the United States and Britain were confronted with so critical a situation in Korea that they did not want a dispute over Hong Kong to add to their difficulties. Relations between USIS Hong Kong and Radio Hongkong did not improve in the aftermath of the incident. During the second half of , Radio Hongkong ‘remained relatively indifferent’ to the recordings of USIS Hong Kong. Although the Americans had loaned approximately seventy discs to Radio Hongkong, it broadcast only five hours of attributed programmes.92 By mid-, USIS Hong Kong ‘finally severed all relations’ with Radio Hongkong as well as with Rediffusion. Its radio operation then concentrated entirely on producing taped scripts for VOA. As the programme inspector of the State Department reported on the activities of USIS Hong Kong during this period: ‘There appears little chance that either Radio Hongkong or Rediffusion . . . can be persuaded either to relay the Voice [of America] or to carry anything except entertainment discs, at least until British policy changes radically.’ 93 Apart from VOA broadcasting, USIS Hong Kong had to accept other restrictions imposed by the colonial authorities. The Hong Kong government did not allow ‘covert’ distribution of materials by USIS. In , it delivered two ‘strong protests’ to the US Consulate General regarding USIS operations—an unattributed pamphlet printed by USIS had violated Hong Kong’s publication ordinances. The main thrust of the British complaint was their view that the ‘USIS’ agreed function was to “explain, by overt means, American policies and American life” ’. The Hong Kong government did not consider unattributed materials to be ‘overt’, although it had ‘tacitly agreed’ to a number of unattributed USIS publications in the past few years. In this regard, the Hong Kong Political Adviser claimed that there had been an ‘understanding’ between Warner and Barrett in London that ‘explicitly anti-Communist publications’ did not ‘come under the scope of the “agreement” ’ in .94 From the British point of view, the problem arose not simply because the pamphlet was unattributed, but also because it contained ‘explicitly anti-communist’ content. To US information officers, ‘[t]he 91 Malcolm to Watson,  Mar. , FO /, PB/; Watson to Malcolm,  Mar. , ibid., PRO. 92 HK to State,  Mar. , RG , USIS HK –, Box , NA. 93 USIS Inspection Report by Olson to State,  June , ibid., Box , NA. 94 HK to USIA,  Aug. , ibid., Box , NA.

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fact that Hong Kong Government considers unattributed material illegal still occasions some difficulties for this office in view of the fact that some types of propaganda are much more efficacious when they are not attributed’.95 Nevertheless, in the light of the ‘stringent attitude’ of the colonial authorities, USIS Hong Kong decided to ‘cut to a minimum’ such unattributed pamphlets. The production of pamphlets, as compared with World Today magazine, was a relatively minor operation for USIS Hong Kong. The Americans realized the importance of not endangering other more important press and publication works ‘by running unnecessary risks of more restrictive British action’.96 Of all USIS activities, the Hong Kong authorities were particularly sensitive to propaganda targeted at the Hong Kong audience. In May , the Hong Kong Police confiscated a truckload of USIS leaflets containing a speech by the US Secretary of Labor to be distributed to local workers.97 The Hong Kong government was tough in dealing with both pro-Beijing and pro-Nationalist elements in labour unions, whose activism from time to time resulted in clashes. In , for example, a number of active left-wing union leaders and film workers were deported on the grounds of connection with the Chinese Communists.98 Obviously, US involvement in the sensitive labour field would not be welcomed by the British. As a result, USIS Hong Kong had to stop producing and distributing materials designed primarily for Hong Kong workers. The showing of motion pictures remained the only effective means of reaching labour.99 In the field of education, local communists were also active in infiltrating schools. The Education Department of the Hong Kong government exercised tight control over the curriculum and restricted political propaganda by both leftist and rightist schools.100 But such an even-handed approach was also applied to USIS information work: the colonial authorities often turned down US suggestions to assist in the distribution of literature to counter left-wing influence in schools.101 95

96 HK to USIA,  Aug. , ibid. HK to State,  Mar. , ibid. HK to USIA,  Apr. , RG , The Murphy Collection on International Communism, –, China, Box , NA. 98 Tsang, Democracy Shelved, –. On the relationship between the Hong Kong government and left-wing labour, see Catron, ‘China and Hong Kong, –’. 99 HK to USIA,  Apr. , RG , The Murphy Collection on International Communism, –, China, Box ; HK to USIA,  Mar. , RG , USIS HK –, Box , NA. 100 Wang (ed.), Xianggang Shi Xinbian, Vol. , . 101 HK to State,  Dec. , RG , USIS HK –, Box ; HK to State,  Aug. , G./–, RG , DF –, Box , NA. 97

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Hong Kong

Thus, it could be argued that the British attitude towards USIS operations in Hong Kong was tacit consent at best, and outright opposition at worst. As the State Department’s Program Inspector, Theodore Olson, assessed the activities of USIS Hong Kong in mid-: ‘Relations with the Government of Hong Kong constitute a special problem. It is obvious that the British attitude towards USIS is one of distrust if not of outright hostility.’ The result was that USIS operations were apparently ‘under constant surveillance’, and were ‘regularly being chivvied and checkreined by colonial officialdom’. Nevertheless, ‘it is something we have to live with’ in a British colony, the inspection report continued, for ‘we cannot expect to carry on activities that the British find objectionable’. More importantly, it would be ‘most shortsighted to jeopardize our principal Hong Kong function, the preparation of material for Chinese audiences elsewhere, in our eagerness to reach the two million Chinese in the colony’.102 Truly, most of the anticommunist materials produced in Hong Kong were used not locally, but by other USIS posts in Southeast Asia in influencing the overseas Chinese there. According to the Country Plan for USIS Hong Kong of January , the most important objective was to ‘diminish Chinese Communist influence among Overseas Chinese’, a target audience which was placed above mainland Chinese and Hong Kong Chinese.103 After , USIS curtailed its activities designed for Hong Kong itself, while focusing on the audiences in Southeast Asia and mainland China.104 In short, the attitudes and policies of the Hong Kong government made it difficult for USIS to undertake large-scale information work in the Colony.105 Anti-Communist Propaganda in Southeast Asia Regarding anti-communist propaganda in Southeast Asia, the British Information Research Department (IRD) worked closely with the 102 Inspection Report by Olson to State,  June , RG , USIS HK –, Box , NA. 103 USIA to HK,  Nov. , ibid.; USIA to HK,  Feb. , ibid., NA. 104 USIS HK to USIA,  Aug. , ibid., Box ; HK to USIA,  Mar. , ibid., NA. 105 Lombardo has ignored the restrictions which the British imposed on USIS operations directed at the Hong Kong audience. As he argued, ‘the population of Hong Kong, including the growing number of refugees and the expatriates, were targeted with all forms of propaganda media’. Lombardo, ‘A Mission of Espionage, Intelligence and Psychological Operations’, .

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United States Information Agency (USIA). Such cooperation was also extended on the ground. The Regional Information Office in Singapore and its Hong Kong branch played an important part in planning and producing materials on communist activities in Southeast Asia suitable for use in anti-communist propaganda.106 The British then exchanged their materials for USIS products. Materials produced by IRD and the Regional Information Office were ‘highly regarded and well received’ by USIA, which wanted to make sure that USIS Hong Kong would ‘receive these regularly’.107 Under the direction of Leslie Smith, the Hong Kong branch of the Regional Information Office maintained ‘cordial and close working relationships’ with USIS Hong Kong. They were ‘in close touch and co-ordinate[d] their activities’. There was ‘an informal publicity committee’ consisting of senior members of USIS, as well as British representatives from the Regional Information Office and the British Council, which met at monthly intervals ‘to consider new ideas for publicity in South East Asia’.108 In March , the US Far Eastern Regional Public Affairs Officers meeting on overseas Chinese was held in Hong Kong to discuss the implementation and operational problems of information policy regarding the Southeast Asian overseas Chinese. It was agreed that ‘Communist activities in relation to schools, students and textbooks are the most dangerous activities from USIS point of view’. The importance of Hong Kong in US overt propaganda was confirmed when USIS Hong Kong was assigned as the ‘production’ and ‘coordinating and information center for Chinese-language materials’ for other USIS posts in Southeast Asia.109 John Rayner, who headed the Regional Information Office in Singapore, was invited to attend the meeting. In explaining the British approach, Rayner said that ‘positive propaganda’ was ‘the most important’, although he agreed ‘not [to] diminish our [British] effort in regard to negative propaganda’. He also stressed ‘the importance of indirect propaganda’, while admitting that ‘a proportion of direct propaganda is necessary’. After the meeting, Rayner got the impression that the 106 RIO to Saigon,  Nov. , FO /, PR//G; Minute by Hebblethwaite,  June , FO /, P//G, PRO. 107 Carroll to Marshall,  Dec. , FO /, PR/; Rennie to Barker,  Dec. , ibid., PRO. 108 Minute by Smith,  Dec. , enclosed in Cox to Wright,  Jan. , FO /, P/, PRO. 109 Report on the Public Affairs Officers Meeting on Overseas Chinese held in Hong Kong, – Mar. , enclosed in USIA dispatch,  Mar. , RG , USIS HK –, Box , NA.

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Hong Kong

Americans ‘seemed to agree with all our own views, and they said that they are now, as far as they can, working on very much the same lines’.110 It should be stressed that Anglo–American cooperation, however close, still stopped short of joint operations and the two countries’ differences in approach to propaganda made any joint effort undesirable. J. W. Nicholls of the British Information Policy Department held the view that ‘too much collaboration in preparing material would enfeeble the best characteristics of both the American and the UK output. In many areas not only our approach but our language is bound to be different, and to try to combine the two would produce an unattractive and ineffective bastard result’. The Director of USIA, Theodore Streibert, thought in the same way: ‘Anglo–American cooperation in the field should not be overt, but should take the form of constant and discreet consultation about our various operations and their effectiveness.’111 Thus, while US and British information officers in Hong Kong coordinated their activities closely, they did not engage in joint production operations.

