FCO 21/490 Detention of Anthony Grey

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Far Eastern Department,

Jhonist

1 August, 1969

Anthony Grey

907

Your telegram No. 2115 of 25 July mentioned the remarks of the Secretary of State on the difficulty of arranging an exchange for Anthony Grey. You will subsequently have seen these remarks in full in our telegram No. 250. You may well have wondered whether we were about to strip the vell from our covert channel to the Chinese in Hong Kong and from the discussions that have taken place through it. This is not the intention, By agreement with the Governor of Hong Kong we have been referring the curious to Mr. George Brown's letter of 1967 to Chen Yi and to subsequent official exchanges in Peking. No mention is being made (other than to Mr. Gerald Long of Reuters) of the covert channel. is a slight form of cheating, but necessary.

This

2. I enelose copies of two submissions of 23 and 31 July to give you some idea of how we are trying to conduct the defence.

(J. D. I. Boyd)

x. M. Wilford, Esq., C.M.G.

WASHINGTON,

*-who already komink

TOF SECRET

934

233

TOP SECRET

thanks

14 AUG 1969

bany

Sir S. Tomlinson

A Wilgo.r.

I 1918

COVERT CONTACTS WITH THE CHINESE AUTHORITIES

THROUGH HONG KONG

From my submissions on the case of Mr. Anthony Grey,

the detained Reuters correspondent in Peking, you will

already be aware of the existence of a covert channel to

the Chinese authorities on the mainland through Hong Kong.

This may be the moment to set out what we know at greater

length.

2. The go-between in Hong Kong is a local businessman of

Chinese race, K. C. Jay. He has acted as a point of

contact between ourselves and the Chinese authorities on

the mainland for a number of years. He is regularly in

touch with Mr. Jack Cater of the Hong Kong Trade and

Development Council, a career Civil Servant of the Hong Kong

Government on detached duty. The following is a brief

assessment of the advantages and disadvantages of the use

of this channel.

Advantages

3. It is clearly useful to have a point of contact in

Hong Kong with the mainland authorities through whom messages

of a practical, and occasionally of a political character,

can be passed. There is of course already one such point

of contact.

The principal representation of the mainland

interest in the Colony ie, as in many parts of the world,

- 1 -

TOP SECRET

930

TOP SECRET

the New China News Agency.

Business of a practical

nature has often to be conducted through this body.

However, the N.C.N.A. has tried for many years to acquire

a quasi-consular position as the spokesman of "progressive"

Chinese elements in the Colony vis-à-vis the Hong Kong

Government and all business conducted through the N.C.N.A.,

treated as the interlocuteur valable of the Chinese

Government in the Colony, tends inevitably to enhance the

public standing of the organisation. This, for obvious

reasons, we are anxious to discourage. Jay's first value

therefore is that he provides an alternative to the N.C.N.A.

4. Jay's second point of value is that he is deniable.

The Hong Kong public do not know that he is a channel to the

mainland and arrangements reached through him have the

advantage that they remain without official character unless

the Hong Kong Government decides otherwise. An example of

this function is offered by the case of Mr. Grey.

It was

possible to conduct with Peking a form of flexible negotiation

over Mr. Grey (albeit unsuccessful) which could not be done

through more orthodox channels, for fear of the consequences

for public confidence in Hong Kong. Such a negotiation

would be much more difficult to conduct through the diplomatic

channel in Peking (or in London) where, given the nature of

relations between officials on our side and their Chinese

counterparts, it would have to proceed by rigidly formal

steps, and where bargaining might in effect be ruled out by

- 2 -

TOP SECRET

Chinese unwillingness to be dislodged from any position

which they had formally taken up.

Disadvantages

The disadvantages of the Jay channel are, however, considerable. First, like many such go-betweens, he has

a tendency to want to be all things to all men. Not content with passing messages to us from the Chinese authorities, he is unable to refrain from embellishing them with personal philosophy and advice and it is often difficult to disentangle the two strands. A second functional disadvantage is his

reluctance to work to one master alone on the Chinese side. Jay works in the first instance to the Kanager of the Bank of China in Hong Kong, who is known to be a competent and responsible official enjoying the confidence of the Peking authorities. However, Jay also claims to carry on a personal correspondence with Chou En-lai's private secretary in Peking. Based on this latter correspondence he produces assessments of the balance of forces among the leaders in Peking (on the lines of "extremists" versus "moderates") which sometimes look like playbacks of assessments by Western "China-watchera" and consequently liable to be misleading; seem designed deliberately to make our flesh creep and hurry us into concessions.

The Balance

and which sometimes

6. Thus there must be reservations about the reliability of this channel. Nevertheless, we know from discussions last

- 3 -

TOP SECRET

year that the Governor of Hong Kong has a ome faith in

Jay. And our friends, whose experience of Jay goes back

some years, have in the past found him to be a reliable

contact. I myself favour the continuing use of the channel

provided we remember what we are doing; we must continue to

treat Jay's messages from China with a large pinch of salt and

set out the messages we wish to have conveyed back in a form

that is entirely unambiguous. If the Chinese attempt to

set a price (in terms of the release of prisoners in Hong

Kong) on the British subjects, other than Mr. Grey, still in

detention in China, we may be glad of Jay's services, if only

to try to head the Chinese off.

Recent Exchanges

Meanwhile the continuing conversations between Jay and

Er. Jack Cater provide a certain insight into the thoughts

and neuroses of the Chinese leadership vis-à-vis Hong Kong.

8. Mr. Cater's report of 20 June provides good examples

of mainland thinking. In this conversation Jay purports to

express mainland preoccupations about the next incumbent of

the governorship of Hong Kong and about the next Colonial

Secretary. This simply confirms yet again the anxiety of

the Chinese of which we have always been aware that these

posts should not fall into other than British handa. (It is

simply a detailed reflexion of the Chinese anxiety that

nothing should ever happen that might contribute towards a

change of constitutional status for the Colony whether it

TOP SECRET

be self-government, independence or some form of

internationalised status.) Jay then goes on to set out

i.e.

the communist attitude to Hong Kong,/that the communists have

no love at all for capitalist economics as such and would

dearly love to undermine the Hong Kong administration, but

that in practice they find Hong Kong too valuable in its

present form, both economically and politically, to upset

the applecart; and that they are less likely to change their

mind if they continue to see that we ourselves are prepared to

use considerable firmness to keep the applecart upright.

Jay comments interestingly that the date of 1997, when our

lease on the New Territories expires, "really means nothing".

We have already written to the Political Adviser in Hong Kong

asking for an exegesis of this phrase. In particular, we

have asked for an opinion as to whether Jay was speaking on

instructions or simply venturing a personal view. Meanwhile

I would only venture the remark that reassuring words about

1997 from the communists are not necessarily an accurate guide

to their eventual intentions. For one thing, they will no

doubt continue to weigh up the balance of gain and loss that

would accrue from a takeover of the Colony, not to mention

the balance of forces involved at any one time in any test

of wills. Second, there is no interest for the communiste

in taking over a bankrupt Colony and the only way to preserve

prosperity in Hong Kong in the interim is for them to let it

- 5 -

TOP SECRET

be thought that they have no intention of ever taking over.

9. Finally, Jay refers to the possible repercussions for

Hong Kong of recognition of China by the United States.

Here we are up against a hypothetical situation. Factors

that would modify Jay's warning are the question of physical

facilities (1.e. whether the Chinese can develop Shanghai as

a viable alternative to the splendid port of Hong Kong) and

whether or not United States big business decides to continue

to use Hong Kong as its base for the China trade or to abandon

it. I do not think we need let ourselves be too alarmed at

this stage by Jay's predictions.

Jams Manay

(James Murray)

12 August, 1969.

Copies to: Sir L. Monson o.r.

Mr. Wilford

Mr. Carter O..

P.U.S.D.

K.C. Panerus O.SE. 3/3/70

· 6 -

TOP SECRET

(111291) D4. 391599 - 1,300 2,00 Hw.

NOTHING TO BE WRITTEN IN THIS MARGIN

Registry No.

ÈCURITY CLASSIFICATION

Top Secret.

Secret.

Confidential

Restricted.

Unclassified.

PRIVACY MARKING

-----~ ~➖➖➖ ➖➖➖ ➖ ➖➖ ➖ ➖➖➖ ➖ ➖➖ ➖

In Confidence

TOP SECRET

DRAFT Submission

Type 1 +

From

To:-

Sus Tomlins

James Murray

Telephone No. & Ext.

Department

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The Hig

Kary

COVERT CONTACTS WITH THE CHINESE AUTHORITIES THROUGH

HONG KONG

From my submissions on the case of M. Anthony

Grey, the detained Reuters correspondent in Peking, you

will already be aware of the existengé of a covert

channel to the Chinese authorities on the mainland

through Hong Kong. This may be the moment to set out

what we know at greater lengt

a logo husinsman of Carmest rave, The go-between in Hong Kong is/F. K. C. Jay. He

Hong/Kong

has acted as a point of contact between ourselves and

the Chinese authorities on the mainland for a number of

years. The following is a brief assessment of the

advantages and disadvantages of the use of this channel.

Advantages

3. It is clearly useful to have a point of contact in

Hong Kong with the mainland authorities through whom

messages of a practical, and occasionally of a political

Theme is win onderdry me surt prout Ą contact. character, can be passed. The principal representation

of the mainland interest in the Colony is, as in many

world D

parts of the lopy, the New China News Agency. the New China News Agency.

Busi-

ness of a practical nature has often to be conducted

through this body.

However, the NCNA/has tried for

many years to acquire a quasi-consular position as the

spokesman of "progressive" Chinese elements in the

Colony vis-à-vis the Hong Kong Government and

TOP SECRET

/all

NOTHING TO BE WRITTEN IN THIS MARGIN

TOP SECRET

[

all business conducted through the NCNA,

treated as the inten locuteur valable of the

Chinese Government in the Colony, tenda

invisibly to enhance the standing of the

and anxam bi duromags organisation. (Jay's first value therefore is

This for Barn remem

Suck a negotiation could be much more to conduct diffrakt Krough the diftomatic

chussed in taking (at in Lanches) Then, gure

the native of rebutions

bution thein's

site and their Clime

counterparts, it wonce have to prend by rigidly Jamal stake, and when bangaining might in affet. be

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ancellingues to be distadque from any

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eginning

competence?

the comfubues of the Peluing and he writing

arrangem

that he provides an alternative to the NCNA,

Jay's second point of value is that he is

deniable. The Hong Kong public do not know

that he is a channel to the mainland and e-

wts reached through him have the advantage

that they remain without official character

unless the Hong Kong Government decides other-

*/se. An example of this function is offered

by the case of Antheny Grey. It was possible to

conduct with Peking a form of flexible

hegotiation over Grey (albeit unsuccessful)

which could not be done through more orthodox

channels, for fear of the consequences for

public confidence in Hong Kong.

Disadvantages

5. The disadvantages of the Jay channel are,

however, considerable.

however,

First, like many such

(bibunt (6)

go-betweens, he has a tendency to be all things

to all men. Not content with passing messages

to us from between-burasives and the Chinese authorities,

he is unable to refrain from embellishing them

with personal philosophy and advice and it is

Stromit

often difficult to disentangle the twol. second functional disadvantage is his refuent

to work to one master alone on the Chinese side.

Tay works in the first instance to the Manager

of the Bank of China in Hong Kong, who is known

to be a competent and responsible official

This

However, he also claima to carry on a personal

correspondence with Chou En-lai's private

TOP SECRET

/secretary.

NOTHING TO BE WRITTEN IN THIS MARGIN

WIEL $1-7406

sometimes look libu

playlocks of arces wate

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If the Chumse atharp! to set a price (in turmas.

of the release of presume), in Hong Kong) on the Butish subject, othe them To Sing, still in defination in China, was mory be place of Jay's survtime, if why to hug to have the Comers off.

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in Peking

Secretary.

TOP SECRET

Based on this latter correspondence

he produces assessments of the balance of forces

among the leaders in Peking (on the lines of

extremista" verwe imperts") which

misleading and at worst designed deliberately

to make our flesh creep and hurry us into

concessions.

The Balance

Views of the Governor of Hong Kong

This Hawa wamel the

16. While I myself have the reservations about

Houthalens the reliability of this channel, set out

above, That year

know from earlier discussions that the Governor

Some

of Hong Kong has (considerable) faith in Jay. I

favour R

usef

myself see no great harm in continuing to use

Jay's

the channel provided we treat his messages from

Large

a/pinch

China with a pinch of salt and set out the

back

messages we wish to have conveyed/in a form

entirety

MiL Rent Exchang that is short and unambiguousMeanwhile the

continuing conversations between Jay and

Mr. Jack Cater of the Hong Kong Trade and-

Development Counei-l provide a certain useful.

insight into the thoughts and neuroses of the

Chinese leadership vis-à-vis Hong Kong.

18.

good examples of they thinking.

Mr. Cater's report of 20 June provides

Marlins

In this con-

prpati ti

versation Jay expresses/preoccupations about the

next incumbent of the governorship of Hong Kong

and about the next Colonial Secretary.

This

simply confirms yet again the khơh anxiety of

of whith me huyu always keen onvaw the Chinese/that these posts should not fall

into other than British hands. Jay then goes

on to make in a roundabout way the centralfadox

Jovering

ind emotimaliser ströma) point" zubat the communist attitude to Hong Kong,

that the communists have no love at all for the captabil economer on such edononte practices in Hong Kong and would dearly Hay Kuny

in practiu

love to undermine the administration, but that

TOP SECRET

/they

NOTHING TO BE WRITTEN IN THIS MARGIN

WEEL SI-2406

and that thing

and

Huy Kay

TOP SECRET

they find too valuable in its present form,

both economically and politically, to upset

the applecart,)

Toy

e comments interestingly that

the date of 1997, when our lease on the New

less Whery of chory Territories expires, "really means nothing".

their mind if they

Man

we jane preponed bit

fumers to keep the apple upright.

We have already written to the Political

Adviser in Hong Kong asking for an exegesis

of this phrase.

In particular, we have asked

for an opinion as to whether Jay was speaking

out smph

on instructions

rather-than venturing a

Menuruthile

personal opinion. At this point we cannot be

ep spinto

sure of the significance of -Jayla words.

would only venture the remark that reassuring

words about/1997 from the communists are not

necessarily an accurate guide to their

intentions.

mat

For one thing, they will no doubt

ما

Content digje prostog to weigh up

ssess the balance of gain and loss that we

Mita Limavade,

accrue from a takeover of the Colony, and the

at any one time in army asof wills.. balance of forces involved neered the time; haur

tou

Second, there is no interest theazer taking

over a bankrupt Colony and the only way to

as līku untenm

Konglis

preserve prosperity in Hong Kong is for them

›mmendaba to let

it be thought that they hate

Makwe over ·

no intention of interfering ith the stetue

Finally, Jay refers to the possible

repercussions for Hong Kong of recognition of

China by the United States. Here we are up

against a hypothetical situation, Factors that

would modify Jay's warning are the question of

physical facilities| (i.e. whether the Chinese

can develop Shanghal as a viable alternative ta

the splendid port of Hong Kong) and whether or

not United States big business decides to

continue to use Hong Kong as its base for the

or ki almtent-

China trade I do not think we need let our-

When sinks Jom?

selves be too alarmed by this/predictions

Acs TOP SECRET

TOP SECRET

M7/23/usi

Sir S. Tomlinson Tomlinson

911

Flag A

Flag B

PROBLEM

THE GREY AND BROOKE CASES

The arrival in this country of Mr. Gerald Brooke

tomorrow will inevitably have repercussions for our handling

While we shall try to

of the case of Mr. Anthony Grey.

discourage comparison between the two cases it seems unlikely

that we can hope to escape questioning, particularly by the

press, on why we have apparently not been prepared to do as

much for Mr. Grey (by prematurely releasing the newsworkers)

as for Mr. Brooke. Moreover there may well be suggestions

from relatives of other prisoners detained in China that we

should offer to exchange them for other "confrontation"

prisoners in Hong Kong. The Governor has given us his

preliminary ideas on the line to be taken once the arrangement

over Brooke becomes public knowledge (Hong Kong telegram No. 566),

and the Chargé d'Affaires in Peking has commented (Peking

telegram No. 424). There is also the linked question of what

might be said to the Chinese through the covert channel in

Hong Kong.

RECOMMENDATION

2. I recommend that we proceed along the lines set out in

the attached draft telegram to Hong Kong. Hong Kong Department

and East European and Soviet Department concur.

(The Governor

TOP SECRET

was informed on 21 July strictly for his own information

that Mr. Brooke would almost certainly be out on 24 July.)

ARGUMENT AND BACKGROUND

3. In defence of our handling of the Grey case there are

three main points that can be made publicly.

(a) Objections to an Exchange. The solution of the Grey

case by means of our exchanging him for one or several

of the newsworkers in Hong Kong was not open to us. It

became clear at an early stage that a solution of this

type was unacceptable to the Chinese.

(b) Humanitarian Concern. We have no less concern for the

welfare of Mr. Grey than for that of Mr. Brooke.

However,

in the case of Mr. Grey it now seems unlikely that the

Chinese will delay his release once the newsworkera have

completed their sentences by early October; and unlike

Mr. Brooke he is known to be in reasonably good health

and spirits.

the newsworkers would have involved interference with the

judicial process which might have undermined local

confidence in Hong Kong.

4. These three arguments have been attached as defensive

speaking notes to a draft statement submitted by E.E.S.D. for

use by the Secretary of State when announcing the return of

Mr. Brooke in the House of Commons. If any of the Members of

Parliament especially interested in other British subjects in

TOP SECRET

- 2 -

TOP SECRET

in China

detention/raise the question of an exchange of prisoners in

Hong Kong for them, the reply might simply be that the Chinese

have consistently taken the line that in their view these

persons have offended against Chinese laws and regulations

and that their cases are being dealt with on their merits.

5. We are likely to have further queries from the press about

our dealings with the Chinese in the matter of an exchange.

What more can be said? The relevant facts are these. In his

letter to the Chinese Foreign Minister at the end of August 1967,

Flag C

at Mr. George Brown spoke of the possibility of arranging the

Flag

on FC 3

return to China of the newsworkers in prison in Hong Kong if

British subjects, including Mr. Grey, who wished to leave China,

were free to do so. The Chinese never took this up. On

7 February 1968 Mr. Cradock formally put forward a proposal

(previously made informally by Mr. Hopson) for an exchange of

Mr. Grey for Haueh P'ing, the leading New China News Agency

newsworker in prison in Hong Kong. Again there was no reaction.

Subsequent offers through covert channels in Hong Kong towards

the end of 1968 to exchange Mr. Grey for one or at the most two

of the more prominent newsworkers were rejected by the Chinese.

Finally, in early 1969, a more favourable bargain was offered

to the Chinese. They were informed that the Governor was

prepared to contemplate the early release to China of all

eleven newsworkers remaining in prison in exchange for the

release of Mr. Grey; the newsworkers could also go to Macao

if they preferred; and it was also implied that they could

TOP

SECRET

- 3-

TOP SECRET

return to Hong Kong at the time their sentences would have

expired. In reply the Chinese insisted that an exchange of

this kind was impossible and that the newsworkers must be

released prematurely in Hong Kong itself. This we could not

accept.

6. The text of Mr. Brown's letter has never been made public

but Reuters and others directly concerned with the case of

Mr. Grey are aware that it contained an offer of an exchange.

I doubt therefore if it would be right with, for example,

Reuters to take the line suggested by the Governor at the end

Flag & ( of paragraph 4 of his telegram No. 566: that "how we might

or might not have actually responded

to a Chinese request that

the prisoners be permitted to return to China 7 was an

academic question". I would prefer that reference be made

to Mr. George Brown'a communication and subsequent démarches

in Peking. (There must of course be no reference to the

covert discussions in Hong Kong, since the Governor is rightly

anxious that the use and existence of this channel should not

become public knowledge.) Reference to Mr. Brown's letter

would have the advantage of demonstrating that our efforts had

not been concentrated solely on Mr. Grey, but had extended to

other British subjects. We might take the line that as early

as August 1967 Mr. Brown indicated to the Chinese Foreign

Minister his readiness to try to arrange the release to China

of the newsworkers in return for an undertaking that Mr. Grey

and other British subjects would be free to proceed to the U.K.