   :    The tens of thousands of Chinese refugees who had fled the mainland into Hong Kong since the late s presented another challenge to Anglo–American relations at the local level. From Washington’s perspective, the fact that the refugees had voted with their feet was a Cold War issue that should be exploited by the ‘Free World’. But as far as Hong Kong was concerned, to exploit the plight of Chinese refugees would be politically sensitive, and simply to single out the group for special treatment would be administratively infeasible. The plight of the Chinese refugees in Hong Kong first aroused the concern of some American voluntary organizations sympathetic to the Nationalist cause. In February , the Aid Refugee Chinese Intellectuals, Inc. (ARCI) was formed in New York by some prominent American politicians, businessmen, and scholars under the leadership of Congressman Walter Judd with the aims of ‘provid[ing] material aid and arrang[ing] resettlement and rehabilitation of Chinese intellectuals who 110 111

Rayner to Rennie,  Mar. , FO /, PR/, PRO. Nicholls to Watson,  May , ibid.; Watson to Nicholls,  Apr. , ibid.

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are destitute, ill or in danger as refugees from totalitarian oppression’. While stressing that its purpose was ‘not political but humanitarian’, ARCI did acknowledge from the outset that its operations, if successful, would inevitably bring about ‘a creative cultural and political byproduct’. By providing temporary relief, such as medical and teaching facilities, to intellectual refugees in Hong Kong, and by arranging the resettlement of anti-communist intellectual leaders to Southeast Asia and especially Taiwan, ARCI hoped to win ‘the faith of the people of Asia’ and finally ‘the great Chinese Mainland back in the family of Free Nations and freedom-loving people’. In June, ARCI established a branch in Hong Kong to facilitate its operations.112 At first, the Truman administration showed little interest in the formation of ARCI and the plight of escapees from areas of Asia under communist rule generally. Instead, the Europe-first administration paid more attention to escapees from behind the Iron Curtain, and established in  the Escapee Program which aimed to provide reception and resettlement services to European refugees. But as ARCI repeatedly requested financial support from Washington, the State Department gradually became more interested in supporting the escapees and refugees from Asia. As a proposal for the extension of the Escapee Program to Asia had made plain: ‘The situation in Hong Kong is clearly the most pressing escapee problem in the Far East, and it is a symbol of the alleged neglect of the United States for refugee and migration problems in the Far East during a period when unprecedented resources were being devoted to the alleviation of similar conditions in Europe and the Near East.’ American support for selected refugee intellectuals in Hong Kong, the proposal argued, would result in ‘the advancement of political, psychological warfare and intelligence objectives of the United States in the Far East’.113 It was believed that Chinese refugee intellectuals and leaders could provide valuable intelligence about the situation on the mainland, and their talents could be exploited for US propaganda operations. Moreover, US support for Chinese refugees could help counter ‘the Communist propaganda allegation that the U.S., a “western, white” nation, regards Asians 112 ‘Aid Refugee Chinese Intellectuals, Incorporated’, Booklet enclosed in Judd to Jessup,  May , Philip Jessup Papers, – alphabetical, ACA–AID (Personal), Box A, Manuscript Division, Library of Congress, US. For a detailed account of ARCI work, see Ena Chao, ‘The Cold War and the Refugee Assistance: A Case Study of Aid Refugee Chinese Intellectuals, –’ [In Chinese], EURAMERICA: A Journal of European and American Studies, / (June ), –. 113 ‘Escapee Program Submission FY–’, Memo enclosed in Martin to McConaughy,  Oct. , RG , CA –, Reel .

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Hong Kong

as second-class world citizens by comparison with Europeans’.114 For these reasons, the US administration decided in early  to finance the economically desperate ARCI through the Mutual Security Assistance funds. But such support was predicated on the conditions that ARCI projects should concentrate on the resettlement of intellectual refugees, and that the ‘Hong Kong Government would not object’.115 From Hong Kong’s point of view, the coming of Chinese refugees from the mainland was hardly a new phenomenon, but their massive influx since the late s, which brought the Hong Kong population to two and a half million by the early s, was a challenge of a different kind. It had been the Hong Kong government’s policy not to feed or house the refugees from the mainland in order to avoid encouraging the destitute to come for ‘free lodging and free food’, as Governor Grantham has put it. And prior to , most Chinese refugees would return to the mainland (or move elsewhere) once the situation there had improved.116 However, the post-war Chinese refugees were different in that they came to Hong Kong chiefly to escape communist rule, and if no opportunities for emigration overseas could be found, they were here to stay in Hong Kong. Also, their huge number meant that private charitable and welfare organizations (both local and international) alone were no longer able to provide welfare services to all, and the colonial authorities had to assume a greater responsibility. Despite the magnitude of the problem, the Hong Kong government was not enthusiastic about the work of ARCI. Although Foreign Minister Anthony Eden might have been convinced by Judd’s promise of ‘a completely non-political effort’ and thus asked the colonial authorities to render suitable support for the ‘humanitarian task’ of ARCI in early ,117 Grantham remained skeptical of the American organization. At the time, the colonial authorities were suppressing the relief efforts by Beijing and local communists to the fire victims of the Tung Tau squatter area, suppression which triggered a riot in March. It would be politically embarrassing for the Hong Kong government to allow American assistance to the pro-Nationalist refugees in the Colony, just at a time when a ‘comfort mission’ from Communist China was denied 114

McConaughy to Allison,  Aug. , ibid. Cox to Morgan,  Feb. , WHO NSCP, –, Psychological Strategy Board Central Files Series, Box , DDEL.; McConaughy to Allison,  Feb. , RG , CA –, Reel . 116 Grantham, Via Ports, –. 117 Judd to Eden,  Jan. , RG , CA –, Reel ; Eden to Judd,  Jan. , ibid. 115

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entry to the territory.118 Indeed, Beijing had long criticized the British of turning Hong Kong into an anti-communist base. When, in an inaugural dinner of ARCI, Dean Rusk talked of the importance of ‘a large body of trained and competent Chinese in communities outside the borders of China who could be available to the Chinese people when freedom returns to that unhappy land’, Grantham lamented that this would only add to the communist accusations of Hong Kong as ‘a base of aggression against China’.119 The Hong Kong Governor realized that an even-handed approach towards both communist and American relief missions had to be adopted if the precarious political balance could be maintained. Nevertheless, British officials in the Colonial Office were quick to remind Grantham of the risk of causing ‘great offence in influential circles in U.S.’ if the prominent Congressman’s organization were denied cooperation by the Hong Kong authorities.120 Indeed, the attitude of the Hong Kong government towards American assistance to Chinese refugees was not entirely negative, for at least this would help lessen its burden of providing welfare services to so many. What it opposed, however, was overt identification of the US administration’s involvement since this would provide ammunition for Beijing’s propaganda machine. The Hong Kong government insisted (and the Americans agreed) that any financial assistance given by Washington to ARCI be treated ‘as a strictly confidential matter’, and ‘no mention of grants from State Department funds . . . [be] made in ARCI publicity’.121 In addition, the British did not oppose the arrangement by ARCI for the resettlement of intellectual refugees to Taiwan (or Southeast Asia), not least because this could remove some of the anti-communist elements from the politically precarious Hong Kong. But they were less enthusiastic about ARCI’s local integration services, such as the provision of education and medical facilities to refugees in the Colony. It was feared that projects of this kind would necessitate a change in the existing education and welfare policies, affecting the way of colonial governance. Thus, the proposals by ARCI to create a medical clinic and a Chinese university were turned down by the colonial administration since this would require the latter to ‘change its regulations regarding such things as standards for medical practitioners and university professors’. The British did not want to make Hong Kong ‘so attractive a place that many more refugees 118 119 121

HK to CO,  Jan. , CO /, PRO. 120 CO to HK,  Jan. , ibid. HK to CO,  June , ibid Aldington to Boorman,  Feb. , ibid.

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Hong Kong

will want to come’.122 In view of the colonial authorities’ restrictions, the Hong Kong office of ARCI thus concentrated its efforts on the registration and selection of qualified refugee leaders for resettlement to Taiwan and on a limited scheme of translation.123 Washington’s financial assistance was not confined to ARCI. In , the Escapee Program, which had been extended on a limited scale to the Far East a year ago, was enlarged, and permanent staff were assigned in Hong Kong. The Far East Refugee Program (as the Asian section of the Escapee Program was called) financed a number of American voluntary agencies, such as the National Catholic Welfare Conference, the Lutheran World Federation, and the Free China Relief Association, for their housing, vocational training, and medical projects in Hong Kong. The Far East Refugee Program was carried out not purely for humanitarian reasons, however. What the Eisenhower administration had in mind was to ‘achieve maximum psychological impact through relatively token assistance’.124 The Far East Refugee Program would only assist in the resettlement of ‘that small percentage of the bona-fide Chinese political refugees who are identified as being in groups or categories having special political or psychological significance’, but not the whole mass of refugees in Hong Kong (approximately , by ). But US information officers and covert specialists had to act cautiously in exploiting American assistance projects. The Hong Kong colonial authorities, as a condition of acceptance of Escapee Program operations locally, had made clear that there should be ‘no publicity concerning the fact of U.S. Government financing of refugee assistance activities carried out through voluntary agency channels’. Realizing that publicity of official US involvement might provoke Beijing or induce the influx of more refugees, American propagandists were willing to accept the limitations imposed by the colonial authorities. Materials concerning the conditions of Chinese refugees and American assistance projects would

122 HK to State,  Feb. , WHO NSCP, –, Psychological Strategy Board Central Files Series, Box , DDEL. 123 HK to CO,  Sept. , CO /, PRO. 124 Memo by State,  July , RG , Records of the Office of Chinese Affairs , Lot D , Country File , Box , NA. According to Davis, in view of communist criticisms of US discrimination against Asian refugees/immigrants, the Far East Refugee Program served ‘as a way to show U.S. concern without opening the American doors’ to tens of thousands of Asian immigrants. Michael G. Davis, ‘Impetus for Immigration Reform: Asian Refugees and the Cold War’, The Journal of American-East Asian Relations, /–, Fall–Winter , –.

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be exploited, either attributed or unattributed, to the cooperating voluntary agencies.125 In , the plight of the Chinese refugees in Hong Kong became a concern of the international community when the United Nations High Commissioner for Refugees (UNHCR) sent a mission headed by Dr Edward Hambro to the territory to investigate to the possibility of extending its mandate to Hong Kong. The conclusion of the Hambro mission was that the Chinese refugees were ‘political refugees’ and should be ‘of international concern’. However, legal technicality as a result of the existence of ‘two Chinas’ prevented the High Commissioner from providing assistance to the Chinese refugees. As most of the refugees owed allegiance to the Republic of China, they were supposed to be diplomatically protected by Taipei. Although the Hambro report did admit that Britain’s recognition of the People’s Republic of China had ‘rendered diplomatic protection in Hong Kong by the Government in Taipei impossible’, the High Commissioner still could not protect these refugees ‘as long as the Government in Taipei is accepted as the Government of China by the organs of the United Nations’.126 In May , the United Nations Refugee Fund (UNREF) Executive Committee considered the Hambro report and adopted a resolution requesting the High Commissioner ‘[t]o give sympathetic encouragement to Governments and organizations with a view to their assisting in alleviating the problems of the Chinese refugees in Hong Kong’.127 By this time, the Hong Kong government had some reservations about the involvement of the UN in the refugee problem. So far, the British had made no appeal to the United Nations for help; indeed, it was the Ford Foundation (partly funded by the CIA) which sponsored and made possible the Hambro mission in the first place. Apart from the ‘complicated legal and possibly political issues’ about the extension of the High Commissioner’s mandate to Hong Kong, they did not ‘want to get involved in any sort of publicity campaign designed to draw attention to the plight of refugees in Hong Kong’. The Hong Kong government did not want to make ‘any distinction between “refugees” and the 125 Joint State–USIA–FOA Instruction,  Feb. , RG , USIS HK –, Box ; Annual Report on Far East Refugee Program in Hong Kong/Macau Area ( July – June ),  July , ibid., NA. 126 Dr. Edward Hambro, The Problem of Chinese Refugees in Hong Kong (Holland, ), –. 127 Geneva to FO,  May , CO/, FED//, PRO.



Hong Kong

rest of the population’, both of which groups, it believed, were suffering from the same hardships. To Grantham, it was ‘not only undesirable, but impossible, to allocate funds for the exclusive use of “refugees”’. Besides, he hoped that any outside assistance should be given without strings attached so that the colonial authorities could use the money freely to benefit the community as a whole.128 By , though, the British were no longer in a position to resist international assistance, if any should be offered. Early in February , the Hong Kong government had lifted, and seven months later reimposed, the restrictions on entry from mainland China, bringing the number of refugees to , in a total population of . million. ‘Hong Kong’s resources of water, housing, employment, education and health services’, the British Parliament was told, were ‘taxed to the utmost.’129 The  rioting by pro-Nationalist elements and Zhou Enlai’s subsequent warning that China ‘could not permit further Hong Kong disorders on the doorstep of China’ had added a political dimension to the refugee problem. As The Economist magazine wrote gloomily of the impact of the riots: ‘Whether these refugees and their descendants are pro- or anti-communist or merely roofless unemployed is beside the point: they will provide increasingly inflammable material whenever Peking wants to explore the possibilities of properly organized “disorders on China’s doorsteps”.’130 Addressing the Legislative Council in late February , Governor Grantham talked of ‘a human problem, a problem of ordinary men, women and children’. Although the Hong Kong government had spent more than HK$  million on resettling , refugees and immigrants to multi-storey estates, Grantham noted, another , squatters had yet to be housed. Grantham concluded his Annual Review by saying that it was remarkable how much the government had done, but no less remarkable how little help Hong Kong had received from outside. His message was quite clear: the problem of Chinese refugees was too vast for the Hong Kong government and voluntary agencies alone to solve, and the international community had to offer a helping hand.131 Indeed, throughout  and , numerous voluntary organizations, refugee groups, and informed 128 HK to CO,  Dec. , ibid.; Howard-Drake to Comfort,  June , ibid.; HK to CO,  Mar. , ibid. 129  Dec. , Hansard, Fifth Series, Session –, Vol.  Sec. –, column –;  Oct. , ibid., Vol.  Sec. –, column –. 130 The Economist,  Nov. . 131 FEER, /,  Mar. , –; Xingdao Ribao,  Feb. .

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opinion, both local and overseas, had been pleading for international assistance for Hong Kong’s seven hundred thousand refugees.132 In February , the Chinese refugee problem came under the international spotlight when the UNREF Executive Committee considered and adopted a resolution submitted by US representatives. The Executive Committee, unable to reach a clear decision as to the eligibility of Chinese refugees in Hong Kong for assistance, referred the question to the General Assembly, which was to meet in the autumn to consider the new mandate of the UNHCR. But the resolution was not entirely welcomed by the Hong Kong government. Grantham believed that the matter of refugees should be dealt with ‘as a problem of people and not as a game of political football’. It was feared that discussion in the General Assembly, in which many communist governments were represented, ‘could be positively harmful to Hong Kong if it is confined to the making of cold war points’. Instead, the colonial authorities hoped that consideration of the problem should take place in the United Nations Economic and Social Council (ECOSOC), with ‘its comparative freedom from publicity’, so that a resolution, ‘which the General Assembly can easily accept and which will at least provide a vehicle for the provision of international aid in forms which will be acceptable to the Hong Kong Government’, would be passed. What is more, British officials in Hong Kong and local public opinion alike expected the United Kingdom ‘to take some initiative in future discussions on this [refugee] problem and to try to give it a constructive twist’, since it was the United Nations Association of Hong Kong and the Chinese Nationalist representatives, not the British representatives, which seemed to have taken the initiative in the earlier Executive Committee discussions.133 There was a feeling that London was not doing enough for Hong Kong’s refugee problem. The home government in London thought otherwise, however. The Colonial Office, the Foreign Office, and the Treasury believed that it would be ‘in the best interests of Hong Kong’ to avoid discussion of the extension of the UN mandate to Hong Kong in the twenty-fourth session of ECOSOC in July, and instead to ‘reserve our fire for the General Assembly in the autumn’. Whitehall wanted to postpone the discussion until later that year not only because there still existed ‘many political and legal differences’, but more importantly because of its realization 132 See, e.g., Xingdao Ribao,  May ; Xianggang Shibao,  Jan. ; New York Times,  Apr. . 133 Ledward to Dalton,  Mar. , CO /, FED//, PRO.

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Hong Kong

that all present United Nations funds were ‘fully committed’. The Americans had informed the British that ‘there would be no United States governmental money forthcoming to assist refugees in Hong Kong’. Financial consideration was as important to the United Kingdom as to the United States. ‘[A]ny U.N. commitment to Hong Kong’, the Colonial Office told the Hong Kong Governor, ‘would almost certainly involve a fresh U.K. contribution to U.N. funds’, and there were ‘obvious objections to channeling U.K. money to Hong Kong through the U.N.’.134 Thus, it is clear that neither Washington nor London was able to make greater financial contributions to the problem of Chinese refugees in Hong Kong. In short, economic realpolitik had triumphed over humanitarian concern. It was not until November that the international community seemingly demonstrated greater concern for the problem of Chinese refugees in Hong Kong. On the th, the UN General Assembly passed a resolution recognizing the problem as one of ‘international concern’ (but not under the mandate of the UNHCR), calling for governments, international organizations and non-governmental agencies for assistance, and authorizing UNHCR to ‘use his good offices’ to encourage arrangements for contributions to the Hong Kong government.135 The implications were that, if large-scale international assistance were not forthcoming, Hong Kong alone would have to assume the main responsibility. Not even the British home government was willing to make a greater commitment, for the Colony itself was thought to be able to finance the resettlement programmes. In private correspondence with Whitehall and even in public speech, Grantham had expressed with regret the failure of the United Kingdom to bear a greater share of the cost of the refugee problem (except the contributions for the Shek Kip Mei fire and the Colonial Development and Welfare allocations). To Grantham, Britain’s assistance to refugees was ‘considerably less than the contribution Hong Kong has made to HMG towards defence expenditure’.136

134 Cabinet Steering Committee on International Organizations, I.O.C.(),  May , CO /, FED//; CO to HK,  May , ibid., PRO. 135 Xianggang Shibao,  and  Nov. . 136 HK to CO,  Apr. , CO /, FED//; Xingdao Ribao,  Dec. . Indeed, Grantham had suggested to Whitehall that, in order to cover the cost of housing and welfare services for refugees, the British government should forgo Hong Kong’s defence contribution which would otherwise be spent on refugees, and failing that, reconsider the proposed reduction in the Hong Kong garrisons. Grantham failed in both regards, however. Grantham, Via Ports, .

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The US administration, for its part, saw the Chinese refugees in Hong Kong as ‘a symbol for the Chinese people on the mainland and overseas of massive repudiation of the Red Chinese regime’. US support for refugees had to be ‘selective’; priority would be given to assisting ‘leadership elements, students, and others who are of special interest to the U.S. or who are targets of Communist campaigns’.137 Clearly, decision-makers in Washington were motivated as much by Cold War propaganda as by humanitarianism. Having said that, American voluntary agencies in Hong Kong did get actively involved in the provision of housing, education, and welfare services to Chinese refugees and immigrants. In short, the Chinese refugee problem was too heavy a financial burden for the Hong Kong government alone to bear and yet (until ) too sensitive a political issue for the international community to address. The British Empire in Hong Kong was more vulnerable than it appeared to be.

 It is a paradox that the ‘American diaspora’ in Hong Kong—consuls, spies, propagandists, voluntary workers, etc.—were both a source of ‘threat’ and stability from the British point of view. The Hong Kong government was particularly sensitive to US operations that were secret and unilateral in nature, fearing that they would become convenient targets for Beijing’s criticisms of the American use of Hong Kong as an anti-communist base. However untrue were the communist accusations, the British were eager to avoid any possible embarrassment caused by US activities, and to prevent any excuse for China’s intervention in the territory. The maintenance of British rule in Hong Kong depended on an even-handed approach towards all parties in the territory. If the US establishment were allowed to use Hong Kong for ‘clandestine’ activities, it would be difficult for the colonial authorities to deny communist elements carrying out similar operations in the territory. As a result, the activities of the ‘American diaspora’ in Hong Kong had to be limited, and Hong Kong should not be turned into an American ‘informal empire’. 137 OCB Progress Report on NSC /,  Dec. , WHO SANSAR, –, NSC Series, Policy Papers Subseries, Box , DDEL.