TOP SECRET

Flag B

Flag A

This was a justifiable use of the prerogative.

The Chinese,

however, had never taken up the offer. Moreover in the

dealings which our Mission in Peking had with them subsequently

it was made quite clear that nothing less than the unconditional

release of the prisoners in Hong Kong would satisfy the Chinese.

This would help to meet the point in paragraph 2 of Peking

telegram No. 424. I think, however, that we must give the

Governor the opportunity to comment. He has frequently taken

the line in consultation with us that he would be ready to use

his prerogative to release any number of the "confrontation"

prisoners on condition that they returned (an in effect were

deported) to China. But I am not sure how publicly he would

wish to say this, and in consequence how he would regard

specific public mention of Mr. Brown's letter with its implied

reference to the use of prerogative.

The use of the Covert Channel

7. We should certainly not take the initiative in raising

this matter with the Chinese through the covert channel.

But

if, as seems likely, our contact makes to Mr. Cater the reproach

that we have been prepared to settle the case of Mr. Brooke

with the Russians on the kind of terms that we told the Chinese

were unacceptable in the case of Mr. Grey, Mr. Cater can simply

point out that the Chinese were offered the release of all

eleven newsworkers to China in exchange for the release of

Mr. Grey and that it was they, not us, who declined to settle

the question in this manner (paragraph 3 of Hong Kong telegram

No. 566 refers).

Jane blmay.

The poses

TOP SECRET

(James Murray) 23 July, 1969

/Copies:

TOP SECRET

Copies to: Private Secretary (ref. para 4)

Mr. Godden

Mr. Baker

Sir L. Monson

Sir T. Brimelow

Mr. Carter

Mr. Giffard

TOP

SECRET

- 6 -

CYPHER/CAT A

CONFIDENTIAL

ikker to Mi

Boyce.

Jay

Cleve

MEDIATE

FOREIGN OFFICE

TO U.K. MISSION NEW YORK

英

TEINO 4487

30 AUGUST 1967

(FED)

CONFIDENTIAL

ADDSD TO UKMIS NEW YORK TELNO. 4487 OF 30/8 AND TO NAIROBI

KHARTOUM KINSHASA AND ADDIS ABABA.

M.I.P.T.

TEXT OF LETTER FROM FOREIGN SECRETARY TO CH'EN YI AS FOLLOWS.

BEGINS.

YOUR EXCELLENCY,

THE PRESENT STATE OF ANGLO-CHINESE RELATIONS REQUIRES THAT YOU AND I, AS THE MINISTERS IN OUR RESPECTIVE GOVERN- MENTS RESPONSIBLE FOR OUR MUTUAL RELATIONS, SHOULD DISCUSS THESE RELATIONS FRANKLY AND DISPASSIONATELY, I HOPE THAT YOU WILL TAKE THIS MESSAGE AS A BASIS FOR SUCH DISCUSSION.

OUR REPRESENTATIVE IN PEKING, MR. HOPSON, WAS SUMMONED TO SEE YOUR VICE MINISTER, MR.LO KUEI-PO, ON 30 AUGUST, THE VICE MINISTER ANNOUNCED THE IMPOSITION OF FURTHER RESTRICTIONS UPON THE STAFF OF THE BRITISH MISSION IN PEKING. BUT, STATING THAT HE WAS SPEAKING ON BEHALF OF YOUR GOVERNMENT, HE ASKED: QUOTE WHERE DO YOU WANT TO PUSH SINO-BRITISH RELATIONS ? UNQUOTE. I WOULD LIKE TO ANSWER THIS QUESTION.

WITHOUT REVIEWING ANGLO-CHINESE RELATIONS IN DETAIL I CAN TELL YOU, AS I AM SURE YOU ALREADY KNOW, THAT I PERSONALLY, AS WELL AS THE GOVERNMENT OF WHICH I AM A MEMBER, HAVE ALWAYS SOUGHT GOOD RELATIONS BETWEEN YOUR GOVERNMENT AND OURSELVES, AND IN PARTICULAR WE HAVE ADVOCATED YOUR MEMBERSHIP OF THE UNITED NATIONS. WE WANT TO CONTINUE THAT SUPPORT BUT I MUST MAKE IT QUITE CLEAR THAT THE ACTIONS WHICH HAVE BEEN TAKEN IN CHINA IN THE LAST MONTHS AGAINST BRITISH SUBJECTS THERE, INCLUDING OUR DIPLOMATIC MISSION, ARE MAKING OUR TASK EXTREMELY DIFFICULT. WE HAVE INDEED COME TO THE POINT WHEN MANY PEOPLE IN THIS COUNTRY ARE ASKING WHY WE CONTINUE TO MAINTAIN DIPLOMATIC RELATIONS WITH YOU AT ALL.

IF I JUDGE THE SENTIMENT OF YOUR GOVERNMENT ARIGHT I THINK THAT YOU TOO WISH US TO REMAIN IN DIPLOMATIC RELATIONS. ON THIS

/ASSUMPTION

CONFIDENTIAL

FOREIGN OFFICE TELEGRAM NO. 4487 TO U.K. MISSION NEW YORK

-2-

ASSUMPTION I SET OUT BELOW WHAT I THINK WE SHOULD DO TO PRESERVE

THEM.

I WILL NOT REHEARSE IN DETAIL THE TREATMENT RECENTLY METED OUT TO OUR DIPLOMATIC STAFF AND PROPERTY AND TO OTHER BRITISH SUBJECTS IN CHINA. I SIMPLY REMIND YOU THAT OUR MISSION AND STAFF BOTH IN SHANGHAI AND PEKING HAVE BEEN SUBJECTED TO TREATMENT WHICH WOULD FULLY JUSTIFY OUR RUPTURE OF RELATIONS WITH YOU. THE SACKING OF OUR MISSION IN PEKING HAS COMPELLED US TO IMPOSE CERTAIN RESTRICT- IONS ON YOUR STAFF AND OTHER OFFICIALS. THESE RESTRICTIONS HAVE NEVER BEEN AND ARE NOT NOW AS STRINGENT AS THOSE YOU HAVE FOR A LONG TIME PLACED UPON OUR REPRESENTATIVES. IT WAS, FOR INSTANCE, ONLY AFTER THE EVENTS IN PEKING OF 22 AUGUST AND THE STEPS TAKEN BY YOUR GOVERNMENT TO PREVENT MEMBERS OF OUR STAFF FROM LEAVING CHINA THAT WE PLACED ANY RESTRICTION AT ALL UPON THE FREE MOVEMENT OF YOUR DIPLOMATS AND OFFICIALS INTO AND OUT OF THIS COUNTRY. IT IS BEING REPRESENTED THAT YOUR STAFF IN LONDON HAVE BEEN SUBJECTED TO INTOLERABLE HARASSMENT. I DO NOT ASK YOU SIMPLY TO BELIEVE ME WHEN I TELL YOU THAT THIS IS NOT SO: PLEASE SEEK THE VIEWS OF ANY

IMPARTIAL OBSERVER IN LONDON DURING THIS LAST WEEK.

I NOW SEEK YOUR COOPERATION TO BRING THE SITUATION BACK TO NORMAL AND TO SET US BOTH ON A BETTER COURSE IN OUR RELATIONS. YOU MAY THINK THAT THESE WOULD BE BEST SERVED IF, WHILE MAINTAINING DIPLOMATIC RELATIONS, BOTH SIDES WITHDREW THEIR MISSION AND PERSON- NEL FROM EACH OTHER'S CAPITAL FOR THE TIME BEING. IF YOU THOUGHT THIS WOULD HELP I WOULD BE PREPARED TO ALLOW ALL MEMBERS OF YOUR DIPLOMATIC MISSION AND OTHER OFFICIAL ORGANISATIONS WITH THEIR DEPENDENTS AND STAFF AND ANY OTHER CITIZENS OF THE PEOPLE'S REPUBLIC OF CHINA IN THE UNITED KINGDOM WHO WISHED TO LEAVE THIS COUNTRY TO DO SO, ON THE CLEAR UNDERSTANDING THAT YOU WOULD ALLOW ALL BRITISH SUBJECTS IN CHINA, DIPLOMATIC, OFFICIAL OR OTHERS, WHO WISHED TO LEAVE TO DO SO AT THE SAME TIME, THIS WOULD INCLUDE, AMONG OTHERS, MR. GREY, THE REPRESENTATIVE OF REUTERS IN PEKING,

/WHOM

CONFIDENTIAL

FOREIGN OFFICE TELEGRAM NO. 4487 TO U.K. MISSION NEW YORK

-3-

WHOM YOU NOW HOLD UNDER HOUSE ARREST. IF YOU GIVE ME YOUR ASSURANCE THAT YOU AGREE TO THIS, BUT THE CHINESE NEWSPAPERMEN AND NEWS AGENCY PERSONNEL RECENTLY SENTENCED IN HONG KONG POSE A PROBLEM FOR YOU, I MAY BE ABLE TO ARRANGE THEIR DEPARTURE FROM HONG KONG FOR CHINA.

THE TOTAL, BUT I HOPE TEMPORARY, EVACUATION OF OUR MUTUAL PERSONNEL MIGHT BE THE BEST MEANS TO ENSURE THAT NO FURTHER INCIDENTS DEVELOP TO MAKE A BREACH INEVITABLE. BUT IF I COULD GET YOUR PERSONAL AND OFFICIAL ASSURANCE THAT A BRITISH DIPLOMATIC MISSION IN PEKING WOULD BE PERMITTED TO FUNCTION IN THE NORMAL WAY AND THAT THE SAFETY AND DIGNITY OF ITS PERSONNEL WOULD BE RESPECTED I WOULD BE PREPARED TO REPLACE THE PRESENT STAFF BY A NEW BUT SMALLER DIPLOMATIC MISSION TO YOU. IT NATURALLY FOLLOWS THAT WE WOULD ACCEPT A CHINESE MISSION IN LONDON ON SIMILAR TERMS AND WITH

SIMILAR GUARANTEES.

1 THINK THAT I FOR MY PART HAVE ANSWERED THE QUESTION WHICH YOUR VICE MINISTER PUT TO MR. HOPSON, REPEAT THAT MY GOVERNMENT

1 WISH TO MAINTAIN FRIENDLY AND FRUITFUL RELATIONS WITH YOU. THERE IS NO PROBLEM BETWEEN US WHICH IS NOT SUSCEPTIBLE TO SETTLEMENT BETWEEN MEN OF GOODWILL. MAY THEREFORE ASK YOU, IN THE SPIRIT IN WHICH I SEND THIS MESSAGE, TO LET ME HAVE YOUR ANSWER TO THAT SAME QUESTION. IN PARTICULAR I WOULD WELCOME YOUR REPLY TO THE ALTER- NATIVE SUGGESTIONS WHICH I HAVE SET OUT ABOVE. IN THE MEANTIME YOU MAY REST ASSURED THAT ALL YOUR OFFICIALS AND NATIONALS IN THIS COUNTRY ARE BEING GIVEN THE FULLEST POSSIBLE PROTECTION.

SIGNED GEORGE BROWN

ENDS

SOSPA

DEPARTMENTAL DISTRIBUTION

F.0.

F.E.D.

W.C.A.D.

C.0.

N.E.A.D.

EASTERN DEPT.

ARABIAN DEPT.

E.A.D.

M.E.W.U.N.D W. & G.A.D.

ZAMBIA DEPT.

SENT 20052

20052 30 AUGUST

CONFIDENTIAL

The Witsan

Grace

DISTRIBUTION

Private Secretary

Mr. Godden

Sir T. Brimelow

Sir E. Peck

Sir

Monson

Sir S. Tomlinson

Hong Kong Dept.

F.E.D.

E.E.S.D.

P.U.S.D.

GR/CAT A

ROUTINE HONG KONG.

TOP SECRET

COPY NO:

TO FOREIGN AND COMMONWEALTH OFFICE.

TELE AY NUMBER 566.

18 JULY 1969.

Reply send

TOP SECRET

ADDRESSED FCO AS MYTEL. 566 OF 16TH JULY RFI PEKING.

YOUR TEL. 444 PARA 5.

BROOKE AND GREY CASES.

IT MAY BE OF HELP IF I SET OUT SOME PRELIMINARY IDEAS ON LINE TO

BE TAKEN.

2. THERE ARE SEVERAL BASIC DIFFERENCES BET: EEN THE PRCOKE/KROGER

POSITION ON THE ONE HAND AND THE GREY/NEWSVORKERS POSITION ON THE

OTHER OF WHICH YOU ARE ALREADY AWARE AND HICH CAN, IF THE NECESSITY

ARISES, BE POINTED OUT TO THE PRESS AND IN OVERT OR COVERT ·

COMMUNICATIONS WITH THE CHINESE GOVERNMENT: BUT FROM THE LATTER'S

PONT OF VIEW THERE IS ONE ESSENTIAL DIFFERE..CE DET EEN THE TWO

SETS OF CIRCUMSTANCES IN THAT WHEREAS CHINESE DEMAND WAS FOR

NEVSWORKERS TO REMAIN IS HONG KONG, IN THE BROOKE CASE THE

EXPECTATION PRESUMABLY IS THAT ALL PARTIES GULD BE DEPORTED FROM NU

THEIR COUNTRY OF DETENTION.

CAN BE USEFULLY EXPLOITED.

IT WOULD SEEM THAT THIS DIFFERENCE

3. TO THE CHINESE WE WOULD SAY, THROUGH CATER, THAT THERE HAS

SEEN NO INCONSISTENCY IN CUR ATTITUDES, YE OFFERED THEM A SIMILAR ARLAMENENT

EXCHATICE ON TERMS, INDEED, EVEN ORE FAVOURABLE TO THEM: BUT THEY

HAD REFUSED TO ACCEPT THE REPATRIATION OF THE NEWSWORKERS.

4. HOVEVER, THERE IS OF COURSE NO PUBLIC KNOWLEDGE OF THESE

NEGOTIATIONS. 13 BACKGROUND PRESS BRIEFINGS AND PRIVATE TALKS WITH

RESPONSIBLE JOURNALISTS, ETC., WE WOULD THEREFORE STRESS THE

ESSENTIAL DIFFERENCE BETWEEN THE TWO CASES, AS IN PARAGRAPH 2 ABOVE.

THERE

TOP SECRET

Berge

Вго

TOP SECRET

-2-

THERE WOULD PROBABLY SE LITTLE HARM (SINCE IT HAS BEEN SAID BEFORE

AS LONG AGO AS 1967) IN ADDING THAT HAD THE CHINESE SUGGESTED A:!

ARRANGEMENT UNDER WHICH PRISONERS LEFT THE COLONY FOR CHINA, 14.STEAD

CF DEMANDING THEIR RELEASE IN HONG KONG, THEN A QUITE DIFFERENT

SITUATION WOULD HAVE BEEN CREATED AND THE CHINESE REQUEST COULD HAVE

BEEN CONSIDERED. THERE HAD BEEN ONE OR TWO CASES IN THE PAST WHERE,

IN SPECIAL CIRCUMSTANCES, THE PREROGATIVE HAD BEEN USED TO RELEASE

CONVICTED PERSONS IN ORDER TO PERMIT. THEM TO RETURN TO THEIR OWN

COUNTRIES, AND THIS WAS A JUSTIFIABLE USE OF THE PREROGATIVE. BUT

RETURN TO CHINA WAS NOT WHAT THE CHILLESE HAD DEMANDED AND HOW NE

"IGHT OR NIGHT NOT HAVE ACTUALLY RESPONDED WAS AN ACADEMIC QUESTION."

5. EARLY WARMING OF ANY POSSIBILITY OF THE KAGGER/BROCKE DEAL COING

THROUGH WOULD BE HELPFUL. IT WOULD OF COURSE BE BEST FROM OUR POINT

OF VIEW IF NOTHING WAS SAID ABOUT BROOKE AND THE KROGERS UNTIL GREY

HAS BEEN RELEASED.

FCO PLEASE PASS ROUTINE TO PEKING.

SIR D.TRENCH

PERMUN.

[REPEATED AS REQUESTED]

TOP SECRET

21/7

NOTHING TO BE WRITTEN IN THIS MARGIN

Registry No. FED

DEPARTMENT

SECURITY CLASSIFICATION

Top Secret 21/7

Seche

Cool Bitial

Rangpicted

TOP SECRET

PRIORITY MARKINGS

(Date).....

Flash

Immediate

Routine

• Date and time (G,M.T.) telegram should

reach addressee(a).

-=-=-=-=-----------

मात्र

фот

CYPHER

NO COPIES MADE

fication]

TOP SECRET

[Secu

Security classification -if any

[

Privacy marking -if any

]

TO PARENJA MAANA

PRIVACY MARKING

In Confidence

En Clair. Code Cypher

Draft Telegram to:-

[Codeword-if any]..................

Addressed to

YOVERNOR telegram No..

ONG KONG

No Nổ.

(Date)

And to:-

-----11 ---

repeated for information to

Metod sada juda manga spojky

CHONG KONG 7

(date)

RECEIV...) IN

T доро

28 JUL 1969

FEL

Repeat to:-

Saving to:---

Distribution:- As from

No cafus quad.

Copies to:-

Saving to......

Personal for Governor from Murray.

Your telegram No. 566 of 18 July 7: Brooke

and Grey cases.

Strictly for your own information it is now

practically certain that Brooke will arrive in this

country on the morning of 24 July and that the

of State Foreign-and-Gemmonwealth Secretary will make a

Full account statement immediately thereafter. (far Bastern

was taken of the argument Department and Hong Kong Department argued strongly)

that it would be best from the point of view of the

Grey case if nothing were said about Brooke and the

Kroggers until Grey had been released; but it was

decided that other considerations were overriding).

2. It was very helpful to have your preliminary

ideas about publicity. We shall be letting you

have our comments as soon as possible.

Jul 21 July

TOP SECRET

1800721/72

PEC 130/1

TOP SECRET

24/7

พา

22 July, 1969.

1997

We were interested by Contact's remarka to Cater on 19 Jume regarding the significance of 1997 (Your Telegram No. 497 of 21 June, paragraph 4). What importance if any do you attach to Contact's remarks? We naturally wondered whether he was indulging in personal speculation or dropping a hint on instructions.

A. F. Maddocks, Esq.,

HONG KONG,

TOP SECRET

(James Murray)

Desbabled 2412

AWR.

898

NOTHING TO BE WRITTEN IN THIS MARGIN

WEL SE-7406

x/2

тор

SECRET

AF Mallocks Esq

Hong Kong

1997

from Mr Meanary

We were finterested

èrestia by

Contact's remarks are neare

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22 JUL 1969

FEC isc

Careina SECRET

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MR MURRAY

A very interesting

conversation.

Jower

Yumay, 3 Isla

With the Compliments of the

M. Rycon los 317

The Cat 4/7 Political Adviser

Me With

The Bayt. T3x-4/68.

Hong Kong

эн. Димова.

Political Adviser

SECRET

897

/this

On Wednesday, 18th June Mr. K.C. Jay telephoned asking to see me soon in order that he might pass on a message:

he uggested that we might meet next day (19th June) and accordingly

arranged to see him at his house (19th June being a public holiday) at 11.30 a.m. I had a two-hour discussion with Jay and then a long luncheon session with his family: four of his sons were present (just returned from university in North America), also his wife and his mistress.