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Hong Kong

While the Americans were not allowed to launch an unrestrained anticommunist crusade in Hong Kong, neither could Britain avoid involving a ‘neutral’ Hong Kong in the containment of China.138 Indeed, in the field of intelligence gathering, both Britain and the United States saw the need for closer collaboration because of the inadequacies of their respective intelligence efforts, and the benefits of a pooling of resources and expertise. The US Consulate General had good working relationships with the Hong Kong authorities regarding the interrogation of refugees, and with the local branch of the Regional Information Office concerning the monitoring of the mainland press. There were frequent and fruitful exchanges of intelligence between the British and Americans. As far as propaganda and information policy were concerned, the colonial authorities gave their tacit consent, but not outright cooperation, to USIS Hong Kong. They were hostile to USIS activities directed at the local audience. It was US covert action which rendered Anglo–American relations in Hong Kong most problematical. The Hong Kong authorities opposed collection of intelligence by secret means, ‘covert’ distribution of propaganda material, and, above all, the use of Hong Kong as a base of subversion against China. Given the Anglo–American differences over China policy, London was reluctant to bring pressure to bear on Hong Kong on behalf of Washington. Nevertheless, in carrying out their intelligence and propaganda operations US officials on the ground were generally willing to observe the political and legal framework tolerated by the colonial authorities. This was inevitable since the ‘American diaspora’ were in a host environment. But the fact that Hong Kong was a British colony was not insignificant. The United States respected Britain as a close ally and a responsible colonial power. Such a respect was rooted in the American ideology of racial hierarchy, which placed the Anglo–Saxon race at the top, as well as the Anglo–American community of values and language, which facilitated close consultation and mutual understanding.139 As a result of their field experience, US officials in Hong Kong gradually developed a 138 On the one hand, Lombardo has exaggerated the extent of Hong Kong’s contribution to US covert operations and anti-communist propaganda, by ignoring the constraints imposed by the British. On the other hand, Tsang has stressed the success of the Hong Kong government in maintaining ‘neutrality’ in the Cold War despite some ‘deviations’. See Lombardo, ‘A Mission of Espionage, Intelligence and Psychological Operations’; Tsang, ‘Strategy of Survival’. 139 See Michael H. Hunt, ‘Conclusions: the Decolonization Puzzle in US Policy— Promise versus Performance’, in David Ryan and Victor Pungong (eds.), The United States and Decolonization: Power and Freedom (London, ), –.

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more realistic understanding of Communist China and greater sympathies for the precarious Hong Kong than did the administration.140 They recognized that the US strategic use of Hong Kong had to be as discreet and subtle as possible, and from time to time they were willing to curtail those activities that were seen as too ‘provocative’ by the British. This is not to suggest that the ‘American diaspora’ in Hong Kong ‘imagined’ themselves as a separate community, ignoring the Cold War requirements of their home government. Nor had the American sojourners integrated themselves into the indigenous society, sharing the mentality of the local people. Quite the contrary, US consuls general, were intensely anti-communist, two of them, Karl Rankin and Everett Drumright, each later becoming US ambassador to Taiwan and a staunch supporter of Chiang Kai-shek. Nonetheless, in their day-to-day operations US officials on the ground were generally successful in striking a balance between their American identity and their local perspective. This owed much to the fact that they were given a relatively free hand in accommodating the British demands for restraint in the territory. US intelligence and propaganda operations in Hong Kong, though valuable, were not of such importance that Washington would risk damaging relations with London. Unlike the introduction of export controls during the Korean War, they rarely commanded the attention of top decision-makers; nor did they become a controversial issue in US domestic politics. Consequently, decision-makers in Washington seldom brought pressure to bear on US officials in Hong Kong, whose views might have been closer to the colonial authorities than to their home government’s. The Americans were not unaware that Hong Kong was only a ‘reluctant Cold Warrior’. 140 Ralph N. Clough Oral History Interview,  Apr. , , FAOHP, GU; Paul Kreisberg Oral History Interview,  Apr. , , ibid.; Karl Lott Rankin, China Assignment (Seattle, ), .

Conclusion The vulnerability of Hong Kong in the age of decolonization and the Cold War presented British and American decision-makers with a number of policy dilemmas. After , the British were acutely aware of the military, political, and economic vulnerability of Hong Kong in the shadow of Communist China. Yet the communist threat to Hong Kong was more potential than real, and was more serious a problem for some officials than for others. Although the British did not expect an isolated Chinese attack on Hong Kong, they could not rule out the possibility that Beijing would attack the Colony in order to deny the possible American use of it as a base of operations in the event of a wider Sino–American war over Korea, Indochina, or Taiwan. Despite the estimate that the Chinese Communists would leave Hong Kong alone because of its economic and political value, there still existed the fear that they would retaliate against the Colony if London came to support what they saw as aggressive US policies locally and internationally. In this regard, the British were also confronted with the ‘American threat’ of an indirect kind: Washington’s demands for action against Beijing which might put Hong Kong in jeopardy. Above all, it was Britain’s powerlessness to defend Hong Kong militarily that intensified their sense of vulnerability. Given their priorities in Europe and Malaya, the British were unable to provide the necessary forces for a successful defence of Hong Kong, whose loss in the Cold War (but not in a world war) was thought to have disastrous psychological consequences for the ‘Free World’. In view of this, the British had to engage US interest in the defence of Hong Kong, while steering American policy away from its more belligerent inclinations. But in the process of restraining Washington, London had to make compromises over Hong Kong in order to demonstrate Britain’s value as a close ally of the United States. The United States, for its part, saw Hong Kong primarily in Cold War terms. After the fall of mainland China into communist hands, Washington defined an important role for Hong Kong in serving US policy objectives: gathering intelligence on China, enforcing export controls against the PRC, and producing anti-communist materials for overt propaganda in Southeast Asia. However useful it was in these areas, Hong Kong was in broad terms peripheral to US global interests. Decision-makers in Washington evaluated Hong Kong as significant not

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in its own right, but in the wider context of the Anglo–American relationship. For Eisenhower, Hong Kong was a diplomatic instrument, a possible bargaining chip to obtain British support for US policy with regard to French Indochina, the Nationalist-held offshore islands, and the Chinese seat in the United Nations. In reconciling their conflicting national interests and their own contradictory policy objectives, British and US governments were influenced by a number of factors, such as their assessments of the communist threat to Hong Kong and its defensibility, the impact of domestic politics and public opinion, the decisive intervention of top decision-makers in the policy process, and, above all, the general state of the Anglo–American relationship. To London and Washington, then, perceptions formed and decisions reached regarding Hong Kong were connected directly with the twists and turns in Anglo–American relations.

   ‒ ,

‒

The coming to power of the Chinese Communists in  confronted the Labour government with the twin problems of the future of Hong Kong and Britain’s relations with the new China. For prestige, economic, and strategic reasons, the British were determined to hold on to Hong Kong. Despite its confidence in deterring a possible Chinese attack after sending reinforcements to Hong Kong, the Labour government still hoped to rally moral support from the United States for its decision to ‘resist communist aggression’. The Truman administration also set the future of Hong Kong in the context of the response to the rise of Communist China. Although unimpressed initially by the analogy of the ‘Berlin of the East’, by September Acheson had been gradually convinced of the significance of Hong Kong in British hands. In view of the US military’s scepticism about the British capability to defend Hong Kong, however, the Truman administration concluded in October that, in the event of a Chinese attack, the United States would provide merely moral support to Britain in an appeal to the United Nations—support which was all that the Labour government wanted at the time. If the United States did not regard Hong Kong as so vital that scarce resources should be committed for its survival, it nonetheless saw great value in making use of this outpost in the Cold War struggle. Following the fall of China into communist hands, the American



Hong Kong

Consulate General in Hong Kong grew rapidly in size and function, becoming a principal listening post on the mainland and the main production centre of anti-communist propaganda in the s. In order to safeguard Hong Kong and the British economic interests on the mainland, the Attlee government was inclined to develop diplomatic and economic relations with the Chinese Communists. The Truman administration, however, approached the China problem differently, hoping to use export controls as a lever to prevent Beijing’s total dependence on Moscow, while providing limited assistance to the Chinese Nationalists ‘until the dust settled’. The Labour government, nonetheless, understood the domestic pressure on the US administration for continuing military supplies to the disintegrating Nationalist regime, despite the possible danger to Hong Kong after the communist capture of the arms as a result of Taiwan’s fall. The Truman administration, for its part, recognized that Britain had more vital stakes in China and Hong Kong than did the United States, and that Europe should be the top priority of both countries rather than Asia. Thus, the Americans agreed to disagree with the British on the issue of recognition. By the year’s end, after a series of diplomatic consultations and policy coordination, the US and British governments had moved some way towards the other’s positions on Hong Kong’s defence, China trade controls, and recognition of the PRC. Differences, of course, remained, but they existed within the framework of a working partnership. The Anglo–American partnership was soon to be tested again, however. The outbreak of the Korean War in June  widened their differences over China, which were also manifested in policies towards Hong Kong. After Truman had announced the dispatch of the Seventh Fleet to neutralize the Taiwan Strait, the Labour government was concerned about the possible extension of the conflict to China. In the event of a Sino–American war over Taiwan, it was feared, Britain would be placed in a dilemma between supporting the United States, thus risking Chinese retaliation against Hong Kong, and standing aloof in the conflict, thereby splitting the Anglo–American alliance. Thus, at the high-level US–UK talks in late July, the British tried to restrain the Americans from expanding the war and committing the United States to Nationalist China. At this stage, British officials, such as Dening, could draw some comfort from their apparent success in impressing upon the United States the vulnerability of Hong Kong and the importance of localizing the conflict in Korea. But as the military situation in Korea worsened by early , the Truman administration

Conclusion



was under great pressure to adopt more assertive measures against the PRC and to tighten the bonds with the Nationalist government. The Defense Department and the JCS were displeased by what they saw as the British predisposition to appease the PRC, at a time when American soldiers were being killed in Korea. In Congress and some quarters of the US public, there were growing criticisms that Britain, whose policies appeared to be dictated by Hong Kong and the China trade, had too much influence on the United States. At this critical stage of the Korean conflict, Anglo–American relations were strained. But it was US pressure for the intensification of economic warfare against the PRC that posed the greatest challenge to Hong Kong during the Korean War. The Hong Kong government and the Colonial Office, in particular, were reluctant to sever all economic ties with the mainland, fearing that this would lead to serious unemployment and social disorder, and would reduce Hong Kong’s economic value to China. But for Bevin and Franks and later Churchill too, colonial interests had to be subordinated to the general interests of Anglo–American relations. By taking a leading role in applying strategic controls against China, they argued, Britain could demonstrate its closeness to the United States, and, in the process, help contain other more aggressive US proposals, such as a naval blockade and a complete embargo. The legitimate trade between Hong Kong and the mainland could also be justified as a result. In the course of the Korean conflict, Britain proved to be the most valuable of all US allies in the economic containment of China. But for all the efforts made by the Hong Kong authorities to introduce export controls, the US Congress and the American public, incited by the MacArthur hearings, remained critical of British trading with the enemy. London’s only allies were in the State Department and the US Consulate General in Hong Kong: the former took the lead in pressing for the liberalization of the American embargo on Hong Kong, while the latter helped the colonial authorities to counter MacArthur’s accusations about Hong Kong’s strategic exports to China. By lending a helping hand to the British on these issues, and by referring to British cooperation during the internal debates, the State Department hoped to build arguments against the more aggressive proposals of the Defense and Commerce Departments. Throughout the Korean conflict, State and Defense were often at loggerheads over the adoption of additional measures against the PRC and the role of the allies in the US policy-making process. Their disagreement over export controls in Hong Kong thus reflected their wider differences over how the Korean War should be waged.



Hong Kong

The Eisenhower administration, which succeeded its Democratic predecessor in , generally attached more importance to Asia. This led the British Chiefs of Staff to perceive, correctly or incorrectly, on at least three occasions that the United States had become more interested in the defence of Hong Kong. Military exchanges between British and American officials also took place more frequently, resulting in a series of joint planning studies on Hong Kong. To Eisenhower, however, the defence of Hong Kong was more a political than military decision; his attitude towards Hong Kong was often shaped by developments elsewhere in Asia, and the maintenance of the Anglo–American relationship in particular. In  and , he hoped to secure British support for ‘united action’ in Dien Bien Phu and the defence of the Nationalist-held Quemoy and Matsu respectively. Conscious of the vulnerability of Hong Kong, Eisenhower recognized that his ally had to be reassured. Thus, during both crises, Eisenhower wrote personally to Churchill, hinting at possible US assistance to Hong Kong in return for London’s cooperation with Washington in Indochina and the Taiwan Strait. Personal friendship with Churchill allowed Eisenhower to call on the ‘special relationship’ at the highest level in his last-ditch attempts to rally British support. This was a not unimportant lever on Britain, at a time when the personal animosity between Eden and Dulles was hardly conducive to Anglo–American solidarity. Eisenhower was unsuccessful, however, in his appeals to Churchill in  and . Like its Labour predecessor, the Conservative government was inclined to believe that the best defence for Hong Kong would be by diplomacy. For all its suspicion and dislike of Chinese Communism, the Churchill government remained eager to avoid unduly provoking Beijing. By the mid-s, British economic interests on the mainland had been all but squeezed out, whilst the strategic objective of splitting the Sino–Soviet alliance seemed untenable. But the British still had a vulnerable Hong Kong to safeguard. Thus, during the Indochina and Taiwan Strait crises, the primary concern of the Conservative government was to avoid open conflict with the PRC. Notwithstanding his desire to maintain a ‘special relationship’ with America, Churchill was not convinced that Eisenhower’s calls for greater support for Paris and Taipei were the wisest courses to take: this would, among other consequences, probably trigger a major war with the PRC, and in that context a Chinese attack on Hong Kong. After the Suez crisis of , the restoration of the Anglo–American relationship was a high priority for both the Eisenhower administration

Conclusion



and the new Macmillan government. This also influenced the way decision-makers on both sides of the Atlantic saw Hong Kong. In , there were three issues, all related to Hong Kong in one way or another, which preoccupied the two allies: the future of Hong Kong, the China trade differential, and Chinese representation in the United Nations. First of all, the Suez Crisis demonstrated to the Conservative government that Britain could not afford to maintain its colonial and world power status without the backing of the United States. When the British long-term defence policy came under review in early , the British position in Hong Kong appeared more uncertain than at any time since . Once the Sandys White Paper had been published, and the level of armed forces in Hong Kong decided, it became plain that the British could not defend Hong Kong against an external attack without US nuclear support. For all its reservations about Eden’s policy in Suez, the Eisenhower administration still hoped to see Britain continue to play the role of a world power, albeit one that was staying in close step with the United States. Thus, in response to Macmillan’s suggestion, at the Bermuda conference in March, of ‘abandoning’ Hong Kong, Dulles tried to persuade the Prime Minister to reconsider by elevating Hong Kong’s status to symbolic significance. Dulles even hinted at helping to hold Hong Kong if Macmillan did not press for the admission of China into the United Nations. When Eisenhower’s National Security Council met in August, however, it decided not to provide military support for Hong Kong beyond the evacuation of US civilians in the event of a Chinese attack. The United States was sceptical of the British determination to fight to remain there, and, in view of its own over-stretched commitments, was unwilling to assume former British responsibilities in case of their withdrawal. Also, without obtaining a definite statement by London that Britain would cease calling for the admission of the People’s Republic into the United Nations, Eisenhower, as always, saw no need to follow up his implicit offer of committing the United States to Hong Kong’s defence. It was not until October that the British and the Americans got another chance to bargain over Hong Kong and China. At Bermuda in March, apart from a possible US commitment to Hong Kong, Dulles had also hinted that Washington might temper its opposition to the relaxation of the China trade differential if London became more cooperative on the issue of Chinese representation. At the time, the Macmillan government was pressing for the abolition of the China differential as a result of strong pressure from Parliament and British



Hong Kong

manufacturing industry, if not simply for the sake of reviving Hong Kong’s entrepôt trade with the mainland. In May, the British, believing that the American reaction, or at least Eisenhower’s, would not be too vigorous, unilaterally announced the removal of the China differential. The Eisenhower administration acquiesced in the British decision, in the expectation that London would reciprocate its favour on the political front. Such a moment came at the Washington conference in October, after the Soviet Union had successfully launched Sputnik. In Washington, Eisenhower offered to strengthen Anglo–American nuclear cooperation; in return, Macmillan agreed not to press for the admission of China into the United Nations; and again in return Eisenhower agreed to examine jointly with the British the problem of Hong Kong’s defence. The British realized that Chinese representation was a more vital and sensitive issue for the US administration than were other China matters, and that Beijing’s response to their continued support for Taipei in the United Nations would not be too adverse. And as long as Washington was willing to make a big concession on the sharing of nuclear technology, the Macmillan government certainly had a strong inducement to move some way towards the US position on Chinese representation. For Eisenhower, a strengthening of Anglo–American collaboration at nuclear, political, and economic levels was essential in countering the challenges, actual or imagined, posed by the apparent Soviet advance in nuclear technology. But Eisenhower was also aware that a demonstration of US interest in Hong Kong was part of the price—albeit a small one in —that had to be paid for ensuring British cooperation in the containment of Communist China. As a result of the Bermuda and Washington conferences in , the Anglo–American ‘special relationship’ was revived, a relationship that was predicated on a largely personal footing, and in the form of what Macmillan described as ‘inter-dependence’.1 While not altering the reality of Britain’s junior status in the Anglo–American partnership, the two conferences highlighted the fact that the United States still had to depend on Britain if the containment of global communism was to be effective. As far as Hong Kong was concerned, the setting up of the US–UK Working Group in late  did not invalidate the existing US policy on limited evacuation assistance; nor did it make Hong Kong a ‘joint defence problem’ in a way Macmillan might have wanted. 1 Anne Deighton, ‘British Foreign Policy-Making: The Macmillan Years’, in Kaiser and Staerck (eds.), British Foreign Policy, ; Alistair Horne, Macmillan – (London, ), .

Conclusion



Nevertheless, by the end of , the uncertainty over Hong Kong’s future in the light of the general defence review had dissipated: the British would not ‘abandon’ Hong Kong for the time being. As for the United States, Hong Kong had become a symbol of the ‘Free World’— an important intelligence and propaganda centre, a refugee haven, and a showcase for the capitalist way of life. And partly as a result of the embargoes on China, Hong Kong gradually emerged as an industrial centre of low-priced textile products, a large proportion of which were exported to America. As long as Hong Kong remained a British colony, and Britain a principal US ally, Hong Kong would continue to be a concern for the United States during the Cold War.

 ,   ,   ‒ ‘ ’ To the United States, the Cold War was a total war that had to be waged on all fronts—political, economic, and psychological—and required the participation of as many countries as possible, from European to Middle Eastern to Asian. With its numerous air bases, naval installations, and sites for technical intelligence collection scattered around the world, Britain undoubtedly stood out as the most valuable of all US allies. ‘Whenever we want to subvert any place’, Frank Wisner, who headed the Office of Policy Coordination responsible for US covert operations, once said, ‘we find that the British own an island within easy reach.’ 2 As part of the British Empire, Hong Kong, however vulnerable, was seen by the United States as having a role in the containment of the PRC. By taking advantage of Hong Kong’s strategic location for ‘China watching’, the US Consulate General provided the administration with first-hand information in the formulation of foreign policy. On the other hand, USIS Hong Kong supplied American propagandists in Southeast Asia and Washington with useful materials for psychological warfare. Furthermore, US officials on the ground oversaw the enforcement by the colonial authorities of export controls against the mainland, so essential to the success of the economic containment of China. Although Hong Kong was not in the front line of the anti-communist struggle, it did play a significant supporting role. Although the contribution of Hong Kong might not have changed the course of the Cold War, the 2

Kim Philby, My Silent War: The Autobiography of Kim Philby (London, ), .