Jay was in a confident, almost boisterous mood:

be was anxious to pass to me a message from Prime Minister CHOU En-lai which Jay described as being "very good". In reply to the report which Jay had submitted recently (please see my report of 13th June), CHOU allegedly had replied that previously it had been his intention that directly negotiations with the H.K.G. over the newsworkers had been completed, Anthony Grey and other Britons held in China should be released: however, in view of the failure of these negotiations it was not possible for the Chinese to proceed with this action. Referring to Jay's recommendation that consideration be given to releasing Grey before the release of the 11 nevsvorkers, CHOU had given the assurance that Grey would now "only be kept as long as necessary On saying this, Jay positively beamed with pleasure and said that was very good news indeed. I apologised For being rather slow to recognise good news and asked him whether he would interpret these words in a little more detail as,on the surface, the message meant very little to me. Jay then explained that by using the phrase "only as long as necessary" he believed that CHOU was saying that, once Peking was convinced that the newsworkers would in fact be released, then there would no longer be any need to detain Anthony Grey. Jay then went on to say that he had passed to LI Cho-chih and to Paking a photostat copy of the list I had given him on 11th June showing earliest dates of release of the 11 newsworkers: Jay was fairly confident that once it was understood in Peking that the dates given on this list were definite "and legal", the release of Grey would become more likely. I took this opportunity of again pointing out to Jay that the dates of release shown on the list were "the earliest dates of release" and that, should any of the prisoners misbehave themselves, it was possible that the date of release could be put back. Jay said he appreciated this point but assured me that none of these 11, now that their date for release vas such a short time away, would cause trouble.

Jay then went on to say that he had replied to CHOU, both directly and indirectly through LI Cho-chik, to the effect that be vas pleased and encouraged by the Prime Minister's message and had assumed that "as necessary" meant as soon as it is certain that the 11 will be released": he thought that such action would be favourably commented upon not only by Europeans and senior people in Hong Kong but also by the world press.

For the rest of the interview Jay was in an expansive mood and for the first time spoke very freely of his views on Hong Kong and China, the future of Hong Kong and also his understanding of Peking's policy and attitude to these matters.

SECRET

/contd....

Las

SECRET

II. 5.

Jay enquired in a rather jocular fashion whether I was prepared to comment on rumours going round communist circles as to the future Governor of Hong Kong: I said that I was prepared to comment to the best of my ability but my knowledge of this subject was of course very limited. Jay said that, although

ven the communists felt this was "nonsense", nevertheless in the last two or three veeks there had been rumours to the effect that Hr. John Keswick vas probably going to be the next Governor of Hong Kong: I said that I had seen a similar statement in the China Mail some months ago but that this obviously vas a question of "newspaper fishing": that it was highly unlikely that a man of Mr. Keswick's age would be appointed Governor, nor did I think it likely that the next Governor would be a man from the British business community: to date, Governors of Hong Kong had tended to be professional administrators/civil servants. Jay then said that the other rumour was to the effect that the new Governor was going to be sir sik-nin CHAU: I again said that I thought this very unlikely indeed and gave similar reasons as for Keswick. It was here that I realised that Jay was leading, rather obviously and not too cleverly, on to a matter of policy: mention of Sir Sik-nin CHAU led Jay to ask whether it was likely that the British Government would ever appoint a Chinese as Governor of Hong Kong. Without giving me any time to reply, he immediately said "because this, I am quite sure, would be a serious mistake": rather jokingly he said "you know the communist Chinese they would think you were trying to set up a 3rd China". Expanding on this a little, Jay said that he thought it most important that Hong Kong should never have a Chinese Governor nor even a Chinese who was "à sort of Governor" - I asked what he meant by this and he said that obviously if the Governor vere away then the next senior man would become temporary Governor. I explained that usually in these circumstances, if the Governor were away on leave then the Colonial Secretary would become either Acting Governor or, in the past, Officer Administering the Government. Jay said that this was precisely what he was getting at; as it would probably not be advisable to have a Chinese Governor it would not be advisable to have a Chinese Colonial Secretary just in case from time to time he was required to act as Governor.

Jay then went on to give his views of the future relationship of Hong Kong to China and in a long and very diffuse discussion made some major points: he emphasised that these views vere his own:-

(1) No matter what approaches China may make to Hong Kong

or to Britain, it must be remembered that they are communists and will always regard the economic practices in Hong Kong, Britain and the western world generally with great distaste: "we are the enemy of communism and we must never forget it".

(2)

Repeatedly throughout this part of the discussion Jay emphasised that in all our relations with China we must stand firm on what we as a Government felt was right for Hong Kong, for example maintenance of law and order must be paramount. "You must never put your- selves in the position of Macau, where the authorities are dictated to by the communists:.

**/contd..

III. 7.

SECKE!

(3) Bearing in mind the point made at (2) above, Jay thought that Hong Kong's policy should always be ained at maintaining and, wherever possible, improving its value to China. Hong Kong's value to China vas manifold! it was not just a question of dollars and cents but also "of political advantage" Jay explained this by saying that just as the vest had China Watchers in Hong Kong so China had South East Asian Watchers and Western World Vatchers in Hong Kong. But of greatest importance, in Jay's opinion (and somewhat naturally in view of his main means of livelihood) was the fact that China could easily and readily obtain foreign exchange in or though Hong Kong *if it were not for Hong Kong China would find it very difficult to obtain funds for its intelligence agents overseas". Goting #HOU, Jay said that Hong Kong has nothing to rear provided it remains of value to China. I pointed out that this was perhaps all very well and a reasonable comment to make in the short terx, but it was my experience, talking to young people in Hong Kong, that they were concerned, perhaps over-concerned, about what the position would be in 1997. Jay countered this in robust fashion, saying that too much emphasis vas

(4)

(1)

placed on 1997 "it really means nothing": provided Hong Kong remains of considerable value to China there is good reason for China to want to see Hong Kong continue. Jay thought that it would be positively embarrassing for China to try and absorb Hong Kong "and certainly they would find it a liability rather than a very great asset",

It was Jay's opinion that the danger, so far as the Puture was concerned, was not to be found in the relationship between Hong Kong and China or Britain and China but rather between China and the U.S.A. If the U.S.A. were ever to recognise China, if China were to hold its reserves in U.S. dollars rather than sterling, if trade were to develop in a big way between China and the U.S.A., then, according to Jay, the value of Hong Kong would be very much reduced. Because of this (and here Jay asked that I should keep this information only to myself) Jay had for some years past done whatever he could to keep the Chinese from becoming too interested in trade with the U.S.A. or dealing in U.S. dollars. Nowadays, of course, this was not too difficult a problem but, according to Jay, some 12 years ago there vere definite moves on the part of both China and the U.S.A. to come to terms and be had done his best to frustrate these moVES

Local Hong Kong problems

Communist schools. Jay said that in recent weeks sone members of the teaching profession had shown signs of anxiety and frustration and had talked of heating up the confrontation again. Jay had recently had a long

SECTET

/contd..

ا نصاب بان

(2)

talk with LI Cho-chih on this matter and advised that everything possible should be done to calm the teachers down and to channel their efforts into becoming simply good teachers. LI had allegedly agreed with Jay and said that he would do what he could to ensure that there was no trouble from the communist schools:

that undoubtedly parents of students vere anxious that the schools should provide education and not political indoctrination.

Referring to the recent theft in a communist bank, Jay said that there vas a strong rumour amongst communist bankers that this had been à put-up job by the Hong Kong Police: on being informed of this, Jay had said that this vas absolute nonsense and had even been supported in this line by LI Cho-chih. Nevertheless LI had recently asked Jay whether he would pass on a message asking whether the Police would pursue enquiries into the theft as energetically as possible. Jay said that he appreciated that clearly the Police vere doing all they could in this matter but that in view of his promise to LI he thought it advisable to mention the natter to me.

20th June, 1969.

جعف

(J. Cater)

SECTET

SECRET

Political Adviser

As requested by you, I made arrangements to see kr. I.C. Jay during the morning of Saturday, 14h June in order to pass to him the names and brief details of the three confrontation risoners the sentences of whom had been recommended for reduction to three years by the long-term Board of Review: the prisoner's in question being LING Mus-yau, 10 Boi-chung and CHING Chi-keung.

Jay had little to say in return but went over some of the ground covered in my previous zeeting with him on 11 June. He was hopeful that his message to CHU In-lai would be well received. He had been a little alarmed when speaking to LI Cho- chih and POON Ching-on that the latter had been quite militant in his views about future relations with the H.L.G. and had advocated violent action if necessary in view of the H.X.G.'s refusal to negotiate over the newsworkers and other matters outstanding from 1967. Jay hoped that his message to CHOU En-lai would strengthen the hand of the more moderate factions in Peking.

Jay, reverting to a conversation of some time ago, said that there was a great deal of dissatisfaction among local communists with the way affairs were being handled and that they had their own "trouble makerS": just recently two members of the Bank of China had been dismissed - CHENG Chih-jui and LI T'ien-yan.

201 June, 1969

elp.

(J. Cater)

SECRET

Reference............

1997

The most interesting Thing about Tel No 497 is the hint at x I wonder if contact was speaking on instinctions?

Mr wrilans 122016

Thr Thunay

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Jorrono a/s

HK Dep. (M. (ammara)

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22 July

[

CYPHER CAT A

PRIORITY HONG KONG

840

TOP COPY

COPY NO.

TOP SECRET

TO FOREIGN AND COMMONWEALTH OFFICE

TELEGRAM NUMBER 497

21 JUNE 1969; R.GI

pako 21/2

23 JUN 1969

FC IJC

TOP SECRET ADDRESSED FCO TELEGRAM 497 OF 21 JUNE RFI PEKING.

721 MY TELEGRAM 391 ■ GREY AND POLICY IN HONG KONG.

ON 19 JUNE CATER HAD A LONG SESSION WITH HIS CONTACT.

2. CONTACT SAID HE HAD RECEIVED A MESSAGE FROM CHOU EN-LAI IN REPLY

TO HIS SUGGESTION THAT GREY SHOULD BE RELEASED BEFORE THE NEWSWORKERS

OME OUT IN SEPTEMBER AND OCTOBER. CHOU ALLEGEDLY REPLIED THAT IT HAD

BEEN HIS INTENTION TO RELEASE GREY AND OTHER BRITISH SUBJECTS HELD

IN CHINA ONCE THE NEGOTIATIONS WITH THE HONG KONG GOVERNMENT OVER

THE NEWSWORKERS HAD BEEN

COMPLETED BUT AS THOSE NEGOTIATIONS HAD FAILED IT WAS NOT POSSIBLE

FOR THE CHINESE TO PROCEED IN THAT WAY. REFERRING TO CONTACT'S

RECOMMENDATION IN FAVOUR OF AN EARLY RELEASE OF GREY, CHOU SAID THAT

GREY WOULD NOW ONLY BE KEPT AS LONG AS NECESSARY'. CONTACT

INTERPRETED THIS TO MEAN THAT GREY WOULD BE RELEASED ONCE PEKING WAS

CONVINCED THAT THE NEWSWORKERS WOULD IN FACT BE RELEASED. CATER

HAD GIVEN CONTACT ON 11 JUNE A LIST SHOWING THE 'EARLIEST DATES OF

RELEASE' OF THE 11 NEWSWORKERS. CONTACT HAD SENT A COPY OF THAT

LIST TO PEKING AND FELT CONFIDENT THAT PEKING WOULD NOW BELIEVE

THAT THE NEWSWORKERS WOULD COME OUT THEN, PROVIDED THEY CONTINUE TO

BEHAVE CORRECTLY.

/3. CONTACT

TOP SECRET

-2-

3. CONTACT THEN TURNED TO DISCUSS HONG KONG AFFAIRS AT SOME LENGTH

EMPHASISING THAT THE VIEWS EXPRESSED WERE HIS OWN. HE POINTED OUT

THE DANGERS OF APPOINTING A CHINESE TO BE GOVERNOR OR COLONIAL

SECRETARY. CATER ASSURED HIM THAT THESE DIFFICULTIES WERE WELL

UNDERSTOOD,

4. CONTACT SAID THAT IN PLANNING OUR LONG-TERM POLICY IN HONG KONG

WE SHOULD REMEMBER THAT THE CHINESE GOVERNMENT WERE COMMUNISTS AND

WOULD ALWAYS REGARD THE ECONOMIC PRACTICES OF HONG KONG AND BRITAIN

WITH GREAT DISTASTE. THEY WOULD CONTINUE TO BE ENEMIES. HE STRESSED

REPEATER Y THAT IT WAS ESSENTIAL THEREFORE THAT THE HONG KONG

GOVERNMENT MUST STAND FIRM ON WHAT WE AS A GOVERNMENT THOUGHT

RIGHT FOR HONG KONG. FOR EXAMPLE THE MAINTENANCE OF LAW AND ORDER

MUST BE PARAMOUNT. WE MUST NEVER PUT OURSELVES IN THE POSITION OF

MACAU, SUBJECT TO THOSE CONSIDERATIONS HONG KONG'S POLICY SHOULD BE

TOWARDS MAINTAINING AND, IF POSSIBLE, IMPROVING ITS VALUE TO CHINA.

IT WAS NOT ONLY AN ECONOMIC QUESTION. IT WAS ALSO A QUESTION OF

PROVIDING A BASE FOR CHINA'S 'SOUTH EAST ASIA WATCHERS' AND

"WESTERN WORLD WATCHERS'. CONTACT

STRONGLY ARGUED THAT TOO MUCH EMPHASIS WAS PLACED ON 1997, A DATE

WHICH REALLY MEANT NOTHING PROVIDED HONG KONG REMAINED OF VALUE TO

CHINA. IT WOULD BE EMBARRASSING FOR CHINA TO TRY AND ABSORB HONG

KONG SINCE IT WOULD BE A LIABILITY RATHER THAN AN ASSET. ONE THREAT

TO HONG KONG'S USEFULNESS TO CHINA WOULD BE AN INCREASE IN TRADE

AND RELATIONS BETWEEN CHINA AND THE UNITED STATES. IF CHINA EARNED

AMERICAN DOLLARS BY DIRECT TRADE THERE WOULD BE LESS INTEREST IN

HONG KONG

5. FULL TEXT OF CATER'S REPORT FOLLOWS BY BAG.

FCO PLEASE PASS ROUTINE TO PEKING.

SIR D. TRENCH

FILE 3

HEAD F.E.D.

HEAD H.K.D.

SIR J. JOHNSTON

[REPEATED AS REQUESTED]

MR. MORETON

SIR A. GALSWORTHY

HEAD P.U.8.D.

P.S.

TOP SECRET

TOP COPY

COPY NO..

126

CYPHER/CAT A

PRIORITY HONG KONG

LINO 478

TOP SECRET

TO FOREIGN AND COMMONWEALTH OFFICE

13 JUNE 1969

YRTEL 341: GREY.

117

R.V

13 JUN 1969

FEC 134/1

ра paper 16/1

DURING LORD SHEPHERD'S VISIT, I WAS REQUESTED TO CONSIDER WHETHER

THERE WERE ANY FURTHER STEPS WHICH COULD BE TAKEN HERE OVER GREY

AND THE NEWSWORKERS WHICH MIGHT HELP TO EASE THE PRESSURE ON

HMG, PARTICULARLY IN THE LIGHT OF DEVELOPMENTS AFFECTING BROOKE.

2. I THINK WE CAN ONLY WORK ON THE PREMISE, PARTICULARLY IN

VIEW OF MORETON'S INTERVIEW WITH MA, THAT ANY CONCESSION OR

GESTURE NOT DIRECTLY CONNECTED WITH VONG CHAK AND THE TEN OTHER NEWSWORKERS WOULD BE NOT ONLY INEFFECTIVE BUT IRRELEVANT. THE

PRESENT POSITION REGARDING THESE MEN IS THAT THEIR ACCELERATED

RELEASE KILL TAKE PLACE OVER A PERIOD OF ONE MONTH FROM

SEPTEMBER 3RD SEMICOLON THE LAST TO GO CUT BEING WONG CHAK HIMSELF ON OCTOBER 30. WE ARE THEREFORE ONLY 11 WEEKS AWAY FROM THE LAST ACT AND THAT TOO IS THE MEASURE OF THE VERY MOST THAT WE COULD HOPE TO GAIN: ASSUMING CREY, IS NOT. SUDDENLY AND PRENATURELY RELEASED.

/3. IF

TOP SECRET

IES:-

TOP SECRET

IF ANYTHING IS TO BE DONE AT ALL, THERE ARE ONLY TWO POSSIBIL:-

(A) TO RELEASE THE NEWSWORKERS AS AN OPEN POLITICAL GESTURE

(B) TO FIND SOME REASONABLY ACCEPTABLE COVER FOR THE REMISSION

OF THEIR SENTENCES, ON THE LINES OF THE ACTION TAKEN IN WONG

CHAK'S CASE.

4. BUT BEFORE COMMENTING ON THE LOCAL DIFFICULTIES OF THESE

T:O COURSES, IT IS VERY RELEVANT TO BE SURE THAT EITHER WOULD

IMPROVE GREY'S SITUATION: IN SPITE OF THE OBVIOUS DIFFICULTY

OF ASSESSING THE EFFECT ON THE CHINESE GOVERNMENT OF ANY

FURTHER GESTURE.

WE HAVE EVIDENCE THAT THE CHINESE GOVERNMENT ARE ALREADY

PUZZLED OVER THE RECENT REDUCTION IN SENTENCES, AND INGLINED

TO BELIEVE THAT HORSE TRADING HAS BEGUN. ANY FURTHER GESTURE

OF THIS KIND MAY CONVINCE THEM THAT PROGRESSIVE BARGAIN ING HAS

STARTED, AND THAT OUR EXPLANATIONS THAT THE PREROGATIVE CAN

ONLY BE USED IN THE INTERESTS OF TRUE JUSTICE, AND NOT FOR

POLITICAL ENDS, ARE INSINCERE AND CAN BE OVERRIDEN. WE HAVE

A BARGAIN OF SORTS THROUGH MA, AND TO DISTURB THIS BARGAIN

INEXPLICABLY MIGHT ONLY PUZZLE AND CONFUSE THE CHINESE TO THE

POINT THAT THEY MIGHT HELL CONSIDER İT WORTH' HILE TO TRY

RAISING THE IR PRICE FOR GREY (WE HAVE STILL 254 CONFRONTATION

PRISONERS IN CUSTODY). THIS COULD RESULT IN PROLONGING HIS

DETENTION.

- TOP SECRET

16. A

TOP SECRET

HONG KONG TELEGRAM NO. 478 TO FOREIGN AND COMMONWEALTH OFFICE

- 3 -

FURTHER CONS IDERAT ION, EVEN MORE DIFFICULT TO EVALUATE,

CONSIDERATION

IS THAT OUR LOCAL CONTACT MAY BE CORRECT WHEN HE SAID THAT THE

IF WE REDUCTION OF SENTENCES MAD EMBARRASSED CHOU EN -LAI.

ARE CORRECT IN OUR BELIEF THAT CHOU IS A MODERATING INFLUENCE, WE

SHOULD NOT RISK WEAKEN ING HIS POSITION,

BUT TO RETURN TO THE TWO COURSES IN PARA3 AND THE LOCAL

DIFFICULTIES OF PURSUING THEM. I DOUBT IF I NEED MORE THAN BRIEFLY RESTATE MY FIRM OBJECTION TO COURSE (A), TO WHICH I HAVE ALREADY EXPRESSED DISAGREEMENT IN PREVIOUS CORRESPONDENCE

IT WOULD KHEN IT HAS BEEN ADVOCATED BY THE CHARGE IN PEKING.

EE A SERIOUS REVERSAL, CARRYING PERMANENT AND CONTINUING DANGERS, CF CUR ESTABLISHED POSITION THAT WE GOVERN HERE ONLY UNDER THE

RULE OF LAW, AND THAT, WHILE WE MAY BE OPEN TO REASON AND REASONABLE NEGOTIATION, WE ARE HCT OPEN TO UNREASONABLE PRESSURE

OR TO DEMANDS FOR A KOW-TOW. IT IS MY CONSIDERED OPINION THAT

IF ANY FUTURE CONCESSION IS MADE IN RESPECT OF THE 11 HEMSWORKERS,

UNLESS IT COULD BE POSITIVELY DEMONSTRATED THAT THAT CONCESSION WAS NOT POLITICALLY INSPIRED, OUR WHOLE POSITION AND REPUTATION

WITH THE CHINESE WILL BE PUT AT RISK, AND THAT THE PRESSURE FOR

FURTHER KOW-TOWS WILL SLOWLY MOUNT. TO QUOTE A COMMUNIST

SOURCE, IF HONG KONG LOSES A ROUND, IT LOSES THE WHOLE GAME''.