Hong Kong

Americans obviously regarded its involvement as indispensable and were eager to secure British cooperation for that purpose. The Hong Kong case thus underlined the global nature of this ideological, political, economic, and military conflict. One should not exaggerate Hong Kong’s role in the Cold War, however. Tony Smith has argued that, besides the two superpowers, junior actors and allies also played an important role in ‘expanding’, ‘intensifying’, and ‘prolonging’ the East–West struggle.3 But Hong Kong seems to be a rather special case within Smith’s ‘pericentric’ framework: as a British colony, it was not an autonomous player, however junior, in the international system; nor did the British desire to ‘intensify’ and ‘prolong’ the Cold War with the Chinese Communists. In this regard, Hong Kong stood out as an example of what might be called ‘reluctant allies’, ‘semi-allies’, or ‘semi-neutrals’ in the Cold War; its room for manoeuvre was limited by geopolitics, historical ties, economic needs, and contradictory political goals. Because of its geographical proximity to and historical and economic links with the mainland, Hong Kong was vulnerable to Chinese Communist pressure. But apart from the Chinese threat, the British sense of vulnerability was also derived, albeit indirectly, from another source—the United States. The British worried that too close cooperation with Washington in the Cold War would provoke Beijing into retaliation against Hong Kong. For these reasons, they insisted that US intelligence and propaganda operations in Hong Kong be conducted in as discreet a manner as possible, and the Americans not be allowed to construct an ‘informal empire’ there. The China factor thus set strict limitations on the scope of Hong Kong’s involvement in the confrontation between the United States and the PRC. Indeed, the Hong Kong case bears striking similarities with the security dilemmas faced by the Scandinavian or Nordic countries— Denmark, Norway, Sweden, and Finland—and their roles in the US–Soviet rivalry.4 Caught between a fervent American Cold Warrior and a mighty Russian neighbour, the Scandinavian countries had little choice but to become either Washington’s ‘semi-allies’ or ‘semi-neutrals’ with Moscow-orientation. Thus, Norway and Denmark joined NATO, but with a public commitment not to allow the stationing of foreign 3 Tony Smith, ‘New Bottles for New Wines: A Pericentric Framework for the Study of the Cold War’, Diplomatic History, / (Fall ), –. 4 See Jussi M. Hanhimäki, ‘Security and Identity: the Nordic Countries and the United States since ’, in Geir Lundestad (ed.), No End to Alliance: The United States and Western Europe: Past, Present and Future (London, ), –.

Conclusion



troops and nuclear weapons on their soils; Sweden adopted a policy of neutrality, though making credible its posture by seeking Western aid and supporting economic warfare against the Soviet bloc; and Finland also proclaimed its neutrality in the Cold War, despite maintaining a ‘special relationship’ with the Soviet Union. The British and the Americans could compromise over a more discreet and indirect role for Hong Kong in the Cold War as a result of a continuous process of persuasion, moderation, and bargaining. If one accepts that the Anglo–American ‘special relationship’ was an interactive process of close consultation, informality, expectation, and mutual concession, their interactions with regard to Hong Kong have also demonstrated the distinguishing features of that ‘specialness’. The close consultative relationship between Britain and the United States was cemented by shared ideology and language, close personal bonds, and mutual respect. But, more importantly, it was their different perceptions and policies on global issues that necessitated a constant exchange of views. On Hong Kong, the US State Department maintained frequent diplomatic consultations with the Foreign Office, mainly via the British Embassy in Washington, whilst the US Consul General in Hong Kong had close contact with the Hong Kong Governor. The Hong Kong issue, at times, also received attention at the highest levels of the US and British governments. By referring repeatedly to Hong Kong’s vulnerable position during diplomatic consultations, the British hoped to impress upon the Americans the importance of a conciliatory approach towards China. What made the Anglo–American consultative relationship qualitatively different from their relationships with other allies was its inherent informality. The Americans were used to informal and secret discussions with the British outside the framework of formal alliances, such as NATO and SEATO, although they did not want to appear to give Britain a special status.5 Good personal relations at the highest level and informal channels of consultation could be used to overcome bureaucratic inertia, facilitate the diplomatic process, and strengthen Anglo–American cooperation. During the Indochina and the Taiwan Strait crises, Eisenhower appealed personally to Churchill, offering to assist in defending Hong Kong in return for London’s greater support for Paris and Taipei. An unimportant Hong Kong apparently became an 5 G. Wyn Rees, Anglo–American Approaches to Alliance Security, – (London, ), , .



Hong Kong

important bargaining chip for Eisenhower. Had it not been for his past friendship with Churchill, the US administration, based on careful costand-benefit calculations, might not have been willing to contemplate defending a possibly indefensible Hong Kong. In addition, in the course of the Bermuda conference in , a restricted dinner conversation at the Mid-Ocean Club provided an opportunity for Eisenhower and Macmillan and their foreign secretaries to exchange, freely and informally, their views on world issues. Macmillan surprised the Americans by saying that Britain was ‘considering abandoning’ Hong Kong, a consideration which prompted Dulles to hint at yet another ‘deal’ with the British. This is not to say that personal concords rather than national interests ultimately determined US policy. The point is that Eisenhower’s bargaining with Churchill and Macmillan over Hong Kong was illustrative of the informal nature of the Anglo–American relationship.6 Anglo–American interactions with reference to Hong Kong were also laced with expectations. The British expected that the United States would come to their rescue in the event of a Chinese attack on Hong Kong. Such an expectation was not based on any particular US undertaking over Hong Kong, but rather on the British perception of the United States as a close ally. The Truman administration, for its part, expected Britain to play a leading role in introducing export controls against China. Eisenhower also expected Churchill and Macmillan to provide support elsewhere in Asia in return for a US commitment to Hong Kong, however vague: in  in Indochina; in  over Quemoy and Matsu; and in  over the maintenance of Britain’s overseas obligations and the exclusion of the PRC from the United Nations. The expectation that the other party would behave in the desired manner, at times turned out to be wishful thinking.7 For example, Eisenhower was disappointed that he could not secure British cooperation in Indochina, whilst Churchill, equally disappointed, felt that American policy was too adventurous. Nevertheless, there was no serious recrimination between 6 In his study of the European influence on the United States, Risse-Kappen has also stressed the informal nature of the Anglo–American ‘special relationship’. The informal habit of consultation and informal norms and understandings gave Britain moderating influence and sometimes veto power over US policies. Thomas Risse-Kappen, Cooperation among Democracies: The European Influence on U.S. Foreign Policy (Princeton, ), , –. 7 For a discussion of how ‘expectation’ and ‘wishful thinking’ affected perceptions in different ways, see Robert Jervis, Perception and Misperception in International Politics (Princeton, ).

Conclusion



Britain and the United States as a result of unfulfilled expectations. Realizing that Europe was their top priority, the two allies would not allow any disappointment and differences over Asia, let alone Hong Kong, to damage their overall relationship. The Hong Kong case has also demonstrated that Britain stood plainly as a junior partner in the Anglo–American alliance. In Asia, London could exert only a moderating influence on Washington. The Labour government had to yield to US pressure over the Hong Kong aircraft dispute and the imposition of export controls against China. But, on other issues, the British were able to resist pressure for change in their own decisions, such as their recognition of the PRC and their refusals to support Washington during the Indochina and Taiwan Strait crises. Besides, they were able to control the ‘American diaspora’ in Hong Kong, to prevent the construction of an American ‘informal empire’. In short, the Anglo–American relationship was one of mutual dependence. Obviously, it was Britain that was more dependent on, and had to make more concessions to the United States than the other way round. And Washington was willing to do something which London wanted only when their interests coincided, not because the shrewd Britons were leading the unsophisticated Americans by the nose. Nevertheless, there was always a self-realization on the part of US decision-makers that making compromises or cutting deals with the British was the best way to maintain allied solidarity.8 For Eisenhower, Hong Kong was a price that the United States had to pay for maintaining Britain as its principal associate in the Cold War. 8 In explaining why the Western ‘democratic alliance’, or the American ‘democratic empire’, proved superior to the Soviet bloc/empire in maintaining allied solidarity and thus won the Cold War, Gaddis also stressed that the Americans were used to ‘compromise’, ‘bargaining’, and ‘deal-making’ with their allies. John Lewis Gaddis, We Now Know: Rethinking Cold War History (New York, ), –, –.

Epilogue After , the vulnerability of Hong Kong in the Cold War continued to perplex the British. But the main thrust of the British strategy of ‘defending’ Hong Kong was still by deterrence and diplomacy, and this proved increasingly successful. From December  onwards, the Anglo–American Working Group on Hong Kong met at Washington to agree on an intelligence estimate of the communist threat to Hong Kong and then to consider measures to meet it. But by mid-, the talks were ‘discontinued without any definite outcome’.1 The main problem lay in the British realization of the limitations of their forces in Hong Kong and the impossibility of defending the Colony, even with US nuclear weapons. No sooner had the Working Group produced an intelligence estimate in early  than the British Chiefs of Staff began to have doubts about proceeding with the talks. As has been mentioned in Chapter , they no longer believed that the joint concept of operations as agreed in the  US–UK staff talks were feasible, a concept based on the assumption that Hong Kong could be defended against open aggression for a significant period before any American nuclear weapons could be brought to bear. Moreover, they worried that further talks would reveal to the Americans the limitations of the British forces in Hong Kong, which would be reduced to six major units by .2 Although US military officials might not have been completely ignorant of the British strength and capabilities in the area, they had ‘not been told the future run-down of our [British] forces’ in Hong Kong and in the Far East generally. Any US agreement to help defend Hong Kong might also necessitate reinforcement on the part of Britain that could not possibly be met. There was also the danger that, if the fact that the British ‘had failed to secure a U.S. commitment were to leak out to the Chinese the risk of overt aggression would consequently increase’. In particular, the Hong Kong Governor was concerned about ‘consideration of evacuation plans, which, if known in Hong Kong, would cause loss of confidence in our determination to maintain our position in the Colony’.3 1

COS(),  July , DEFE /, PRO. The garrison stood approximately at this level until the late s. COS(),  Mar. , DEFE /; OPD(),  July , DEFE /, PRO. 3 COS(),  Mar. , enclosed in D(),  Mar. , CAB /, PRO. 2