/8. FINALLY

TOP SECRET

FINALLY THERE IS THE EFFECT OF COURSE(A) ON CONFIDENCE IN

HONG KONG, I AM SURE THAT A SIGNIFICANT LOSS OF CONFIDENCE

BOTH IN MYSELF AND IN HMG'S SUPPORT FOR THE COLONY WOULD RESULT

FROM ANY FURTHER REDUCTION IN THE SENTENCES OF THE NEWSWORKERS.

THE OVERWHELMING WEIGHT OF LOCAL OPINION IS NOT IN THE LEAST

SYMPATHETIC EITHER TO THE NEWSWORKERS OR TO CONFRONTATION

GENERALLY. ANY LENIENCY WILL BE REGARDED AS EVIDENCE THAT THE

GOVERNMENT IS WILLING TO GIVE GREATER CONSIDERATION TO

PROTESTS MADE BY THOSE DISLOYAL TO THE ADMINISTRATION THAN

TO THE FEELINGS AND INTERESTS OF THOSE WHO SUPPORTED GOVERNMENT

IN THE EMERGENCY.

9. THIS FEELING WILL BE HELD PARTICULARLY STRONGLY BY THOSE

WHO HAVE HAD TO DEAL DIRECTLY WITH, AND SUFFERED FROM THE COMMUNIST SUBVERSIVE, PARTICULARLY THE POLICE, THE AUXILIARY POLICE,

THE VARIOUS VOLUNTARY SERVICES, THE STAFF OF THE PRISONS AND

AMONGST OTHER PRISONERS, INDEED I HAVE ALREADY HAD TO DEAL

WITH A SMUGGLED PETITION ALLEGED TO HAVE BEEN SIGNED BY

SC ORDINARY ''LOYAL'' CONVICTS ASKING, VERY PERSUASIVELY,

WHY THEY SHOULD BE TREATED LESS GENEROUSLY THAN THOSE WHO HAD

SCUGHT TO OVERTHROW THE GOVERNMENT.

TROUBLE IN THE PRISONS OVER THIS ISSUE.

WE CANNOT RISK SERIOUS

/10. FURTHER

TOP SECRET

- ነ

TOP

SECRET

HONG KONG TELEGRAM NO. 478 TO FOREIGN AND COMMONWEALTH OFFICE

FURTHER MORE, LOCAL CHINESE OPINION MIGHT WELL TAKE THE LINE

WHILE THE HONG KONG GOVERNMENT SEEMED TO BE WILLING TO GO ANY

LENGTH FOR A EUROPEAN UNCONNECTED WITH HONG KONG, IT WAS INCAPABLE

OF TAKING ANY EFFECTIVE ACTION TO SECURE THE RELEASE OR PROTECTION

([2 MUT. GPS:]) OCAL FISHERKEN KIDNAPPED (AND ON ONE OCCASION MURDER

BY CHINESE COMMUNE OFFICIALS. THERE IS, AS YOU ARE AWARE,

ALREADY A SCHOOL OF THOUGHT THAT HMG ARE TOO READY TO SUBORDINATE

THE INTERESTS OF HONG KONG TO THOSE OF THE U.K. AND IT WOULD

BE EXTREMELY DAMAGING, NOT ONLY IN PRESENT CIRCUMSTANCES BUT

IN THE LONG TERM, IF THIS FEELING, AT PRESENT CONFINED,

WERE TO SPREAD SEMICOLON PARTICULARLY AMONG THE SECURITY FORCES

UPON WHOM ALL DEPENDS.

11. FOR ALL THESE REASONS, I MUST CONTINUE TO ADVISE FIRMLY

AGAINST COURSE (A) IN PARA 3.

12. THERE REMAINS THEREFORE COURSE(B) IN PARA 3. HERE THERE

ARE TWO ASPECTS TO BE CONSIDERED:-

(A) THE EFFECT OF ARRANGING EARLY RELEASES EVEN ON A REASONABLY

GOOD COVER STORY: IT BEING REMEMBERED THAT EVEN IF A CAST-IRON

COVER STORY WERE FOUND, IT WOULD BE VIRTUALLY IMPOSSIBLE ENTIRELY

TO PREVENT THE PRESS AND EVERYONE ELSE FROM JUMPING TO CONCLUSIONS

SE ICOLON AND

•

(5) THE PROBLEM OF FINDING SUCH A COVER STOPY.

TOP SECRET

/13. THE

TOP SECRET

12. THE PLAIN FACT IS THAT THE DIFFICULTY OF OBTAINING ANY

CREDIBILITY FOR COURSE (B) VIRTUALLY MEANS THAT ALL THE OBJECTIONS

TO COURSE(A) ATTACH ALSO TO COURSE (B). CREDIBILITY FOR THE

RECENT REDUCTIONS IN SENTENCES DEPENDS ENTIRELY ON THE INTER-

VEĽTION OF THE BOARD OF REVIEW AND THE FACT THAT ONLY 1 NEWS-

WORKER WAS INVOLVED. WE CANNOT POSSIBLY USE THE BOARD OF REVIEW

AGAIN, AND HERE WE ARE SPECIFICALLY CONSIDERING ALL THE

NEWSWORKERS.

14. INDEED, FOR SOME 18 MONTHS NOW WE HAVE BEEN SEARCHING FOR

SOME ACCEPTABLE EXCUSE ON WHICH TO RELEASE THE NEWSWORKERS,

AND OF COURSE IT WAS AS A RESULT OF THIS SEARCH THAT A WAY

OF REDUCING WONG CHAK'S SENTENCE WAS FOUND. WE HAVE EXAMINED

THE PRISONERS FAMILY BACKGROUND, STATE OF HEALTH, AND EVERYTHING

ABCUT THEM SEMICOLON AND HAVE EVEN CONSIDERED EXTREME MEASURES

SEMICOLON BUT WITHOUT SUCCESS SO FAR. NATURALLY I AM PREPARED

TO CONTINUE THE SEARCH, BUT IT WOULD BE QUITE WRONG OF ME TO

LEAVE ANY IMPRESSION THAT I HAD ANY HOPES OF SUCCESS. I REGRET

TO HAVE TO SAY THAT I HAVE VIRTUALLY NONE.

15. IN CONCLUSION, MAY I MAKE THE POINT THAT IN BROOKE'S

CASE NO SERIOUS ADDITIONAL THREAT TO THE FUTURE SECURITY OF THE

UK CAN BE INVOLVED. HERE, THE DEVELOPMENT OF A VERY SERIOUS

THREAT TO HONG KONG'S SECURITY IS THE ESSENCE OF CUR DIFFICULTY.

/16. TO

TOP SECRET

[

TOP

SECRET

HONG KONG TELEGRAM NO. 478 TO FOREIGN AND COMMONWEALTH OFFICE

- 7 -

16. TO SUM UP:-

(A) I CAN ONLY CONTINUE TO ADVISE STRONGLY AGAINST COURSE (A)

IN PARA 3 SEMICOLON AND

(B) I WILL CONTINUE TO SEEK A SOLUTION ALONG THE LINES OF COURSE

(B), BUT I HAVE TO SAY THAT MY EXPECTATIONS OF FINDING ONE

KHICH DOES NOT IN FACT CARRY ALL THE DANGERS OF COURSE (A)

ARE VERY SLIM INDEED.

SIR D. TRENCH

FILES

F. EAST. DEPT.

P.U.S.D. -

FFFFF

TOP SECRET

FEC IJC,

15/5/69

Mr. J. Murray

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SECRET

806

Loy

Political Adviser

As you are avare, I spoke to Mr. K.C. Jay yesterday and arranged to see him at 9.15 a... this morning.

It was an unexpectedly lengthy and in some ways difficult interview, mainly because of a local mini crisis in the money exchange following a decision to suspend dealings in Deutschemarks: this meant that Jay was busy most of the time I was with him answering questions on the local situation and giving advice on the Deutschemark, Franc and US. Dollar.

I started the discussion by making a personal remark on the problems apparently facing the Bank of China in Singapore. On my asking what the true situation was down there, Jay said that this was a problem which had existed for some time: that he himself had advised Peking a long time ago that they would probably rua into difficulties in Singapore: that, although LO, the local Singapore Manager of the Bank of China, had many good ideas, he was "a little too corrupt". More recently Peking had decided to "dry up" funds held in Singapore: this they had done by instructing Singapore to buy sterling on behalf of Peking and in turn they had paid the Singapore branch in Hong Kong dollars deposited in the Hong Kong branch to the credit of Singapore. Jay said that the newspaper reports of low liquidity vere very much an under- statement of the true facts, which were simply that the Bank of China now had very little liquid funds available in Singapore. As agreed with H.E. yesterday, I then took the opportunity of making what I said was a purely personal comment to the effect that I sincerely hoped that this action by the Bank of China and the counter-action/the Singapore Government would not have repercussions here in Hong Kong: Jay seemed a little surprised by this and asked what could possibly happen to affect the Hong Kong situation. I said that although I had no precise knowledge of the legal position, nevertheless it occurred to me that if they so desired the Singapore Government might well attempt legal action in Hong Kong and try, say, for a legal order of attachment on funds held in Hong Kong. I went on to say that this, if it did happen, would be most unfortunate. Jay certainly appreciated this point and said he would like to look further into the matter.

Then, as agreed, I informed Jay that, as a result of the R.K.G.'s continuing appraisal of the security situation locally, it was intended that the last of the detainees would be released within the next few days. Thereafter it vas probable that Governsent would, in the next few weeks, give consideration to placing Regulation 31 and its attendant rules "into cold storage". From this I led into the question of reduction of sentence for the 11 confrontation prisoners: I spoke, of course, to my brief, along the lines of the press release. I further said that this action was yet another indication of the H.K.G.'s desire that relations return to normal.

/Contd...

SECRET

I also added the comment that we hoped the C.P.G. would also contribute to the restoration of normality, for example by re-considering the position of British subjects detained in

China,

I was interrupted on several occasions whilst putting across the above message: Jay felt, as he had often said before,

He wanted that we were too easily giving up bang gining points. to know how ve knew that this was the "right price" to offer for an improvement in the situation or for the release of Anthony Grey. I referred him back to the many discussions we had had on this point over the last year or so and said that this was not a question of a political deal and that our actions had been taken on grounds of justice. Jay, of course, has never been convinced that we were right in acting as we do but on this occasion contented himself with the comment that as a business- man he would certainly feel it wrong not to take advantage wherever possible.

I asked that the message be passed on to LI Cho-chih as soon as practicable, to which Jay replied that he would try

I said that this would not and contact LI to-morrow morning.

be very satisfactory as a public announcement would be made, probably tonight or to-morrow morning. Jay then undertook to contact LI as soon as possible. (NOTE: Later in the morning Jay telephoned to say that LI was still in Canton and therefore be had passed the message to him there.)

Jay said that when there was more time to discuss things leisurely there were one or two general iteas he would like to mention to me, in particular concerning communications he had received from Peking. Among other things he said that he had heard from the Prime Minister's office:-

(1) that CHOU En Lai remains disappointed at the outcome of the recent Party Congress and was rather moody in his dealings with people;

(2) that LIN Piao's original draft political report had contained some hard-hitting comments on "imperialists" including Britain, but that CHOU in committee had successfully managed to have these references cut out of the final report

(3) that CHOU had been particularly upset when the names of the

that Standing Committee of the Politburo were announced: because the names were in alphabetical order CHOU had appeared after CHEN Po Ta: it is alleged that afterwards in committee CHOU had rather petulently said that in the circumstances perhaps CHEN Po Ta should be made Prime Minister in his place but that MAO had smoothed the matter over and insisted on CHOU retaining his position.

Jay enquired what the position was concerning the 8.C.I.V. land at Tsuen Van: I said that I hoped to be in a position to give him at least a broad indication of how things were going within the next few days.

9th May, 1969.

C.C.

Mr. J. Murray (F.C.0.)

Mr. J.B. Denson (Peking)

D.3.B.

H/A.R. G.;

E.S S.

جعة

(J. Cater)

SECRET

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SECRET

Yesterday Mr. K.C. Jay telephoned asking whether be could see me: he stated that it was not urgent but that he had one or two general things to say to me. Accordingly, I arranged to have lunch with him today (Friday, 2nd May).

As agreed, I informed Jay that LAU San was due for release from détention on 3rd May and that LOK Tin-sung would be released on 5th May.

During lunch time I took the opportunity of mentioning VONG Cho-fan, the ex-leadmaster of the Chung Vah Middle School. As agreed, I said that on several occasions during the past few veeks VONG had been in contravention of the Education Ordinance in that he had visited the Yu Hua School: I said that such action on WONG's part clearly meant that there was a possibility of a clash with the authorities. However, recently WONG appeared to

have heeded warnings given and had kept away from the school: it was hoped that, in everybody's interest, WONG would continue to be sensible and avoid contravention of the Ordinance. Jay said that he would certainly see that this advice was passed on to the appropriate people but that he was aware that VONG was a stubborn, difficult person and that it had been necessary for the communists to instruct hia to be careful and not to cause trouble.

The discussion ranged over many topics:-

(1) Bong Kong.

(a)

(b)

Jay said that the communists were anxious to obtain the support of retail market stall holders. It was believed that, during the 'food strike' of 1967, the stall holders, even those who dealt exclusively with Mainland goods, had not readily and properly supported the local communists. Accordingly, the banks would be making small loans at very low interest rates to stall holders, particularly those dealing in Mainland goods:

this way

it was hoped that local communists would assure them- selves of support from the stall holders. Consideration had also been given to extending similar credit facilities to hawkers, but it was felt that initially this might prove too difficult and that the situation should be reviewed again when experience had been gained of dealing with the stall holders;

May 1st Celebrations. Jay said that the local communists had received very strict instructions from Peking that the May 1st celebrations should be held in orderly fashion and that no trouble should be caused the Hong Kong authorities. Jay said that the local communist leaders vere so concerned that these instructions should be properly carried out that the originally planned 'morning gathering' had been cancelled and also communist flags in most instances had not been hoisted until about 10 a.a as a meeting had been called first thing on the morning of May 1st to discuss the flying of communist flags;

SECRET

/contd....

(c)

(a)

(e)

(F)

(g)

SECRET

Jay reported that LI Cho-chih remained rather depressed: Jay believes that LI had attracted a certain amount of criticism from Peking recently and Feels rather badly about matters. I asked whether there was anything in particular of which Jay knew that could be causing LI this distress. Jay was unable to nase any specific item but felt that possibly LI felt a sense of failure that comparatively little had been achieved through the LI/Jay/Cater Channel;

Jay said that LIU, the Chief Superintendent of the Bank of China (Hong Kong branch) had been to see Jay on several occasions since returning to Bong Kong from Peking: LIU was a very much subdued man and clearly had been criticised severely for the part he had played in the 1967 disturbances. Jay made great play of the fact that virtually everywhere he went LIU was accompanied by a colleague in European-type clothing: referring to this person as a 'mystery man', Jay said that he had been unable to find out any details whatever about his but vas of the opinion that the man was of considerable standing (at times he appeared to give LIU instructions) and the guess in banking circles was that possibly he was there either to supervise LIU's activities or even vas understudying LIU with a view to replacing him;

Fei Yi-ming. Jay repeated what he had said often in the past few months, that FEI was very much out of favour with Peking and that he was working under strict instructions not to cause trouble in Hong Kong: in particular, Jay claims that FEI has now been told that he must not concern himself with trade union matters any more and that he must stick to matters concerning the Ta Kung Pao;

Detained yachtsmen. According to Jay, it was now quite clear that the Chinese authorities had been in error over the nationality of some of the detained yachtsmen: Jay said that originally the Chinese vere convinced that among the group were some Dutchsen and that it was not until they had received my assurance to the contrary that they were convinced of the situation and therefore prepared to release the yachts- san other than the two Americans. In making this statement, Jay said that the question of the two Americans was one which he wished to keep well away Prom: that he had no information as to the possibility of their release but thought that it could well be many weeks ahead;

South China Iron Works. Jay enquired the present position and I said that I would make enquiries and let his know. He was particularly anxious that no mention should be made in any future correspondence on this matter to the letter which the District officer, Tsuen Wan, had sent to Migel of Johnston, Stokes and Masters as, at Jay's request, Nigel had held up action on the letter pending action being taken by me to ascertain the position. Jay asked that nothing

SECRET

/contd...

SECRET

further be put in writing on this matter until it vas kaova firstly whether such a proposition were possible and secondly, in very broad terms, how much Government sight be prepared to pay for the 8.C.I.V. land. If it were thought that such a deal were possible and if the price were reasonable, then Jay would be pleased (if the H.I.G. were to agree) to enter discussions with the appropriate land authorities before anything officiäi vere put in writing.

(2) CHOU In Lai. Jay said that he had not received any direct communication from Prine Hinister CHOU En Lai recently:

in that bou

no doubt he was "very busy on other more important matters" However, Jay claimed tht he had received a letter from one of the P.M. ' s Secretaries. In this letter a consent had been zade that CHOU as a result of the 9 People's Congress, now felt himself to be in a rather isolated position, being outnumbered in the main Centra committee by hard-line communists such as KIANG Sang and CHENG PO-ta. But it was the Secretary's view that the sanoeuvring for power was far from finished and that it was expected that event ally CHOU, as usual, would 'come out on top'. According to Jay, the letter also referred to a criticism which had been made of CHOU in committee that, as a result of his lenient policies, the sit ation in Hong Kong was not particularly good from the Chinese point of view: to this criticism CHOU had allegedly replied that Hong Long was in itself a very small watter but that if the Chinese decided to interfere in the affairs of Hong Kong, then there would be very serious consequences. far as CHOU was concerned, when he dealt with Hồng Kông he did so as if he were dealing with Britain itself. Jay, and apparently some of his colleagues to whom he had mentioned this incident, thought CEOU's reply to be "brilliant.

Although Jay was of the opinion that CHOU had somewhat unexpectedly suffered a setback in recent weeks, he nevertheless thought it significant that of all the top communist hierarchy in Peking CHOU was the only one who could still travel free from fear in any part of China. In referring to General VANG Ving- sing, the Army Chief of Staff, Jay said that the Chinese authorities dare not let him travel outside Peking: vas known to have been a strong opponent of Peking when he vas in Canton and had only been promoted Chief of Staff In order to

in take his influence away from South China.

General VANO

(3) Johnston. Jay only referred to Johnston in passing but in doing so said that he thought this case vas likely to be long drawn out and difficult to resolve.

(4) Canton Spring Trade Fair. Jay said that the Fair

a thorities and local communist authorities had been convinced that invitations would be given to British businessmen in Hong Kong to attend the Fair: rather surprisingly, approval had not bean forthcoming from Paking and it now seemed too late for such approval to be given in time for this Trade Fair.

/conté...

SECRET

•

SECRET

(3) Sino/Russian Relations.

It was Jay's opinion that, from information now being received from Peking, China

was anxious to play down this whole affair and to 'normalise' matters.

In summing up his general feeling about the future, Jay said that undoubtedly China vanted no trouble and would be taking f rther steps to de-escalate sensitive positions wherever practicable.

2nd May, 1969.

x.c.

Mr. J. Murray (F.C.0.) Mr. J.B. Denson (Peking D.S.B. H/A.R.G. *.8.3.

(J. Cater)

SECRET

41C 2600079

30,000-1/67-B52117

TOP SECRET

804

No. TSX 15/64 IV

Dear James

GREY

COLONIAL SECRETARIAT,

LOWER ALBERT ROAD,

HONG KONG,

2 May, 1969.

نشاه

130

In our telegram No.10 of 6 January we mentioned a Special Branch paper on Grey that the Governor gent-to Sir Arthur Galsworthy. We also sent a copy to Peking, partly by bag, partly by telegram (our telegram No.5 to Peking).

I now enclose a copy of a

further paper dated 16 April on the same subject. I am sending a copy to John Denson in the same split style as in January.

ever

Your

Arther.

(A.F. Maddocks)

J. Murray, Esq., CMG,

Far Eastern Department,

An intersting Summing

but it introduces no was

Foreign & Commonwealth Office, element in our

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2 Vol 2415

No Wild 2715

Reference: PA/1763

INTRODUCTION

TOP SECRET

Page No. 1 of 7 Pages

Copy No. 19 of 20 Copies

Special Branch,

Hong Kong Police.

16th April, 1969.

ANTHONY GREY

INDICATIONS OF THE C.P.G.'S

ATTITUDE TOWARDS HIS RELEASE

Special Branch paper PA/1763 dated 2nd January, 1969 contained a study of developments and intelligence concerning the C.P.G, attitude towards the release of Anthony Grey, Reuters correspondent, detained in Peking since July, 1967. The present paper brings together the main developments since

that time and sees whether any fresh evaluation of Chinese intentions

towards Grey's release is possible following a re-examination of the whole

of the material.

PUBLIC STATEMENTS ON GREY

There have been no public statements from the C.P.G. concerning Grey since the beginning of 1969 and the last official pronouncement is, therefore, that put out by N.C.N.A. on 27th December, 1963. This stated

that the Chinese were justified in holding Grey because the Hong Kong British authorities were still keeping patriotic journalists in jail, and that "this was the consistent stand of the Chinese Government".

COMMUNICATIONS THROUGH COVINT CHANNELS

The covert link with LI Cho Chih, General Manager of the Hong Kong branch of the Bank of China, has continued through a former senior

Bank employee who still acts as an exchange broker for the Bank.

/2.

TOP SECRET

Towards the end of December LI visited China, The intermediary

belloves he either had a personal meeting with CHOU En Lai, or, at least,

received a message from his. Before he left Hong Kong, he reportedly made

Bone effort to find out if there had been any message from the British side

and, by the same account, got in touch by telephone before his return from

China to see if there had been any last-minute message. After I had

returned to Hong Kong, on 2nd January, 1969, his contact reported a dis-

cussion in which LI had said that he now firmly believed that CHOU En Lai

was embarrassed by the Grey affair and had personally intervened to prevent

the Paking Government (sic) from trying and sentencing Grey, because this

would have made his early release out of the question. LI continued that the Chinese side was aware of the difficulties involved in releasing the

prisoners in Hong Kong: for their part, the releasing of Grey was equally

difficult. 'LI then asked particularly that the British side should be informed that Peking had no intention of making propaganda should the news-

paper workers be released and there would be no talk of a victory. The

onus was now upon the Hong Kong Government to find some suitable formula

for their release.

On 27th January the intermediary was asked to tell LI that the

Hong Kong Government was willing to consider releasing the prisoners to

China and, by his own account, he did this the following day. He reported that LI received the proposal without enthusiasm and was reluctant to pass it on to Peking, remarking that a similar proposal had been made in (the then Foreign Secretary) Mr. George Brown's letter to CHEN I of 30th August, 1967, and rejected. In spite of this cool reception, LI asked his contact

for clarification of one or two points, which was given.

On 5th February the intermediary reported having had an urgent

meeting with LI the previous day at the latter's request. According to the

intermediary, LI stated that he had received a letter from Peking on the evening of 3rd February, saying unequivocally that Grey would be freed if

he 11 newspaper workers in prison in Hong Kong were released. The intermediary quoted LI as saying that this was the first time that Peking had

been quite specific about the exchange, without any qualifications. The

intermediary gave it as his opinion, that the corollary, i.e. that unless

TOP SECRET

13.

TOP SECRET

-3-

the 11 were released Grey would remain incarcerated, was not implied, and therefore, even if they were not released, it was still possible that Grey

would be let out on some other terus.

Next day, however, the intermediary stated that LI had just heard from Peking that the latest British proposal was unacceptable. He reported that LI was under instructions to give no reasons for the rejection but had admitted to him that, although it was the Chinese intention to take the 11 prisoners back to China on their release anyway, they had little control over them and were not certain of how they would react. For this reason, the C.P.G. was unwilling to risk the potential embarrassment of their refusing to go back to China. LI wished it to be known, nevertheless, that the door was not completely closed and that the dialogue might continue.

On 12th February, the intermediary claimed that he himself had

received a message from the Premier's office rejecting the Rong Kong Government's proposal of 27th January (see para. 5). At the same time, ho said he had spoken to LI again, who had given it as his opinion that, had the proposal been put forward by the British in early November, it would have been acceptable. But something had happened in the meantime which had changed Chinese thinking.

The dialogue was resumed on 20th February, 1969 when the intermediary claimed he had received another message, directly from CHOU En Lai, repeating the promise to guarantee no publicity or propaganda about a victory having been gained if the prisoners were released in Hong Kong. CHOU is also alleged to have said that if the Hong Kong Government so wished, it could overcome any difficulties, legal or otherwise, involved in the release of the newsworkers an early solution to the problem was needed.

10.

A completely reliable and delicate source reported independently on a conversation between LI and the intermediary on 26th February, in the course of which LI instructed the latter to inform the Hong Kong Government that news that these covert talks were taking place had leaked out. The intermediary was also told to tell the British that their latest proposals (to release the prisoners outside Hong Kong territory) were

14.

TOP SECRET

"unworkable" and "hopeless".

He reported to this effect the next day.

This report of the conversation with LI provided the first independent

confirmation that the intermediary is actually receiving directions from

him and, in this case, at least, transmitted them in generally faithful

terms.

11.

Another completely reliable and delicate source reported in

early February that LEUNG Bai Lan, Director of the N.C.N.A., Hong Kong and FAI I Man, Publisher of the Ta Kung Pao, were discussing the possibility

of opening up unofficial discussions with the Hong Kong Government, using

a former Chinese member of the Executive Council as the channel. Shortly afterwards FAI is known to have met this person and arranged a subsequent meeting with LEUNG.

12.

About the same time a European journalist in Hong Kong, who was formerly the Regional Information Officer (R.1.0.), received proposals,

allegedly emanating from FAI, regarding yet another possible channel for

unofficial talks between the communists and the Hong Kong Government,

These proposals showed clearly that FAI, or those claiming to represent

him, had some knowledge of the talks already taking place between LI Cho

Chih and the intermediary and of the proposals made by the Hong Kong Government regarding possible conditional release of the journalists. This approach to the former R.1.0. provided an opportunity for Government

to make the intermediary aware of FAI's activities and to request the Chinese side to avoid this multiplicity of channels. The intermediary subsequently reported that LI had evinced surprise that FAI had taken

these stopa, adding that he was already in bad odour with Peking. LI

promised to investigate further and, for whatever reason, no moves by FAI or LEUNG Wai Lam have subsequently come to notice.

LOCAL COMMUNIST COMMENT ON THE DETENTION OF GREY

13.

A completely reliable and delicate source reported that on 7th March, 1969 the senior Communist official in local publishing circles

gave a lengthy exposition of current communist policies in Hong Kong to

his immediate subordinates, in the course of which he dealt with the

TOP SECRET

15.......

TOP SECRET

- 5-

detention of Grey. It would appear that he was passing on the gist of

a Peking directive discussed at a previous meeting he had attended, which

had been addressed by LEUNG Tai Lên,

14.

The official was at pains to show that, in the absence of physical assistance from China for the Hong Kong communists, Grey's

detention had been a source of encouragement for the masses and had demonstrated local communist unity (presumably between Hong Kong and

China). Claiming Grey's detention had been at the instigation of the Hong Kong cadres, he declared 'Our request has been entertained by the Mother

Country

an eye for an eye that's what we want", The British

had considered (wrongly) that Grey could be exchanged for a few of the

prisoners but before they released Grey, the Chinese would first insist that all communists (journalists?) detained in Hong Kong were released,

"We will swap one of them for many of us. That will be our victory!"

15.

The speaker continued that Britain was anxious to improve

relations with China, but China was indifferent to such initiatives and

would make Britain "kow tow" now that she had lost her power and influence,

The detention of Grey provided a lever by which China could force the

United Kingdom to apply pressure on the Hong Kong Government to change

its policy towards the local communists.

GENERAL POINTS

16.

From the start, the Chinese have, perhaps, by their own standards

at least, been consistent in equating Grey with whatever number of neve- paper workers was held in Hong Kong at any given time, and attempts to

equate Grey with the eight in custody at the time he was seized, or with HSUKH Ping, have been branded by them as mere equivocating. However, in October 1968 there were clear indications that CHOU En Lai had directed

that communist opinion in Hong Kong should be prepared for Grey being

released. It is by no means clear what happened after early November

which caused the Chinese attitude to harden. The most likely explanation

seems to be that the wave of hostile publicity at that time was regarded

by the C.P.G. as an attempt to apply pressure. It was against this back- ground that the next offer by the Hong Kong Government to release the

TOP SECRET

16.

TOP SECRET

- 6

prisoners, provided they left the Colony, was turned down by the Chinese, who, it would seem, felt unable to allow themselves to be seen to give vay. It also seems likely that they have seriously considered the Hong Kong Government's proposals to release the prisoners outside the Colony as being no advance on Kr. Brown's offer of August 1967, when he said that, if the newspapermen and News Agency personnel posed a problem, "I may be able to arrange their departure for China". This last proposal was unanswered by the Chinese at the time, but was rejected out of hand by 10 Kuei Po, a Deputy Minister, in April 1968 at an interview at the M.F.A. Peking with the British Charge d'Affaires.

17.

It seems possible the Chinese are in something of a dilemus over releasing Grey. On the one hand, there is some evidence of an apparent inclination to normalize relations with Britain and to present a better image internationally at a time when several nations are about to recognize the Peking Government. On the other hand, the Chinese are clearly intent on deriving the maximum profit from their position and are under no humanitarian pressures to make concessions. By holding Grey they can demonstrate their support for the Hong Kong Communists and, at the same time, hope to drive a wedge between Britain and the Hong Kong Government.

CONCLUSIONS

18.

This paper cannot disagree with the conclusions reached previously, namely that the C.P.G. will release Grey when they consider it to be to the advantage of their overall foreign policy to do so. There are, however, several new factors; the Chinese have now made it fairly explicit that Grey will be released if the Hong Kong prisoners are freed - an offer which they would find it very difficult not to honour. Also, the British side has shown clearly that the release of the prisoners is a possibility, although under conditions which appear not to be acceptable to the C.P.G.. The Chinese apparently believe that if sufficient pressure is applied, particularly to the U.K. Government, the Hong Kong Government's conditions can be modified.

TOP SECRET

17..

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19.

The time-scale factor has also changed in that ten of the eleven newspaper workers at present imprisoned in Hong Kong can be expected to be released by September 1969. After September, therefore, the exchange would be reduced to a one-for-one basis. If the Chinese wish to make a 'victory' of the exchange, as a local communist has claimed, there is some inducement for them to act well before the ten are due for release. They may, on the other hand, feel that time is more on their side than ours; by holding Grey until the last journalist is released they can retain a means of exerting some pressure on the U.K. and Hong Kong Governments, and at least claim to their local supporters that they have stuck by their original statement, unless, of course, in the meanwhile they find some overriding political reason for releasing him.

TOP SECRET

100

TOP COPY

721

CYPHER/CAT A

TOP SECRET

HONG KONG TO FOREIGN AND COMMONWEALTH OFFICE

0 391

SECRET

15 MAY 1969

RECEIVES N

REGISTRYA, 30

1969

FEC 170

TOP SECRET ADDRESSED FCO TELEGRAM 391 OF 15 MAY RFI PEKING MY TELEGRAM 347: WONG CHAK ET AL.

ON THE MORNING OF 9 MAY CATER SPOKE TO MTS CONTACT ON THE LINES OF PARAGRAPH 2 OF MY TELEGRAM UNDER REFERENCE, AFTER MENTIONING THE IMPENDING RELEASE OF THE LAST DETAINEE AND THE POSSIBLE WITHDRAVAL

SOON OF EMERGENCY REGULATION 31 FROM EFFECT.

2. CONTACT PASSED ON THE MESSAGE THE SAME DAY TO LI CHO-CHIH WHO WAS

IN CANTON.

3. CONTACT'S ONLY IMMEDIATE COMMENT WAS THAT HE FELT WE WERE TOO

EASILY GIVING UP BARGAINING POINTS AND HE WONDERED HOW WE KNEW THAT

THIS WAS THE RIGHT PRICE FOR GREY, CATER EXPLAINED ONCE AGAIN OUR

VIEW OF THE REDUCTION OF WONG CHAK'S SENTENCE,

4. CONTACT'S REACTION WAS PARTLY INFLUENCED BY HIS FEELINGS THAT HE

HAD BEEN GIVEN TOO LITTLE NOTICE AND HIS BELIEF THAT IF THIS SECRET

CHANNEL IS TO BE KEPT GOING IT IS NECESSARY TO PASS MORE MATTERS OF SUBSTANCE THROUGH IT, IN FACT, OF COURSE, WE HAVE NOTHING MORE OF SUBSTANCE TO PASS.

FOO PLEASE PASS ROUTINE TO PEKING.

SIR D. TRENCH

TILE 3

HD. F.D.D.

H.Z.D.

SIR J. JUMISTON

KR. VORETON

SIR A. GALSWORTHY

HD. P.U.S.D.

P.S.

FFFNE

[REPEATED AS REQUESTED]

TOP SECRET

Yea!

Yen fr3. 19/5

ル

TOP SECRET

Reply sent

CYPHER/CAT A

1 COPY NO. Gr=

PRIORITY HONG KONG TO FOREIGN AND COMMONWEALTH OFFICER

PELKO 347

TOP SECRET

2 MAY 1969

ADDRESSED FCO AS MYTEL NO. 347 OF MY TELEGRAM NO. 325 PARAGRAPH 2:

PRISONERS,

2ND MAY RFI PEKING. FEC 1341

WONG CHAK AND OTHER CONFRONTATION

1 PROPOSE TO PROCEED AS FOLLOWS. I SHALL SIGN THE WAR! REDUCING THE SENTENCES OF THE DOZEN OR SO PRISONERS CONCERNED ON THE SAME DAY AS THE PRISONERS THEMSELVES ARE INFORMED AND A PUBLIC ANNOUTICE" ENT MADE. "'Y FOLLOWING TELEGRAMS CONTAIN THE DRAFT PUBLIC ANNOUNCEMENT AND MATERIAL FOR BACKGROUND GUIDANCE. WE WOULD DENY THAT THERE IS ANYTHING ABNORMAL IN THE OPERATION OR THAT IT IS CONNECTED WITH THE PLICHT OF ANTHONY GREY AND WE SHALL REFUSE TO BE DRAWN IF THE NEWSPAPERS SPECULATE ON THE SECOND POINT. 2. CATER WILL MENTION THE DECISION TO HIS CONTACT 24 HOURS ONLY REFORE IT BECOMES PUBLIC, TO VIBRISE RISK OF EARLY DISCLOSURE. HE, TOO, WOULD SPEAK ON THE LINES OF THE DRAFT IN MY IMMEDIATELY FOLLOWING TELEGRA, THOUGH HE COULD PERHAPS CO A LITTLE FURTHER. 1 WOULD NOT HOWEVER WISH HIN TO SAY THAT VE HAD MADE A CONCESSION IN THE HOPE OF OBTAINING GREY'S RELEASE ONLY THAT MY ACTION IN REQUESTING THE BOARD OF REVIEW TO CONSIDER ALL SENTENCES, AND IN REDUCING SENTENCES IN ACCORDANCE WITH THE BOARD'S RECOM'ENDATIONS, WAS ANOTHER INDICATION OF THE HONG KONG GOVERNMENTS DESIRE THAT RELATIONS RETURN TO NORMAL. HE COULD ADD THAT WE HOPE THAT THE CHINESE GOVERNMENT WOULD ALSO MAKE THEIR CONTRIBUTION TO THE RESTORATION OF NORMALITY, FOR EXAMPLE BY RECONSIDERING THE POSITION OF BRITISH SUBJECTS DETAINED IN CHINA.

3. I PROPOSE THAT THE DAY FOR THE ACTION DESCRIBED IN PARA. 1

PE 15 MAY,

4. 1 SHOULD BE GLAD TO KNOW WHETHER THESE ARRANGEMENTS AND THE PROPOSED DATE ARE AGREEABLE TO YOU.

FCO PLEASE PASS ROUTINE PÉKING.

SIR D. TRENCH

FILES

HEAD F. 2.D.

HEAD H.K.D.

SIR J. JOHNSTON

MK MORETON

SIR A. GALSWORTHY

HEAD P.U.S.D.

P.S.

AAAAA

(REPEATED AS REQUESTED]

TOP SECRET

MR. MURRAY

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Тор

TOP SECRET

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II.

TOP SECRET

Political Adviser

RECE RG.

21 APR 1YDY

FEC 130F

I saw Mr. I.C. Jay on the evening of 20th March. had asked to see me because that day he had seen in the local English press a statement to the effect that, despite many -- applications to the Chinese authorities, Mrs. Johnston had been refused an exit visa. This, Mr. Jay said, was incorrect: be had specific information from Peking that Mrs. Johnston's exit visa had been approved the day before. I said that this was known but that the press comment in London had obviously been made just ahead of news being received of Mrs. Johnston's exit visa being approved.

Jay commented on various items:-

(1) He was more than ever convinced that Mr. Pullen of the Chartered Bank had acted most unwisely in insisting on seeing the Manager of the Bank of China and in his unnecessarily anxious activities to obtain information concerning Johnston. He thought that if anything, undoubtedly Johnston would suffer because of this anxiety on the part of Pullen.

(2) Anthony @rey. Jay was positive that Grey's living conditions were being improved and again referred to the fact that the Chinese were becoming a little concerned at the probability that Grey, on release from China, would write at length and in very critical terms of the conditions in which he was detained.

(3) Other Britons held in China. Commenting on the general tone of communications from Peking, Jay said that the climate of opinion had improved and that he thought it would not be very long before we had good news of the grant of exit visas for other detained Britons.

(4) South China Iron Works Land. Jay expressed concern about this and asked whether early consideration to the Chinese request could be given. I promised that I would see what I could do to hasten consideration.

(5) Jay then talked at some length on the Bino/Russian dispute. It was his personal opinion that the dispute had been manufactured, or at least exaggerated, in order either to cover up internal/problems within China which might prevent the holding of the 9th People's Congress, or conversely in an attempt to induce consolidation of the rival factions in China in order that, if and when the Congress is held, there might be some hope of achieving solidarity in the face of an external threat.

On the evening of the 21st March, at the Cocktail Party given for the University Grants Committee, Mr. Dick LɛE drev me to one side and said rather enigmatically that he had recently lunched with LEUEG Vai-lan, FRÏ Yi-ning and KHI Pung: that these gentlemen had asked after my health and whereabouts. I was completely non-committal on this and LEE then dropped the subject. I had the impression that be was hoping I would have expressed interest in seeing some of these people but,in viev of my lack of positive interest, decided not to press the matter.

TOP SECRET

/contd...

$10

III.

Top SECRET

On Monday, 24th March, I.C. Jay telephoned to ask whether I had any special message for Mr. LI Cho-chih. On my replying that I had not, Jay pressed the matter and enquired whether I was quite sure about this as LI was expecting some- thing special from me. I assured Jay that I had no such special message and obviously would have contacted him at once if I had received such instructions. Jay asked whether I would see him the next day.