Epilogue



If the British had doubts about continued Anglo–American planning for Hong Kong’s defence, ‘U.S. interests in Hong Kong have in most essential respects been advanced as a result of developments since ’, according to a report by the Operations Coordinating Board in June .4 Later that year, the Operations Coordinating Board began its review of the existing NSC policy statement on Hong Kong (NSC ) in the light of the newly approved US policy in the Far East (NSC /). According to NSC /, ‘[p]reservation of the territorial and political integrity of the Free World countries and other Free World areas against further Communist expansion and subversion’ became the primary objective of the United States, and Hong Kong was also regarded as part of the ‘Free World’.5 But there were two other important considerations that caused a shift in US policy towards Hong Kong: ‘a reported stiffer British attitude regarding their determination to maintain control of Hong Kong in the face of an outside threat’, and ‘Hong Kong’s increased importance as an industrial and financial center in the Far East and its potential effect on U.S. economic policy for that area’.6 As has been discussed in Chapter , in  the Eisenhower administration decided not to provide military assistance to Hong Kong, partly because of the apparent British lack of determination to defend the Colony. But by , as a result of ‘various exchanges of views and ad hoc meetings, plus other bits and pieces of evidence’, the NSC had come to the conclusion that ‘the U.K. did not intend to abandon Hong Kong’.7 All this resulted in a greater willingness on the part of the Eisenhower administration to contemplate US support for the defence of Hong Kong beyond evacuation of US and other nationals. When the NSC met on  June, it was agreed: In the event of an actual Chinese Communist attack on Hong Kong or major civil disorders with the direct support of the Communist Chinese, a decision as to whether or not the United States should intervene against the aggressor should be made in the light of the conditions existing at the time, including the British response to the attack, the extent of the hostilities . . . and actions which might be proposed by the United Nations.8 4 Operations Coordinating Board Report on Hong Kong (NSC ),  June , RG , NSC Policy Paper Series, Box , NA. 5 NSC /,  Sept. , WHO, SANSAR, –, NSC Series, Policy Paper Subseries, Box , DDEL. 6 Operations Coordinating Board Special Report on Hong Kong (NSC ),  Dec. , RG , NSC Policy Paper Series, Box , NA. 7 Memo. for the files,  May , WHO, NSCP –, Special Staff File Series, Box , DDEL. 8 Statement of US policy on Hong Kong, NSC /,  June , FRUS –, : China, –.



Hong Kong

But did this policy statement, approved as NSC /, symbolize a US commitment to the defence of Hong Kong? As a briefing note for the NSC meeting had pointed out, the statement took ‘a positive approach to a policy of helping the colony remain as part of the Free World’, and would ‘authorize U.S. intervention, if necessary, in the event of an armed uprising or aggression’.9 Nevertheless, the stipulation that the United States would intervene ‘in the light of the conditions’ was far from a firm US commitment to Hong Kong, for a final decision still had to be made by the US President. Indeed, when considering the policy statement at the NSC meeting, Eisenhower, together with the Bureau of the Budget, had many reservations about US assistance for the suppression of any civil disturbances in Hong Kong. If ‘the British were about to lose Hong Kong as a result of civil disturbances’, he argued, ‘Hong Kong would be such a completely hostile place that there would be little use in attempting to retain it’. Eisenhower also stated that he was not ready to order any US intervention in civil disturbances in Hong Kong ‘unless there was a showing that Chinese Communist forces were involved’.10 As always, Eisenhower probably did not regard Hong Kong as so vital that the Americans should commit themselves to its survival in any circumstances. It should also be pointed out that, by the time NSC / was approved in June, Eisenhower would soon leave office after serving as president for two terms. Even though Hong Kong had become more important to the United States economically, a change of the guard in the White House might bring about a reconsideration of US ‘commitment’ to Hong Kong, especially since, as this study has shown, the intervention of the US president could be decisive in the policy making process. Thus, in  the US Secretary of State, Dean Rusk, was told that the Johnson administration had made ‘no specific commitments’ to Britain with respect to Hong Kong.11 In , the Department of State also made plain that the United States ‘would not expect to defend Hong Kong for [the] British, nor do we expect [the] British to ask for this support’.12 9

Briefing Note for NSC Meeting,  June , RG , OMM Series, Box , NA. Memo. of discussion at NSC th meeting,  June , FRUS –, , –. 11 Bundy to Rusk,  Sept. , RG , CFPF, –, Political and Defense, Def  HK, Box , NA. 12 State to HK,  May , RG , CFPF, –, Political and Defense, Pol – HK, Box , NA. 10

Epilogue



Truly, in the s the British were less eager to coordinate Anglo–American planning for the defence of Hong Kong than they had been previously. As mentioned above, they worried that any discussions would result in the disclosure of insufficient British forces in Hong Kong and American demands for reinforcement if any US assistance were to be given. When, in March , Lord Mountbatten was queried by CINCPAC concerning ‘British intentions for the defense of Hong Kong’, he ‘gave no clear reply’. As the State Department assessed it: ‘The British have, in effect, discouraged any U.S. participation in planning with respect to Hong Kong.’13 Even during the  riots in Hong Kong, ‘British officials have consistently been reluctant to discuss their plans for the defense of Hong Kong and the role they may expect the United States to play in its defense’, according to a contingency study on Hong Kong by the State and Defense Departments as well as the CIA. Shortly before the Hong Kong Governor, David Trench, departed for home leave in June, he told the American Consul General that ‘the question of any joint action would have to be decided on an ad hoc basis’. The Americans thus concluded that US contingency planning should be predicated on the assumption that ‘we would not assist militarily in the defense of Hong Kong against overt Chinese Communist attack’.14 This book has argued that events and developments in the mid-s convinced the British that the only way of safeguarding Hong Kong was to deter a Chinese attack (probably in order to restore law and order in response to the outbreak of internal unrest) in the first place. As a memorandum from the Colonial Office to the Cabinet’s Defence Committee put it in : ‘It is the psychological deterrent . . . rather than the existence of Anglo–U.S. defence plans that will protect our position in the Colony.’15 Militarily, it meant the Chinese belief that any move against Hong Kong would result in American retaliation with nuclear weapons. The visit of the Seventh Fleet, Anglo–American discussions at suitable intervals in Hong Kong, etc. were believed to be useful to reinforce such a belief. On the civil side, the objective was ‘to discourage the Americans from any type of activity which could increase the Chinese belief that Hong Kong is, or is becoming, a base for American hostile actions towards China . . .’ In the fields of intelligence gathering and other 13 Bundy to Rusk,  Sept. , RG , CFPF, –, Political and Defense, Def  HK, Box , NA. 14 [Original emphasis], Politico-Military Contingency Study on Hong Kong, WH Report (), (no date), DDRS, , fiche , doc. . 15 D(),  Mar. , CAB /, PRO.



Hong Kong

operations, the Americans had to be ‘discreet in all that they do in or concerning Hong Kong’.16 During the s, as a result of the Vietnam War, the United States found Hong Kong particularly useful as a port of call for US naval vessels and a ‘rest-and-recreation’ centre for US soldiers. In , , and  the Chinese Communists protested to London against the US use of Hong Kong as a ‘base of aggression’ against Vietnam. This occurred against the backdrop of the most critical phase of the Cultural Revolution in China and later the outbreak of riots in Hong Kong. In , the British Consulates in Beijing and Shanghai were sacked, and their staff humiliated by Red Guards, partly in response to British suppression of the leftists in Hong Kong and also because of their collusion with American ‘imperialists’ there. Nevertheless, the US military use of Hong Kong was not affected, in a significant way, by either the chaos on the mainland or the riots in Hong Kong. Although a handful of US interests in Hong Kong were attacked during the  riots (for example, the USIS library and the Bank of America), local communists concentrated their struggle mainly against the British, not the Americans.17 And even their anti-British struggle had not been sanctioned by top Chinese leaders such as Zhou Enlai, who himself was involved in a power struggle with the radical Red Guards. On the other hand, the Americans themselves also showed restraint in Hong Kong. In , they and the British had worked out guidelines governing the use of Hong Kong facilities by the United States. Accordingly, rest and recreation visits would be kept unobtrusive; naval ship and personnel visits would be kept roughly to the  levels (,); ships recently publicized as in action off Vietnam should not come directly to the Colony; and a United States–Hong Kong Government consultation group was set up for the implementation of the guidelines.18 The Americans were willing to accept the judgement of the Hong Kong authorities as to the desirable volume of traffic, and a few scheduled US naval visits were cancelled during critical and uncertain periods of the Vietnam War. This was remarkable, given the fact that during the s the United States disagreed with Britain over a number of global issues, such as London’s refusal to send troops to Vietnam, and the American

16

COS(),  Mar. , enclosed in D(),  Mar. , CAB /, PRO. HK to State,  Feb. , RG , CFPF, –, Political and Defense, PolPolitical Affairs and Relations HK, Box , NA. 18 HK to State,  Feb. , ibid. 17

Epilogue



pressure on Britain to maintain its role east of Suez.19 Nevertheless, the Americans, as always, realized that the cooperation of the host government was essential to their strategic use of Hong Kong in the Cold War. As the situation in Asia became less tense with Sino–American rapprochement in  and the end of the Vietnam War in , the British sense of vulnerability over Hong Kong also dissipated. In , the People’s Republic finally established full diplomatic relations with Britain, thus ending the role of Hong Kong as a hostage to fortune in Sino–British relations. And as Hong Kong was transformed into an industrial and financial centre of the world, the United States increasingly treated the territory as a place in its own right. It saw Hong Kong as one of the US’s largest trading partners in Asia, a regional headquarters for American companies, and a popular place for US tourists— and not simply as an outpost for export controls and intelligence gathering. 19 For an analysis of the British decision to withdraw from East of Suez and its impact on Anglo–American relations, see Saki Dockrill, Britain’s Retreat From East of Suez: The Choice between Europe and the World? (Basingstoke, ).