I saw Jay in the afternoon of Tuesday, 25th March. In explanation of the telephone call of the previous day, he said that LI had only recently returned from Canton and had been quite positive that I would have a special message for hia.

I reiterated that there was no such message for LI.

Jay then went on to say that I had returned from Canton in a very depressed state of mind: that LI's old confident air had disappeared and LI felt himself under criticism by Peking. By way of explanation, Jay said that LI had been given the impression in Canton that the Chinese were disappointed at the lack of positive value coming from the channel to the H.I.G.: that some people felt that the Chinese should have taken a rather tougher line and perhaps have made contact with the H.I.G. through others closely connected with Executive and Legislative Councils. Jay said that from discussions with LI it seemed that the people referred to vere P.C. WOO and Dick LEE, Jay again cautioned that P.C. veo had close contacts with the comunists and to his knowledge had been advising them in a way that could only be detrimental to the interests of the H.I.G. Be thought it would be most unfortunate if P.C. Woo were to receive information of a really confidential or secret nature: in these circumstances he felt that there would be no doubt that such information would be passed on to the local communists. As for Dick LEE, he said that LEE vas very anxious to ingratiate himself with the local commumists and by this might have led LEE to speak to the communists in terms that they might wish to bear, i.e. a tougher line might be more likely to achieve success. As for P.C. WOO, Jay felt that voo had lost a great deal of prestige with the communists because of the scandal of his mistresses and was hoping to regain some of this lost prestige by providing information and giving tough-line advice.

Jay said that he had been very concerned to learn from NIGEL of Johnston, Stokes & Hasters that the reply on the South China Iron Works land was most unsatisfactory. NIGEL had prosised to send Jay a note on this subject and Jay said that he would like to see me soon after be had received NIGEL's comments.

As I was leaving the office, Jay said that LI had been so depressed about matters generally and his own position in particular that be had asked Jay to write personally to CHOU Ex Lại telling the Prime Minister what Jay thought of things and hopefully-telling CHOU that LI was doing a good job.

/contd...

Тор

Top SECRET

IV.

Тор

Top SECRET

I saw K.C. Jay again in the afternoon of 28th March.

10.

Jay said that he had seen LI Cho-chik twice since our last meeting and that he was pleased to see an improvement in LI's attitude. Jay had, as requested by LI, written to CHOU En Lai explaining the situation and commenting that he thought in the present circumstances matters vere proceeding as veli as they possibly could.

11.

In commenting generally on the situation in Hong Kong and Peking, Jay said that the communists in Hong Kong were definitely beginning to build up support among the local

¡ population and, although they had failed so badly in the past,

they nevertheless had learned their lessons and were approaching the matter more intelligently. It was clear that there would be a concentration on the weak spots of the administration and in particular he mentioned corruption, mini vans and hawkers. He also mentioned H.T. villages where, increasingly, communists were beginning to make inroads. Be felt that, unless effective action were taken by Government in these various fields, the communists would gradually obtain the support of a large section of the community. The consunist tactics vere to show that they vere the people who really cared about the ordinary man in the street and in the village: on the other hand, the communists were depicting the H.K.G. as a part of a colonial power who really had only the interests of the wealthy and the metropolitan country at heart.

12.

As for China, Jay said that the more militant groups were beginning to become vocal again in Peking but that he personally had no doubt whatsoever that CHOU remained in complete control of the situation. Be expressed the view that CHOU aight even welcome a clash with the more militant groups in the future in order to demonstrate his strength.

13.

Jay than showed me a letter which he had received from NIGEL (Johnston, Stokes & Masters) concerning the letter from the District Officer, Tsuen Wan, on the South China Iron Works land. At first Jay said that he would give me a copy of the letter from #IGEL, but at the last moment, just before handing it to me, be decided that this could put him and possibly NIGEL into a difficult position if later the case came to court and it were found that I had had access to the opinion given by the Bank of China's legal advisers. Jay expressed grave concern that the letter from Barnes, in which a specific offer was made in regard to the land exchange, would cause nothing but trouble: he would prefer that the Bank of China and the South China Iron Works should not know of this offer lest they consider it a "trick". I said I would pass on these views to H.E.. but explained to Jay that in such a complex matter as this land exchange, in any event there would be some tidying up of certain aspects necessary before Government could seriously consider making an offer for the $.C.I.V. land at Tsuen Van. Later that day Jay telephoned to explain yet again why he felt it necessary not to give me the copy of the letter from NIGEL.

/contd.......

Top SEODET

14.

Toe SECRET

I saw K.C. Jay on the morning of Wednesday, 2nd April, mainly to inform his that LING Vang-yan was that day being released from detention,

15.

Jay, having noted this, then came back to the question of the S.C.I.. land. He was obviously very worried about this and, after some discussion, agreed to give me a copy of NIGEL's letter (attached) on the strict understanding that I would show it to nobody else except H.E. Jay's position can be stated quite simply, although of course the matter in itself is very complicated. Jay, on behalf of the Bank of China, is asking that Goverment make an offer for the 8.C.I.. land as it stands at Tsuen Wan. When he first made this suggestion to me some months ago I asked why it was not possible for the Bank of China simply to sell the land themselves or have it put up for auction: Jay's comment at that time was that the Bank of China did not wish to do this in case either at the first sale or a later sale an American concern might be successful in obtaining the land. This, it was felt, would prove to be an awkward situation and one which could make for very adverse publicity. In the circumstances, they would auch prefer that the H.K.G. should make an offer and take over the land. To reiterate, Jay said that hopefully they were expecting an offer for the whole area of some 499,000 sq.ft. of sone HK$10 to 11 millions, I assured Jay that H.5. vished to assist in this matter if at all possible and that I would let him know directly a decision is made. Jay replied that from his point of view he would prefer a straight 'no' to the proposition (perhaps with an explanation that this would be against principle or policy) rather than have the Barnes letter to deal vith. Jay said that for the time being he had asked NIGEL to hold up the letter from Barnes in the hope that early consideration would be given to the bigger proposition made by the Bank of China three or four months ago. I assured Jay that I would inform H.E. of the anxiety which Jay had in this latter,

16.

I took the opportunity at this meeting of informing Jay that probably I would be going to Europe and the United States about the già April and that I would be away for about three weeks.

17.

Jay said that recently the more militant local communists had begun talking about the possibility of starting They had been prompted in this view by the fact that large numbers of posters appear constantly all over Hong Kong advertising various products, etc. etc. The communists were aware that theoretically the putting up of any poster should first have the approval of the S.ll.A, but they knew that in most cases such approval was not obtained. In the circunstances, they felt that they could start a poster campaign almost with impunity: that if indeed the H.K.G. were to counter such action, the H.K.G. would be seen by all to be singling out the communists for reprisals, whilst letting other poster stickers operate without action being taken.

Тор

/contd..

Top SECRET

Jay said that the

TOPSECRET

communists would be sensible enough not to make the posters too inflammatory and therefore to come within the special law against such posters. Be advised that early consider- ation might be given to ensuring that all complied with the law where appropriate, in that S.H.A. approval should be sought before a poster is put up.

(J. Cater)

3rd April, 1969.

C.C.

Mr. James Murray (FCO) Hr. J.B. Denson (Peking) D.5.8.

H./A.R.G. B.5.5.

w/o enci.

TOP SECRET

RECEIVED IN

PERSONAL AND TOP SEC-BT

REGISTRY NO.50

17 APR 1969

Far Eastern Department

FEC 13C/1

pah2017/4

15 April, 1969

(561)

GREY

You asked me in your personal letter of 17 March whether there were any new developments in the case of Anthony Grey.

You asked first of all about the conditions of Grey's detention. The most recent news is that the Chinese told John Delson on 8 March in Peking (the latest occasion on which the cases of British subjects have been raised with the Chinese) that Grey could now go upstairs to get his books. This assurance was quite specific and we are prepared to believe that it is true. It has not yet been confirmed in Grey's own. sorrespondence.

3. On the other hand Gray has confirmed in correspondence which reached here in February that he had received medical attention on three ocossions for a throat complaint. On the last he was visited by quite a delegation including a radiologist. The Chinese told him that he was suffering only from laryngitis,

4. You will know of course about our past efforts to negotiate acceptable conditions for Grey's release through a channel in Hong Long. Recently acting upon a hint from the Chinese side, we resurrected the proposal for an exchange. We told the Chinese that we were prepared to release to China for the remainder of their sentences all eleven remaining news workers in exchange for the release of Grey. The Chinese response simply confirmed that even if they are interested in closing the book on the Grey affair, they are more interested in securing the overthrow of the prison sentences imposed on the eleven remaining news workers. We regard these negotiations as having failed.

5. Ministers have agreed that we should now ain for Grey's release this September, ly then ten of the eleven news workera will have completed their sentences (with remission). The Governor has undertaken to review the sentences of a certain aategory of long term confrontation prisoners in such a way as to ensure a reduction in the sentence of the eleventh news worker, Wong Chak, and his release no later than September. Naturally our ability to carry through this plm will be subject to the fluctuating pressures of public opinion, not to mention the health and state of mind of the unfortunate

/Grey.

1.7. Davies, Esq.,

OTTAWA.

PERSONAL AND FOR SKØRET

PERSONAL AND FOR STORET

Grey. Needless to say, the information in both this and the preceding paragraph are for your ears only.

6. I should mention one last development. In a recent letter dated 6 January, Grey expressed himself dissatisfied with our efforts to secure his release, We believe the Chinese may have seen in this letter a useful means of leverage towards the release of the eleven news workers and for this purpose gave it unusually rapid passage, perhaps in their diplomatic bag. I attach a copy of a telegram of guidance on this subject which was sent to Rabat. Irs. Grey is now claiming that the Chinese are holding up her letters to Grey, but we have no confirmation that this is really the

7. Finally, Ministers have been subjected in the last week to a small flood of letters from M.P.s following the publication in the "Church Times" of a letter appealing for the release of the newa vorkers This campaign" is likely to have received further stimulus from an article in last Bunday's "People" throwing doubt on the legitimacy of some of the sentences imposed on the news workers in 1967. attach (size you asked for guidance on this point) a copy or a standard draft reply to the sort of letter wo are now receiving.

8. A copy of this goes to Michael Wilford who will also wish to be up to date.

(J.D.I. Boyd)

PERSONAL AND TOP BRORET

Mr. Murray (F.C.O)

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Mr. K.C. Jay telephoned me on the morning of Sunday, 23rd February to say that he had arranged to meet with LI Cho- chih that day in order to pass on the message which I had taken to him the previous day: he was anxious to know whether there had been any changes in our thinking on this matter and whether we still wished to proceed with the proposals.

1 vas in somewhat of a quandary as to why Jay should be in doubt on this matter but nevertheless told him quite firmly that the proposals were definite and that we should be grateful if he could put them to LI as soon as possible.

Jay telephoned me on the morning of Tuesday, 25th February to say that he would appreciate a brief meeting with se in order to give me LI's reactions to the proposals' made on the previous Sunday. Accordingly I saw Jay at 12.30 p.m. confirmed that LI had undertaken to pass our proposals through to Peking and that he, Jay, would also be sending the proposals separately on his own channel. LI's opinion was that our proposition was unlikely to find favour in Peking but neverthe- less felt that it was good that such a proposal had been made by the H.I.G. as it showed that the H.K.G. had given a great deal of thought to the problem and were keen, so far as possible, to meet the Chinese request : LI allegedly said that it was becoming certain that, although both sides had tried to meet the other's requirements, the proposition nevertheless was impossible of acceptance.

Jay said that LI was due to go to Canton about the beginning of March, when undoubtedly he would be discussing not only the general Hong Kong situation but also probably the present proposal. Jay said that he intended communicating with Peking suggesting that somebody from the Prime Minister's office might be sent to Canton in order to give directly Peking's views on the proposal.

In general discussion, Jay reiterated that serious problems faced the Chinese in this matter: that even if the H.K.G. had found it possible to release the 11 newsworkers, it would cause serious embarrassment to the Chinese if it were known publicly that such a deal had been negotiated: in particular, he said, the trade unions would almost certainly be very critical of Peking, and it was because of this that Peking had continued of the pe to support the granting of "strike pay" as a "sweetener" to the Think and

militant trade union groups.

in any fat that we must

profussent coment for the Common 5.

Referring to a previous discussion, Jay handed to me the attached list of men who had recently been disaissed by the Bank of China. He said that this action had caused quite a stir in banking circles and that he felt that LI had not heard the end of it.

Just as I vas about to leave the office, Jay said that he had had some indication of the conditions in which Grey was

Tof SECRET Тор

/contd..

462

II.

now being kept.

SECRET

He said that he had the specific information that Grey vas being allowed to spend 120 J.N.P. a month on food and that he retained the services of his cook. He had also gained the impression from discussions with LI that circumstances generally had improved so far as Grey was concerned.

In reply to several questions on this he admitted he had received no direct information on this but based the assessment on a comment from LI to the effect that Grey's living conditions vere not now as bad as Jay had indicated in a recent discussion:

that Grey was in good health although "not free to leave the house". Jay had not questioned LI further on this statement but said that LI was quite specific in his comment and he, Jay, assumed that Grey had access to the rest of his house and possibly the garden.

At about 10 p.m. on the night of 26th February Jay telephoned to say that he vas extremely concerned about news which LI had just given him to the effect that there had been a leak "on the British side" and that "people outside" now knew specific details of recent discussions and proposals. Jay vas obviously very worried and consequently our conversation was even more elliptical and confused than usual. Among other things, be asked me to "plug the leak", but when I suggested that this was not possible without some detail, be calmed down sufficiently to say that he would make further enquiries next day: he asked whether I could see him some time during the afternoon of 27th February. I saw Jay at about 4.15 p.a. on Thursday, 27th February. Be said that the previous night LI had telephoned kin and had been most agitated:" LI had claimed that "outsiders" had come to know of the negotiations now under way and that he was very anxious to see Jay as soon as possible. In particular, he wanted Jay to contact me in order that I might be apprised of the situation as soon as possible. Jay claims that later that night LI visited hia (COMMENT: I have serious doubts about this as Jay states that LI had visited the Jay house on Island Road, but Jay was unsure whether LI had taken a taxi or had "walked": when I asked how LI had later gone back to his own home Jay, in rather a confused manner, said that he did not know, in spite of the fact that obviously he would have seen LI out of his house). When I asked for details of the "leak", Jay was far from being specific: all be could say was that LI had information that the negotiations were known to people "outside". I then suggested that it was quite clear that if there had been any leak obviously it had been on the communist side and not that of the H,I,G.: I suggested that possibly the 1.C.F.A. night have thought it in their interests to leak a little of the story. Jay vehemently denied this, claiming that the communist security was excellent in such matters and, by way of explanation, said that LI had called an urgent meeting the night before and already that day (27th) had held two further top security meetings. I suggested that this was, if anything, a sure indication that the leak had probably come from the communist side, but Jay was not impressed by this. He said that the meetings had been called of top communists in Hong Kong including bank officials, and that they had been briefed to keep their ears open as to talk about possible negotiations. On hearing this I said quite firmly that this did not impress me at all that the communists were "excellent" in their security arrangements: that probably the

SECRET

/contd....

SECRET

worst thing they could have done would have been to sow doubts and concern in the minds of such people. After some argusent back and forth Jay saw the point of my remarks and finally agreed that probably it was not vise of the communists in these circumstances to have opened up knowledge of the discussions so videly. He said that he would speak to LI about this.

Jay said that he had been advised by LI that the proposals made the previous Saturday had already been sent to Peking but that it was LI's opinion, and he had so warned, that these new proposals, like the previous attempts, would not be successful, Jay then went on to say that all along he had advised the H.I.G. not to give in to the Peking suggestions but now, after very serious reflection, he thought it would be wise for us to do all that we could possibly do to meet Peking on this matter. In some exasperation I said to Jay that I thought I had made it clear in many discussions that release of the newsworkers in Hong Kong was quite out of the question: this remained the position and would always remain the position. further said that, whilst we clearly had been doing all that could to reach an acceptable compromise, it seemed to me that the Chinese had not noved at all in the situation.

Jay said that he had made this point to LI, who rebutted the argument by saying that it was quite untrue, for previously the Peking stand had been that they would "consider" the release of Grey 1f the B.I.G. vere to release the newsworkers in Hong Kong" . now Peking had said that definitely they would release Grey if the 11 nevs- workers were first released in Hong Kong, I commented that this did not appear to me to be a substantial change, indeed scarcely varranted a mention.

In a lengthy general discussion Jay commented that he vas quite sure now that Peking would not agree to the proposal nade "the previous Saturday nor to his "own suggestion": I picked him up on this and asked what this vas. After some hesitation and a great deal of hedging, he said that on his own initiative he had proposed to LI that a possible compromise might be for the H.K.G. to release the 11 newsworkers in Hong Kong on the strict understanding that the Chinese would keep them incarcerated in the Bank of China until the expiry of their sentences. I said that it was just as well that LI had indicated that the Chinese would not find this proposal acceptable as certainly it would not be acceptable to the II,Ì.G.

10.

As I was leaving, Jay asked me again to think carefully about the Peking proposal: he said that clearly the Chinese were anxious to reach agrement on the whole question of Hong Kong and that he personally had been impressed by the fact that already they had done much to ease the situation. I asked him to be a little more specific about this but all he could remember at that time was the fact that the Chinese claimed to have quietened down the communist press and particularly the Ta Kung Pao and, because they had been given prior warning of the visits of several V.I.P.'s including Admiral Bringle of the U.S. 7th Fleet, they had not made any propaganda about these visits.

c.c. F.C.o. (Mr. Hurray) (who encl.)

Peking (Mr. Denson)

D.5.8. H./A.R.G. E.S.S.

3rd March, 1969.

SECRET

ев

(J. Cater)

FEC

(HNB-372)

Lx49

TOP SECRET

Japa 2713

25 March, 1969.

I enclose a copy of a letter addressed to Gerald Long of Reuters by Professor D. R. Lan of Hong Kong. Reuters have enquired whether we have any comment either on the writer or on his suggestion.

2. We have been unable to trace any mention of Professor Lan in the Hong Kong Directory and we should be grateful for any information that you can let us have about his and for your comments on his letter.

3. Among the possibilities are that he is one of Hong Kong's numerous cranks or that this is a clumsy and naive attempt, inspired by local communists, to play on Reuters' concern for Grey and get Reuters to put pressure on us to treat with them on a broad front. On the other hand Mr. Lan oould be a well-meaning if somewhat woolly-minded gentleman who is merely reflecting a line that has not, I believe, been without its advocates in Hong Kong.

A. F. R. Maddocks, Esq.,

HONG KONG.

TOP SECRET

(James Murray)

25/3 he

(LED). DE 391999. 1,300% 2700 Hv.

NOTHING TO BE WRITTEN IN THIS MARGIN

Registry No.

SECURITY CLASSIFICATION

Top Secret.

Secret.

Confidential,

Restricted.

Unclassified

PRIVACY MARKING

DRAFT

LETTER

To:-

A. F. R. Maddocks, Esq.,

Political Adviser,

HONG KONG.

In Confidence

Type 1 +

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V.R.

Telephone No. & Ext.

Department

--rי-וווייחיי

and for your commate on has

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I enclose a copy of a letter addressed to Gerald Long of Reuters by Professor D. R. 1

2 Hàng Trong

Lank

Reuters have enquired whether we have any comment

his

either on the writer or/on is suggestion.

or/on

umable

We have been unable to trace any mention

of Professor Lan in the Hong Kong Directory and

we should be grateful for any information that you

thank

can let us have about him. The suggestion in

scene to bear a vague resemblance to that-

mentioned in paragraph 1(D) of Hong Kong top secret

telegram nø. 2092 of 16-October, 1968.

However,

this may be no more than fanciful thinking on our

Among the possibilities are that

he to

of Hong Kong's

In time, comes

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or that thi

clumsy and

coltempt, inspired by local communists, to

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I believe,

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MR. MURRAY (F.C.O.)

166

24 Raul

pa Top the

To Boy Onlin

SEC

Part No Shaded.