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BIBLIOGRAPHY   . Dwight D. Eisenhower Library, Abilene, Kansas Dwight D. Eisenhower Papers as President (Ann Whitman File), – DDE Diaries Series International Series NSC Series Dwight D. Eisenhower Records as President, White House Central Files, – Papers of John Foster Dulles Subject Series White House Office, National Security Council Staff Papers, – Operations Coordinating Board (OCB) Central File Series Special Staff File Series White House Office, Office of the Special Assistant for National Security Affairs Records, – NSC Series, Policy Papers Subseries . Harry S. Truman Library, Independence, Missouri Papers of Harry S. Truman Department of State Selected Records Relating to the Korean War National Security Council Files President’s Secretary’s Files Papers of Dean Acheson Memoranda of Conversations, – . Lauinger Library, Georgetown University, Washington, DC Association for Diplomatic Studies, Foreign Affairs Oral History Program Oscar Armstrong Ralph Clough Everett Drumright Lindsey Grant John H. Holdridge Arthur William Hummel Jr. Richard E. Johnson Paul Kreisberg Larue R. Lutkins Edwin Martin Richard McCarthy

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INDEX Acheson, Dean: and Ernest Bevin ,  on export controls , , –, , –, , , , – on Hong Kong’s security –, , , –,  on Hong Kong aircraft dispute –, – and Korean War – on Nationalist China , –,  on recognition of China ,  American Consulate General in Hong Kong: evacuation advice by  and export controls –, , , –, –, ,  and Hong Kong government , , , – and interrogation of Chinese refugees , – and monitoring of Chinese press , ,  report on Hong Kong by , , , , , ,  size of , –, – see also under entries for individuals Anglo-American relations , , , , , , –, – in Hong Kong , , ,  as ‘special relationship’ –, –, , , ,  see also under entries for individuals Anglo-Chinese relations: after  –,  in   and China trade , , ,  after Geneva conference ,  and Hong Kong aircraft dispute – during Korean War – ANZUS –, ,  Attlee, Clement: on export controls , ,  and Harry S Truman ,  on Hong Kong ,  and Korean War , –

Bandung conference , , ,  Barnett, Robert , – Barrett, Edward ,  Bermuda conference () –, , , , , , , , ,  see also Dulles, John Foster; Macmillan, Harold Bevan, Aneurin  Bevin, Ernest ,  and Dean Acheson  on export controls –, , ,  on Hong Kong , –, –,  on recognition of China –,  on ‘third world force’ ,  on US military aid to Taiwan – Bradley, General Omar , , , , ,  Butterfield and Swire ,  Butterworth, Walton , –, , , ,  Central Intelligence Agency station in Hong Kong: and British secret service , – and Hoi Houw affair – and Kashmir Princess incident  and Office of Policy Coordination , ,  and request for a radio station – and Third force Movement – and US Consulate General  see also Civil Air Transport Incorporated (CAT) Chennault, General Claire  n., ,  Chiang, Kai-shek , , , , , ,  on Hong Kong ,  see also China, Nationalist China, Nationalist  attack on Rosita  blockade of China coast – and Chinese refugees in Hong Kong  and Kashmir Princess incident  China, People’s Republic of: attitude towards ‘unequal treaties’  bombardment of offshore islands 



Index

China, People’s Republic of (cont.): criticism of Churchill–Truman meeting –,  criticism of Anglo-American ‘two Chinas’ conspiracy –,  and Hong Kong aircraft dispute –,  peaceful coexistence , ,  reorientation to the Soviet economic bloc , , , ,  shooting of Cathay Pacific airliner – support to Viet Minh  value of Hong Kong to – see also Anglo-Chinese relations; and under entries for individuals China differential , , –, , – see also under entries for individuals Chinese representation in United Nations , , , –, , , – see also under entries for individuals Churchill, Winston: on China , ,  and defence review  on détente with Soviet Union , , ,  and Dwight D. Eisenhower , –, , , , ,  and Harry S Truman ,  on Hong Kong , , , , , , , –, , ,  Civil Air Transport Incorporated (CAT) , , , ,  Clough, Ralph , ,  n. Clubb, Edmund  Commander-in-Chief of the Pacific (CINAPAC) , , , , , , ,  Congress (US) , , ,  on China trade , –, ,  and Hong Kong , , , – MacArthur hearings at –, , , , ,  and Taiwan , , ,  Cox, Alfred  n., – Cultural Revolution  Dening, Esler , , , , , ,  Dien Bien Phu crisis –, – Donovan, ‘Big Bill’  Drumright, Everett –, , –,  Dulles, John Foster ,  and Anthony Eden , , 

on China differential , –, –,  on Hong Kong , –, , , , –, , –, ,  Eden, Anthony: on China differential , –, ,  on Hong Kong , , –, , , ,  visit to Washington  Eisenhower, Dwight D.: on China and Taiwan , , , ,  and Harold Macmillan , –, , , ,  on Hong Kong , –, , , , , , , , , , , , , , , –,  and massive retaliation , ,  and Winston Churchill , –, , , , –, –, , , , – Fechteler, Admiral William – FitzGerald, Desmond  Franks, Oliver  n., , , –, , , ,  Fressanges, Air Marshal Francis –, – Frillman, Paul  Geneva conference () , , ,  Grantham, Alexander , , , , – on Chinese refugees –, – on export controls , , ,  on Hong Kong’s security , –, ,  n.,  on  riots –,  on US activities in Hong Kong –, , – and Zhou Enlai – Graves, Hubert , –, –, , , ,  Hansen, Kenneth – Harding, General John  Holdridge, John  Hong Kong: as ‘Berlin of the East’ , ,  British acquisition of  as British trading post , , 

Index closure of Naval Dockyard ,  development of manufacturing industry , , , , ,  future of , , , , –, –, –,  and Kashmir Princess incident , ,  as ‘rest and recreation’ centre –,   riot –, ,   riots , , , –, ,   riots ,  role in Cold War – as signals intelligence post – Third Force Movement in – trade with China , –, ,  UN consideration of ,  and Yalta conference , – Young Plan  Hong Kong, Chinese refugees in –, ,  and Aid Refugee Chinese Intellectuals, Inc. (ARCI) – Hambro mission on  Hong Kong government’s policy towards –, –, – Hong Kong, defence of: and Amethyst Incident  British Chiefs of Staff’s views on  , –, , , ,  and evacuation of civilians , , , , , , , , , ,  and Five-Power Military Conferences on Southeast Asia  n., ,  and garrison –, –, , –, –, , , , ,  impact of Korean War on –, –,  impact of ‘unleashing’ of Chiang Kaishek on –,  in a global war , , , , ,  and Southeast Asia Treaty Organization –, , – US Joint Chiefs of Staff’s views on –,  US–UK staff talks () on , ,  and US–UK Working Group on Hong Kong –, ,  see also Bermuda conference; Washington conference; and under entries for individuals Hong Kong, export controls in: and additional economic measures against China –, 



and Coordinating Committee (COCOM) , –, , ,  divisions within US administration over –, –, –,  and Essential Supplies Certificates – introduction of –, ,  and naval blockade , , ,  and strategic embargo –, –,  and suspension of economic information to American Consulate – and total embargo , , ,  and transshipment control – and US licensing policy towards Hong Kong –, –, –, , ,  see also under entries for individuals and voluntary agencies , , –,  and Third Force Movement  and United Nations , – US policy towards –, , – Hong Kong and Shanghai Banking Corporation ,  Hong Kong government: attitude towards US operations , , –, –, –, – policy towards aircraft dispute , , ,  policy towards Communist and Nationalist activities –, –, ,  see also Grantham, Alexander Huang, Zuomei  India , , ,  Information Research Department ,  Japan: and export controls , –, , ,  occupation of Hong Kong ,  reconstruction of  Jardine Matheson ,  Johnson, U Alexis – Johnson administration  Jones, Arthur Creech  Judd, Walter ,  Kennan, George  Knowland, William 



Index

Korean War, see Anglo-American relations; Hong Kong, defence of; Hong Kong, export controls in; and under entries for individuals Labour government: concern about US military aid to Taiwan – policy towards Hong Kong , –, , , – recognition of China –, –,  see also Hong Kong, defence of; Hong Kong, export controls in; and under entries for individuals Lennox-Boyd, Alan , ,  Li, Zongren  Lloyd, Selwyn , –,  MacArthur, General Douglas , –, ,  see also Congress (US) McCarthy, Joseph  McConaughy, Walter , , ,  Macmillan, Harold: on China differential  on Chinese representation in United Nations –,  and defence review  and Dwight D. Eisenhower , , ,  on Hong Kong at Bermuda , –, , , ,  Makins, Roger ,  Malaya , , , ,  Mao, Zedong ,  on Britain ,  on Hong Kong – and Joseph Stalin  Marshall, George –, , , –, ,  Martin, Edwin  Merchant, Livingston , , , – Morrison, Herbert , , ,  Mountbatten, Lord  n.,  Murray, Jack  Perkins, George  Qiao, Guanhua  Radford, Admiral Arthur , –, , ,  Rankin, Karl , 

Rayner, John , – Regional Information Office ,  Hong Kong representative of , –, , ,  Robertson, Walter –,  Roosevelt, Franklin D. , ,  Rusk, Dean , , , , ,  Sandys, Duncan , – Sandys White Paper , , , ,  Sawyer, Charles – Scott, Robert: as Assistant Under-Secretary , , ,  as Minister in British Embassy  as Commissioner-General in Southeast Asia , , ,  Seventh Fleet , , , –,  Shawcross, Hartley – Smith, Leslie ,  Smith, Walter Bedell – Southeast Asia Treaty Organization , , – see also Hong Kong, defence of Sputnik , ,  Stalin, Joseph , , , , ,  Stassen, Harold  Stilwell, Richard ,  Stuart, John Leighton  Stump, Admiral Felix , ,  Suez crisis , , , , – Taiwan Strait Crisis, see China, Communist; Congress (US); and under entries for individuals Trench, David  Truman, Harry S: and Clement Attlee , , ,  and Douglas MacArthur ,  and Kem Amendment  and Li Zongren  and Winston Churchill , – Truman administration: and Angus Ward case  neutralization of Taiwan Strait , ,  policy towards US trade with China –, ,  support for Third Force Movement – see also Hong Kong, defence of; Hong Kong, export controls in; and under entries for individuals

Index United States: attitude towards colonialism , , ,  China lobby in , , ,  economic interests in Hong Kong , ,  public opinion on Hong Kong –, –, , , ,  and Sino-American ambassadorial talks , – United States Information Service in Hong Kong –,  and distribution of material – and Hong Kong government , , –,  and publicity of US aid to Chinese refugees – and use of Chinese in information policy 

 and Voice of America broadcasts – see also under entries for individuals

Vietnam War ,  Warner, Christopher , ,  Washington conference () –,  Wisner, Frank , ,  Young, Mark  Younger, Kenneth , , ,  Zhang, Fakui ,  Zhang, Hanfu ,  Zhou, Enlai , , –, ,  on Hong Kong – on  riots , , 