Ли

With the Compliments of the

Political Adviser:

Long

Hong rộng

25 MAR 1909

FEC 13C

TOP SECRET

Гов

Political Adviser

Before I left for Bangkok on Sunday, 9th Harch, Mr. K.C. Jay telephoned asking whether I would contact him issediately on my return to Bong Kong as he had a message to pass to me which was not very urgent. evening of 17th March, I telephoned Jay next morning, Wednesday, 12h March,

Accordingly, on the and arranged to see kia

Jay said that he had received several enquiries from LI Cho-chih and also from Peking asking whether Jay had seen me recently and in particular whether I had any further comments to make on the question of Anthony Grey and the possibility of an exchange being effected for the 11 newsworkers. Jay said that he had replied briefly to the effect that, although he had seen me fros time to time, I had made no further comment on this subject and be assumed therefore that I had nothing new to suggest.

Jay then went on to say that he had recently spoken on two or more occasions to r. George Pullen, Chairman of the Chartered Bank. Jay expressed serious concern that, in his opinion, Pullen vas far too over-anxious in his dealings with the Chinese communists and in particular over the question of Johnston. Jay said that Pullen had asked his to arrange a meeting with LI Cho-chih but that LI had indicated that he was not at all keen to speak to Pullen: that he would prefer Jay to put Pullen off, saying something to the effect that LI vas extremely busy at the present moment and due to leave for Canton at any time. LI said, however, that if Pullen were insistent then he would reluctantly be prepared to meet kin. Apparently Pullen vas most insistent and therefore Jay had arranged for Pullen to see LI later that day. Jay expressed the opinion that little, probably nothing, would come out of this meeting and that it would merely encourage the Chinese communists to believe that in Johnston they had an important hostage and that in these circunstances they say later even try to start bargaining over

bíu.

Talking generally of visitors, Jay said that LI had been criticized by Peking for refusing to see John Keswick on the latter's last visit to Hong Kong. It had been reported to

Peking that the restrictions placed on the Chinese Charge d'Affaires' staff in London had been lifted the same day that Ieswick and Lane (Chartered Bank) had been to the Foreign Office

In these to make representations on behalf of the Chinese, circumstances, Peking assumed that Keswick was a man whose opinion was not only highly regarded by the British but also acted upon.

Accordingly LI has now been instructed to be wore affable to Keswick when next he is in Hong Kong and to be prepared to meet hin. Jay then sentioned in very general teras the question of the 15 yachtsmen. He said that the view had been expressed to him that itr. David Bailey had been released as that this vas "a show of good will" on the part of the chinese: possible because Bailey was British and that if all 15 yachtsmen had been British then they also would have been released by now. Jay then went on to say that the major problem regarding the yachtsmen was the fact that they had among the group some Dutch

Тор

Top SECRET

/contd...

445

[I.

SECRET

people and that Peking felt strongly about the Dutch as a result of the LIAO incident. I iamediately pointed out to Jay that in fact there were no Dutchmen among the 15: I also resinded him that yachtsmen going to Macao over the Lunar New Year period had been in two groups of three yachts and that among the first group of three was indeed a vessel belonging to a Dutchman and flying a Dutch flag, but that this group had been allowed through to Macao allegedly because the Dutchaan in the group was carrying a portrait of Chairaan MÃO Tse Tung. Jay was convinced, however, that there vere Dutchmen among the 15 and said quite firmly that this was the only serious reason which Canton had given for the detention of the yachtsmen. I assured hia he was wrong but said that I would re-check for him.

Referring to a previous discussion, Jay said that the Bank of China was still experiencing troubles as a result of the dismissal of five members of its staff. The dismissed staff vere nov spreading rumours to the effect that they had been dismissed on the recommendations of a man called TSUI who himself was an undesirable character: they had cited as proof of this the fact that TSUI had formed an undesirable relationship with a female employee of the Bank of China Jay was certain that this vas a lie for the female named, according to Jay, was known among the bank staff as "the plank" and, said that i'SUI would have to be out of his senses to form any sort of alliance with any such person.

Jay then very briefly mentioned Anthony Grey, consenting that he had been pleased to see newspaper reports to the effect that Gray was now receiving better treatment. Jay said that one of the problems exercising the Chinese communists was that Grey night, on his release, write his story up for the press of the world and might even write a book. Jay claims that he took the opportunity of saying undoubtedly no matter what happened Grey would write his story after release and therefore it was probably very much in the interests of the Chinese communists to ensure that his living conditions were improved in the hope that Grey would not be too critical. Jay holds the opinion that the Chinese will in fact gradually improve Grey's living conditions along the lines recommended by hin some three months ago.

On Friday, 14th March Jay telephoned asking whether he could see ne in order to report on the Pullen visit to LI Cho- chih. Accordingly, I saw Ì.C. Jay at 12 noon on Saturday, 15t March.

Before the discussions got under way I informed Jay that I had made a thorough check on the nationalities of the 15 yachtsmen and that he could be assured that there were no Dutch- laen in the group. Jay seened genuinely surprised and said that he would pass this information on as a matter of urgency directly I had left the office. In discussing briefly the names of the yachtsmen, Jay tried to argue that von Sydow was Dutch but I was able to assure him that I knew von Sydow personally (he lives in the same block) and that von Sydow is Swedish, although his wife retains her American nationality.

SECPET

/contd.

SECRET

Zit

Jay said that he had now heard from both Pullen and LI Cho-chih their respective accounts of their meeting on Wednesday, 12th March. Jay said at his worst fears had been realised and that undoubtedly Pullen vas seriously mistaken in insisting on seeing LI. Jay said that Pullen had gone to LI's office on his own but had been received by LI, CHAN Hung and

ne other male employee of the bank: LI and his two henchmen vere dressed in HÃO uniform and wore soup-plate size HAŬ badges. Jay said that/was in fact rather unusual for LI to wear HAO unifors but that clearly he had done this to emphasise the official nature of the interview and to indicate unequivocally his position in the scheme of things. The discussion was in English and was taken down by a stenographer. LI was prepared only to discuss banking matters and these very generally. Pullen got on to the question of Johnston, LI and his henchmen pretended at first not to know of Johnston or his whereabouts and only after some prodding from Pullen ware they prepared to acknowledge that they had heard of Johnston. Despite repeated requests by Pullen, LI refused to discuss the Johnston case, saying that be, LI, was a banker and therefore only competent to discuss banking matters. Although pressed to do so by Pullen, LI refused to pass on a message tó Péking about Johnston and the Johnston Family,

then

10.

Jay then spoke at some length about the over-anxiety which Pullen had shown about Johnston. Pullen seened convinced that the major problem with the Chinese was to do with deposits frosen in the Chartered Bank, Singapore, in spite of the fact that Jay did his best to convince him that this had nothing to do with the matter. Jay says that he tried to hint to Pullen that there were other reasons for Johnston's detention, going so far as to suggest that possibly Johnston might have been in contact with, or had been speaking to, officials when Johnston should have know that the Chinese would regard it was wrong to contact such people. He said that Pullen before leaving London had written to one fone ko, who was known to be in poor standing with Peking. Pullen had also suggested that possibly Johnston had got himself into difficulties with the Chinese because he had been in contact with MAN Harg Chang, the former Minister for Overseas Trade: to Jay this was an indication of Pullen's lack of political sense Jay said that NAN although he had been criticized by the Red Guards, had been well regarded by KAŬ and CHOU En Lai, so much so that after NAN had committed suicide HAO had composed a poes in praise of NAN and that this poem had been recited by CHOV at the funeral.

(COMMENT: You will be aware that on several occasions jay has been critical of the Chartered Bank attitude towards the Chinese over this question of Johnston. Ubviously Jay feels that the Chartered Bank officials are being over-anxious and that this attitude can only bring difficulties in the future. In confirm- ation of this I was told by Harold LEE a few days ago that one night at dinner with the LEE family Pullen had persuaded Dick LEE to try and get into contact with Krs. Johnston in Shanghai

Apparently Dick LEE spent a couple of hours trying to do this but unsuccessfully.)

18th March, 1969.

c.c.

Itr. Murray (P.C.O. Mr. Denson (Peking)

رفـ

(J. Cater)

D.S.B.

H./A.R.G.

: E.8.8.

Minutes

اچھی ہے

RD (CK) To See

IRD

To see para

11/3

Frehim quichey please

し

Лавир

paj 141

26/2

Mr. Murray! (has seen) H.K. Telegrams

Nos. 184

refer.

* 185

зде

391

With the Compliments of the

Political Adviser

Hang rộng

paj

14/13

Aois nohy o бавовни ичи

REF.. $x. 4/68.

મ

TSECRET

Political Adviser Top SECRET

Тор

Mr. K.C. Jay telephoned on Thursday, 20th February to say that he vas anxious to see me the following day:

accordingly

I made arrangements to meet him at 11.15 a.m. in his office.

that he

Jay started by saying that there had been a lot of activity on his front over the Lunar New Year period: had received a short message from CHOU En Lai: two discussions with LI Cho-chih: lengthy (4 hours) discussion with LEUNG Wai-lam.

that he had had and that he had had a very

The message from CHOU was very similar to previous messages in that CHOU allegedly stated his appreciation of the difficult situation which faced the H.K.G. in this matter of release of the newsworkers in Hong Kong: but he reiterated that Peking would assist the H.K.G. in this so far as possible and would guarantee no publicity or propaganda about à v ictory being scored. CHOU En Lai, whilst realising that it was a big price for the H.K.G. to pay, nevertheless considered it a small price for the improved British/Chinese relations which would foliov. CHOU had said that the Anthony Grey affair was a "knot" which vas holding up improvement in Sino/British relations as well as delaying the final and full solution of the "Hong Kong problem". CHOU apparently had not been specific about the type of improve- ment which could follow a settlement of this kind but LI Cho-chih, by vay of explanation, suggested that if the H.K.G. were to release the nevsvorkers in exchange for Anthony Grey, then some of the present British detainees in China would be released, that there would be increased trade between China and Britain, that invitations would be issued to British and Hong Kong-based firms to attend the Canton Fair. Having given me a glimpse of the bright future to come, however, Jay at once said that of course it must be understood that these further benefits and improvements cannot be considered as part of the deal but were merely indications of the improved situation to come once the H.K.G. had agreed to Peking's proposal. CHOU is also alleged to have said that he did not accept the claim that it was impossible to release the news- vorkers in Hong Kong before the expiry of their prison sent ence: allegedly he said "if the British wish to do it, then they can do it". Jay thought this a very important point, that CHOU had nov given it as his opinion that if the H.K.G. so wished it could overcome any difficulties, legal or otherwise, involved in releasing the newsworkers. I replied firmly but tactfully that, whilst in no circumstances would we vish to offend CHOU En Lai in such a matter, nevertheless despite the fact that he, from his vantage point, thought it was possible for us to overcome the difficulties involved, in practice and from our point of view the situation remained precisely as it was before and as I had so often stated, i.e. that the release of the newsvorkers in Hong Kong was quite out of the question.

Jay said that CHOU in his message had impressed on Jay the need for an early solution to this problem: similarly, in Jay's discussions with LI and LEUNG, both had made the same point: that time was "getting short" and that it was in both parties' interests to reach an early solution.

Tóp

/Contd...

TOP SECRET SECRET

リ

SEC

SECRET

Jay also stated his concern again that certain influential Unofficials had been, and still are, misleading local communists: he felt that these people were largely responsible for encouraging members of N.C.N.A., communist newspaper editors, etc. to believe that, provided sufficient pressure is applied, the H.X.G. would be prepared to give way to the Peking proposals. After some pressure from me, Jay said that in particular he was referring to Mr. Dick LEE and to Mr. P.C. WOO. He was particularly anxious that I should keep this information "very secret" as he regarded himself as a friend of

In regard to these two gentlemen, and especially of Mr. LEE.

Mr. LEE, Jay said that he had been quite militant in his views in recent weeks and during the New Year holidays had even suggested that it would be sensible of the Chinese to retain the 15 yachtsmen arrested en route to Macao as hostages in bringing further pressure

Mention of on the H.K.G. For the release of prisoners locally.

Mr. Dick LEE brought him to discuss the present position of FEI Yi-ming: Jay said that FEI had been effectively muzzled by Peking and he felt that it was now highly unlikely that the Ta Kung Pao would cause the H.K.G. or people of Hong Kong any further serious embarrassment.

In discussing the position of Mr. P.C. WOO, it was Jay's opinion that WOO had no sinister ulterior motive behind his attempts to become acceptable to the communists, but nevertheless felt that it would be unvise for the H.K.G. to entrust WOO with information of a secret or confidenial nature and which in particular they did not wish the communists to know about,

Referring to his conversation with LEUNG Wai-lam, Jay said that CHOU En Lai had impressed on LEUNG that he was taking a very personal interest in the Hong Kong situation and would be

LEUNG said taking steps to ensure that the matter was resolved. that, by way of explanation, CHOU claimed that he had taken some five days to convince Chairman MAO of the correctness of his action in, and attitude towards, Hong Kong (later, when Jay allegedly recounted this comment to LI Cho-chih, LI said that he very much doubted whether Hong Kong would have been discussed for five days by the Prime Minister and the Chairman, but undoubtedly CHOU would have cleared his policy towards Hong Kong with Chairman MAO). Jay explained that his lengthy discussion with LEUNG had been made the more difficult as he was unavare precisely how much LEUNG knev of the present negotiations "ve therefore talked to each other in riddles", said Jay. It was apparent, however, that LEUNG knew something of the negotiations for he said in typical communist Fashion that it would be, as far as the British were concerned, a test of sincerity.

II.

You will recall that this interview was discussed at

As a result of the G.H. G. H. at noon on Friday, 21st February. discussion, when I saw Jay later that day I made the following points:-

(1) We fully appreciated the desire of the Prime Minister (CHOU) to have improved relations with Hong Kong and Britain: in turn also wished for improved relations with China.

/contd..

SECRET SECRET

SECRET

(2) In spite of what had been said, it was important that Peking and Prime Minister CHOU should' understand that there can be no question of releasing the 11 newsworkers in Hong Kong before expiry of sentence.

(3)

It seemed to the H.K.G. that, in spite of Peking's under- taking not to make propaganda out of this matter, etc. nevertheless they had not moved in their demand that the newsworkers be released in Hong Kong.

(4) In the circumstances I was to reiterate the offers already

made: briefly they are:-

(a) release to China; and

(b) deportation from Hong Kong to China or Macao or any

other way which the Chinese care to propose.

I further said that I was authorised to say that in either case and at the expiry of full sentence, consideration would be given on an individual basis to the possibility of ex- prisoners being permitted to return to Hong Kong.

(Note:

In reiterating the offers at sub-para. (4) above, I repeated at length the detailed conditions.)

In discussing this, Jay enquired whether, in regard to (4)(a) above, it would be possible to extend the offer to read 'release to China or Macao': he felt that the prisoners vould be more likely to accept such a proposition as they were in the main

I said thought to be most reluctant to agree to go to China. that personally I could see no objection to this but that I would check with H.E. as soon as practicable. I said, however, that in

I said that

these circumstances we would, of course, expect the communists to arrange for the Macao Government to say that they would be prepared to accept the newsworkers. Jay also asked whether it was really necessary for the newsworkers to sign a formal statement be request that they wished to be released to Macao or China. there vas room to manoeuvre on this particular point but that undoubtedly H.E. would require some firm indication that this was indeed the wish of the prisoners: for example, it might prove acceptable if the prisoners vere to make such a statement orally in front of, say, à prison officer and one other witness.

10.

Jay, for some reason or other which even now is not clear to me, thought that this extension of our proposal might find acceptance with the Chinese. Accordingly I said that I would seek H.E.'s approval of the two points made above and I agreed to see Jay next day at 11.30 a.m.

11.

As you are avare, I cleared the points concerning release to Macao and the question of signature on prisoners' statements with H.E. during the morning of Saturday, 22nd February.

12.

I sav Jay again at 11.30 a.m. on 22nd February. expressed great pleasure when I told him that he could proceed along the lines discussed the day before.

/contd..

SECRET SECRET

III.

C.S. 41C

2600079

30,000-1/67-152117

No.

Top SECRET

ор

108

COLONIAL SECRETARIAT,

LOWER ALBERT ROAD,

HONG KONG.

117

hr. Wilson Mr. harayor.

Reference Hong Kong telegram

No. 138 of 11th February, 1969.

(372

RECEN ARGI!

18FLB00J

J. Murray, Esq., CMG, Far Eastern Department,

Foreign & Commonwealth Office, LONDON, S.W.1.

Кас

beli

Tor SECRET

SECRET

13.

At the request of H.E. I also once again made it quite clear to Jay that neither the H.K.G. nor H.E. could accede to "demands": if the Chinese were looking for a "kow-tov", then they were going to be disappointed. If on the other hand they had something reasonable to propose, then we should be pleased to consider and if possible negotiate.

14.

I informed Jay that it was my impression that clearly there was a great deal of pressure on the part of the Chinese For an early settlement: I wondered why the 11 newsworkers had become so important to Peking, and why was it that suddenly there was a sense of urgency. Jay gave his opinion that the 11 newsworkers themselves vere inmaterial so far as Peking was concerned, but that Peking was looking for a "settlement" and that it seemed to them that this question of the release of the 11 newsworkers was the best final and full solution. He thought that timing was probably important at the moment as at this particular time CHOU En Lai vas known to be very strong in Peking: that, in the way that things often occurred in Peking, this need not be the case say in a few months' time when somebody else could be moved into a position of authority. In particular it was the hope of the Peking Government to hold a People's Congress in May: whilst it was possible that CHOU might improve his position still further, there remained the possibility that his strength would be less.

15.

Jay then commented that, in discussion with LI Cho-chih, LI had said that "somebody" had said to him that the British tactics would be to wait until September when 10 of the newsworkers were due for release and then attempt to try a one-for-one swop with Peking: such action, according to LI, would definitely not be acceptable indeed, LI referred to such tactics as being "child's play".

16.

I enquired of Jay whether he had any information concerning the conditions in which Anthony Grey was being kept: he said that he had a definite impression from what had been said in recent communications with Peking that Grey's conditions had been much improved since Cradock sav him last November.

17.

Jay was particularly anxious to make one point with me: he said that he and one or two "reasonable people" had been for some time trying to persuade Peking that they would get nowhere with violence if local communists were well behaved and reasonable things would improve. It was Peking's view that already they had done a great deal to quieten down the situation (for example, no violence, the Ta Kung Pao had been brought under control, there was no political trouble from the trade unions and Peking had continued to pay strike pay in order to ensure no trouble, etc.). In spite of this, Peking felt that there had been no tangible result so far as they were concerned (I immediately refuted this and, as I had done on several occasions recently, pointed to the very substantial concessions which the H.K.G. had made, but Jay pointed out that he CHOU was was merely repeating Peking's opinion and not his own). now anxious to show the more militant people in Peking that by being reasonable he could "get results": he would want "something" to show his political critics.

24th February, 1969

c.c.

D.S.B.

H./A.R.G. E.S.S.

(J. Cater)

SECRET

Political Adviser

SECRET

Mr. K.C. Jay telephoned yesterday afternoon asking for a discussion - "not urgent" : accordingly I arranged to see him at 11.30 a.m. this morning.

Jay said that he had now received a reply from the Prime whilst Minister's office concerning our proposal of 27th January: substantially the same as that given through LI Cho-chih, neverthe- less it was much "softer" in tone and, Jay thought, more hopeful. The message read:-

*Suggestion made is very difficult to implement at this

moment: therefore it does not find favour with us. Try to explain pleasantly to the other side the position. Although we have decided to improve our relationship, to try to put into effect something now which is not workable would only have the reverse effect. In trying to explain the position nicely, be careful not to lose your integrity or demean yourself."

(10%)

Jay said that he had seen LI again since receiving this message from Peking and that on this occasion LI had passed a comment on the whole situation which had caused Jay to "ponder deeply". LI allegedly said that it was his view that, if this proposal had been made in response to the "approach" in early November, it would have been acceptable to Peking. Clearly, said Jay, something happened between then and the present time to change the Chinese thinking on this subject: on reflection, he felt that it was probably the statement made in London by HSIANG of the Chinese Mission: as indicated before (please see my report of 11th December, 71968) this statement by HSIANG was allegedly purely personal and

unauthorised.

Jay said that already he had passed back through LI the H.K.G. comment on the Peking reply that the H.K.G. would be pleased to consider ways and means of overcoming the Chinese difficulties if they would care to put forward proposals. The question of suggesting that the H.K.G. would facilitate, for example, contact with the nevsvorkers in order to ascertain their views on "release to China" should, in Jay's view, be left a day or two longer before being put forward as his own idea. Jay said that he had reported to Peking that he had met Denson, whom he found to be a charming

He had not so far person who undoubtedly would try and be helpful. suggested that Peking might care to make a gesture of good will (for example by way of, say, releasing Anthony Grey) but would consider doing this later when Denson goes to Peking.

I asked whether Jay had any further information concerning Grey's living conditions: he said that he had no specific information that Grey's conditions had been improved but, from the tone of correspondence and indirect references to Grey, he was convinced that there had been an improvement in conditions since Cradock's last visit to Grey.

Referring back to our previous conversation on the Bank of China personnel, Jay said that three had definitely been dismissed but that he now understood that dismissal action was now contemplated only in the case of two more employees. Again he promised to obtain for me the names of these employees.

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As I was leaving his office Jay asked whether I had any further news for him about a possible offer by the H.K.G. for the South China Iron Works land at Tsuen Wan:

I apologised please see my report of 21st December, 1968.

for the delay in handling this matter. I said that this vas a complex problem but that I hoped to have a firm reply for him in the not too distant future.

12th February, 1969.

c.c.

D.S.B. H./A.R.G.

E.S.S.

ме

(J. Cater)

TOP SECRET

T3x 89

Date:

WONG

KONG GOVERNMENT

SECRET SECRET

Political Adviser

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(106

had

I telephoned K.C. Jay at lunch time yesterday and made arrangements to see him at 2.30 p.m.

I stated my wish to clarify the telephone discussion hich I had/with Jay the previous evening and, in particular, the point made about the price for Grey and alternative possibilities. It was as vell that I sought this clarification, for it is now quite certain that there was a misunderstanding on my part. Expanding on the cryptic message passed the night before, Jay said that in the reply from Peking through LI, the comment was made that the proposition now made by the H.K.G. posed very serious diffi- culties for the Chinese Government and indeed so far as they were concerned"it was worse than just letting Grey go without any price being paid! A further,minor,misunderstanding was also cleared up at this meeting: the previous evening Jay had led me to believe

this point that he had spoken to LI after my meeting with him (Jay) cropped up during general discussion and Jay apologised for apparently misleading me: what he had intended to convey was that the three points had in fact been mentioned to him by LI at their· meeting on the morning of the previous day but that Jay had "forgotten" to mention them to me the previous afternoon.

I said that the Peking decision had been carefully · considered by H.E. the Governor who fully appreciated the difficulties which Peking undoubtedly faced. For his part, H.E. would be pleased to assist Peking in overcoming difficulties facing them in this matter. We vere avare, of course, from Jay's confidential and personal comments of the real reasons "behind Peking's refusal. We were, however, reasonably intelligent people and no doubt would have been able in any event to have guessed fairly accurately these reasons. In the circumstances we would like Jay to put to Peking the suggestion that we would facilitate a Chinese approach to the newsworkers in order to ascertain whether or not they wished to be "released to China". We would guarantee If this that there would be no publicity of facilities so given. vere agreed and the Peking fears were not realised, then presumably

On the other the proposal for the release of Grey could proceed. hand, however, if Peking's fears vere in fact realised and some of the newsworkers refused to co-operate, we should nevertheless consider that the H.K.G. had carried out its side of the bargain and would expect Peking to be prepared to do something about Grey.

Alternatively, and bearing in mind the understanding that in any event Peking would like to have the nevsvorkers back in China for "study", perhaps the possibility of deportation should be reconsidered: whilst from the H.K.G. point of view the act of deportation would have to be formal, nevertheless it could be kept quiet and point of departure of the newsworkers could be at the choice of Peking: For example, through Lo Wu at night time, via a Rari River boat or even to Macau on the assumption that the Macau Government could be persuaded by the Chinese to receive these people. I made the point, however, that eventually of course the fact of deportation would become known.

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If the above were unacceptable to Peking we should aksa be prepared to consider any other alternative which Jay or Peking cared to recommend in order to overcome the Chinese difficulties.

If indeed it was thought easier to release Grey "with- But price" then clearly we should be pleased, but I warned that in these circumstances the Chinese should not expect anything dramatic in return. I suggested to Jay that if indeed they were looking for an excuse to release Grey, an excellent reason would soon present itself in the form of Mr. John Denson: perhaps as a gesture of good will the Peking Government may wish to consider releasing Grey on Denson's appointment as Charge d'Affaires "a clean slate", etc., etc.

Jay said that he doubted whether the Peking Government would be pleased to receive direct comments such as this from the H.K.G. as Peking was particularly anxious and sensitive about any

In the doubt that their supporters vere other than 100% loyal. circumstances he felt it desirable that he should say officially that the H.K.G. appreciated the difficulties which Peking faced in this matter but nevertheless would be pleased to assist in

He then overcoming these difficulties if this vere possible. personally would go on to make suggestions concerning contact with prisoners and so forth. As for the possibility of releasing Grey as a "gesture of good will" on the appointment of Denson to Peking, Jay thought that this was a proposal which he should properly make directly to Peking on his own initiative rather than through the LI channel. Talking of the question of loyalty Jay said that in a recent conversation LI had indicated that, for the first time since 1950,,it had become necessary to dismiss three employees of the Bank of China: according to Jay because of "disloyalty" Jay promised to obtain the names of these three men for me. In addition, there were another three Bank of China workers who were about to be dismissed. Another problem facing the Chinese on the question of the nevsworkers, according to Jay, was that "behind closed doors" the trade union groups in Hong Kong had been very critical of the N.C.N.A. and Peking Government decision to seek only the release of the 11 nevsvorkers for Grey. In many ways, Jay said, Peking's position is impossible. At the present time they were able to argue that, by continuing to hold Grey as hostage, they were speaking from a position of strength and attempting to force the H.K.G. to accept terms dictated by them in settlement of the Grey case: there was deadlock there was little positive ason for trade union groups and others to claim that their interests had been overlooked. Once negotiations had been completed, however, and Grey released, thd door would be open for the trade union groups to argue and complain. Partly because of this, Peking had agreed that strike

It was Jay's pay should continue to be paid to "strikers" opinion that, even if the H.K.G. had agreed to release the news- workers in the Colony, Peking could not guarantee to persuade them to go to China, although they were anxious to "study" them.

whilst

In all this, and in spite of the true reasons, it was Jay's opinion that Peking would continue to oppose release to China of the nevsvorkers, using the simple excuse that they could not countenance such a deprivation of rights: i.e. the right of any Chinese to stay in Hong Kong.

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I asked Jay whether he had any news of Johnston. He merely repeated what he had said on two or three occasions in the past: that the Johnston case was a particularly difficult one and that he felt Johnston had been far from

that he had become "too friendly" vise in his activities: with a Bank of China official in Shanghai and had been over- energetic in seeking information about the "Financial situation" Jay said that he would mention the Johnston case when next he had good reason for so doing in a communication to Peking, but that he felt that the circumstances were such that he could not

He indicated that, in the do this with any great enthusiasm,

past when he had asked questions about Johnston, he had been "warned off" and that recently he had been given the reason for such varning - that the Johnston case was in the hands of the

according to Jay, this indicated a very "security forces":

Jay was critical of the attitude adopted serious situation. by the Chartered Bank, and in particular the attitude of the Jay felt that the Mr. George Pullen: Chairman of the Bank, Chartered Bank attitude was far too soft and that they gave the

It was Chinese the impression of being over-anxious to please. Jay's opinion that the Chartered Bank had little to lose in this matter and might well gain if they were to take a rather tougher line.

8th February, 1969.

ме

(J. Cater)

c.c.

D.S.B. H./A.R.G. E.S.S.

OP SECRET No Ex 88

GOVERNM

KONG GOVE

SECRET

SECFE

HONG

}

Political Adviser

SECRET

Mr. K.C. Jay telephoned early yesterday (6th February} asking for "an urgent interview"; accordingly I arranged to see him at his office at 3.45 p.m. but warned that as I had a previous engagement I would have to leave him by 4.30 p.m. at the latest.

Jay vas in a much more relaxed and confident mood than he had been the day before: indeed he started our discussion off by saying that he felt very much better and had been "rather depressed" the day before.

In the light of our discussion of the previous evening (5th February) Jay said that he had given a great deal of thought and consideration to the whole situation and was determined to clarify matters. Accordingly at 8.20 a.m. (Jay said that by arrangement with LI Cho-chih they telephoned each other at this time if there were something important to be discussed) Jay says that in a rather cold, off-hand manner he invited LI to his house at 9 a.m. for an important discussion". Rather to Jay's surprise LI vas anxious to oblige but said because of other urgent affairs he could only reach Jay by about 9.20 a.m. (Jay's comment on this was: "I knew he had nothing important on, obviously he wished to finish his breakfast").

Jay says that the discussion with LI was lengthy and very friendly. The first point discussed was my report that FEI Yi-ming was attempting to open up a new channel into the H.K.G. According to Jay, LI made some pretty hard-hitting comments about FEI and his character: allegedly LI said that if the information had not come through this channel he would have serious doubts about its accuracy. FEI was already in a great deal of trouble with Peking and if it were established that he was indeed attempting to open a channel without the blessing of Peking they would be very angry indeed. Li said that FEI in no circumstances would act in this way without first clearing with, and obtaining the approval of, LEUNG Wai-lam: LI felt certain that LEUNG would not have encouraged FEI in this matter without checking either with LI or vith Peking. LI undertook to make confidential enquiries about the matter. In discussing FEI he said that FEI was not trusted by the communists, that they were avare that some time ago he had made approaches to the French with a view to "getting out": LI further said that the communists were hesitant about putting too much pressure on FEI by way of disciplinary measures for fear that in an extreme situation he might defect to Taivan. At this Jay said that it had also been reported to the H.K.G. that FEI vas preparing to go to Peking: LI thought this highly doubtful and said that he certainly was not avare of such a proposal. In the present circumstances he also very much doubted whether FEI would really like to go to Peking at this particular time. If he did, it might be in Peking's interests to "entertain him" there for some time.

Regarding the concern which I had expressed the day before about the security of the channel so far as the Chinese were concerned, LI, according to Jay, was adamant that FEI had not been told of the

LI said that LEUNG Wai-lam proposals presently under discussion,

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was aware that LI had contact through Jay with "somebody in authority" in Hong Kong but that even LEUNG knew no more than this: it was possible that LEUNG may have hinted to FEI some- thing along these lines. LI allegedly said that FEI was a very dangerous but a very clever man: he thought that FEI's comments on the proposals about the release of the 11 newsworkers were little more than intelligent guesswork. However, LI appreciated that the circumstances looked most suspicious and undertook to carry out a security check. At this stage LI apparently had said that LEUNG Wai-lam had recently gone to Peking for discussions: LI thought that it was probable that he would be seeing CHOU En Lai to receive directly instructions on communist activities and in particular N.C.N.A. activities in Hong Kong. LI allegedly said that when he saw CHOU on his recent visit to Peking CHOU had said that it was important that LEUNG Wai-lam should make regular contact with K.C. Jay "so that he would not make the same mistakes as he did last year". By now it was almost 4.30 p.m. and so, indicating that I would have to leave soon, I asked whether there vas further nevs of the Croziers. Jay said that they had been expected yesterday but due to aircraft trouble they had been delayed: he would let me know the exact time of arrival and whether any assistance would be required concerning entry of the Croziers into Hong Kong and so forth.

As I was about to leave Jay said in some surprise that he was sorry that I was leaving so soon as he had not yet been able to pass his important message to me. He then said that LI Cho-chih had now heard on his channel from Peking (Jay thought the message emanated from the Communist Party) that the H.K.G. proposal was "unacceptable". Jay then went on to explain that LI'S instructions were that no explanation was to be given at this time to the H.K.G. for this "decision" although there was no objection to LI explaining the reasons to Jay. The real reason, according to LI, why this decision was necessary is that the Chinese have no direct or specific control over the 11 newsworkers nov in prison: Peking was allegedly concerned that some, or perhaps all, of the nevsworkers might refuse to make the request to be released to China: if asked or given a free choice some might even ask to go to Taivan: this would be very embarrassing indeed. LI then said that it was not the intention of Peking that these newsworkers should stay in Hong Kong even if they were released before the expiry of sentence: the Chinese authorities really knew very little about these people they may have been "brainwashed" while in prison: they might really Just be trouble-makers in any event Peking would prefer to have

them back in China for a while where they could be studied. Jay claims that at this stage he was a little sarcastic and suggested that it would seem odd to the H.K.G., as indeed it seemed extra- ordinary to him, that the prisoners vere thought by Peking to prefer to stay in a Hong Kong prison about which they had made many criticisms, rather than go back to China. To this LI commented that surely Jay and even the H.K.G. realised that the communist protests over prison conditions were to do with propaganda only.

I suggested to Jay that the reply from Peking was almost unbelievably quick: I wondered whether due and proper consideration had been given to a proposal which had been the subject of a great

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deal of thought and discussion, not only in Hong Kong but also in London. Jay for his part did not feel that the speed of the reply indicated in any way a lack of serious consideration on the part of Peking. He suggested that the possibility of the news- workers being released to China would have been one of many and that a tentative decision to reject such a proposal would already have been made. Jay, in reply to a question, said that he would still expect to hear something specific on his own channel with the Prime Minister's office in Peking but that in the circumstances he did not think that the reply would.be any different although perhaps further explanations as to why the proposal had been rejected might be forthcoming. I indicated to Jay that my own personal reaction to the reply was to wonder whether Peking was really serious in their alleged desire to de-escalate the situation in Hong Kong, to solve the embarrassing problem of Anthony Grey, etc.,etc. My own view was that they were being entirely cynical about the whole matter and in spite of professed fine intentions, continued to act in a barbaric manner. I emphasised that this vas a personal view and that I would, of course, be reporting back directly to the Governor. At this stage Jay became anxious to explain that the Chinese were in fact serious and keen to reach an agreement which was acceptable to both sides but it was quite clear that they had their problems also, which in their eyes might be just as serious as, or even more serious than, those facing the H.K.G.

II.

In the early evening I reported directly to H.E. the gist of the above and then, as I was leaving Government House, I received a message to ring Jay urgently: this I did at his home address.

Jay said that he had been anxious to reach me as he had just received information that the Croziers would be crossing the border into Hong Kong on the "first train" next morning. He asked whether action could be taken to ensure that so far as possible the Croziers' arrival did not attract publicity. I said that I would see what could be done,

10.

Jay then said that he had had a further discussion with LI Cho-chih after seeing me and that LI had three further points to make which he had "Forgotten" to mention to Jay that morning. They were:-

(i)

(ii)

LI was anxious for the H.K.G. to know that the Chinese would in no circumstances make propaganda out of the negotiations nor indeed would any mention be made in the press of them. (I commented that this had been my understanding all along and that therefore there was nothing new in the comment.)

LI was keen for me to know that in his discussions with CHOU En Lai, CHOU had expressed the high regard which he had for I.C. Jay and that this had been commented upon in the communication which LI had received from Peking rejecting the H.K.G. proposal. (I said that I had been told on numerous occasions by Jay of the high regard in which CHOU held him and therefore, although interesting to hear again, it was scarcely anything new.)

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Rather surprisingly Jay then went on to say that LI was most anxious that I should not misunderstand the true meaning of the message which had been passed to me that afternoon: that it was not meant to be a closing of the door but an indication that there were serious problems involved in the proposal put to Peking by the H.K.G. : that nevertheless Peking was very well aware of the difficulties and problems facing the H.K.G. in this matter. Accordingly I should know that the release of the 11 news workers for Grey was not the only price: that something else might be agreed or Grey might be released without the release of anybody from a Hong Kong prison. In the circumstances, and as this discussion was being conducted over an open telephone line, it was agreed that I should meet with Jay again on the following day.

7th February, 1969-~

c.c.

D.S.B.

H./A.R.G.

E.S.S.

(J. Cater)

SECRET

■

Political Adviser

SECRE

SECRET

Yesterday afternoon Mr. K.C. Jay telephoned asking to see me "urgently". Accordingly I arranged to see him soon after 5 p.m. that evening.

Jay start ed the discussion by saying that the previous day, 4th February, LI Cho-chih had contacted him asking for an urgent meeting. Such was the urgency that Jay Found it necessary to cancel a luncheon engagement. He arranged to see LI in the latter's office in the Bank of China. On arrival at the Bank of China Jay encountered, very much to his surprise, Mr. Dick LEE, who was in the company of Messrs. PUN and TAM of the N.C.N.A. According to Jay, Dick LEE, "an old friend", was clearly embarrassed at seeing Jay at the Bank of China just as Jay was embarrassed to meet Dick LEE.

LI Cho-Chih explained to Jay that he had the previous evening received a letter from Peking enquiring as to the reaction of the H.K.G. to the approach of early January. Apparently this letter had crossed with LI's report to Peking on the proposals of the H.I.G. made to Jay on Monday, 27th January. In this latest letter from Peking the definite statement was made that if the H.K.G. vere to release the 11 nevsworkers then this would definitely secure the release of Anthony Grey. According to LI, this was the first time on which Peking had been quite specific on this proposition: that previously there had always been some let-out in the wording of the Peking proposals such as 'if the H.K.G. vere to release the 11 nevsworkers then Peking would probably respond with the release of Grey, etc.": now, however, according to LI, there would be no doubt that if the 11 nevsvorkers vere released then Grey quite definitely would be released also. At this point I asked Jay for clarification: vas LI nov saying that the only price for Grey was the 11 newsworkers? In other words, was Peking indicating that Grey would not be released unless the 11 nevsvorkers were released from prison. Jay denied that this was the position: if Peking accepted that release of the nevsworkers in Hong Kong were impossible the position would still be open for them to release Grey either for another price not yet specified or even no price at all.

Jay was most anxious that the H.K.G. and the British Government should now make up their minds definitely whether they

with vere prepared to release the 11 newsworkers in Hong Kong: great emphasis he expressed the opinion that if later, because of pressure in London, the H.K.G. were forced to accept the Chinese demand that the newsworkers be released in Hong Kong, this would cause very grave embarrassment and the position of the channel and indeed of the H.K.G. would be very much impaired. He asked whether

I would raise the question once again to ensure that the H.K.G. and the British Government were quite firm on this point. Showing some exasperation, I said I was not prepared to raise this issue again: time and time again I had said quite specifically that the H.K.G. was not prepared to release the convicted newsworkers in Hong Kong and quite recently I had told Jay, in the expectation that he would pass the message on to Peking, that the British Government also had said that release of the 11 nevsworkers in Hong Kong was quite out of the question. I reminded Jay of our

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discussion on 27th January when, in response to a question, I had said that the possibility of the newsworkers being permitted back into Hong Kong after the expiry of the full sentence would raise grave difficulties but if a firm pro- posal were made on these lines the Governor might be prepared to consider it, possibly case by case.

There followed a long and rather shapeless discussion concerning Peking's possible reactions to the H.K.G. proposals. Initially Jay expressed grave doubts as to the possibility of success but as the very one-sided discussion continued he appeared to talk himself into a rather more confident mood and his final opinion was that with Peking anxious to conclude matters there must still be a good 50/50 chance of success.

Jay then went on to mention the Croziers and the fact that they were soon to be allowed to travel to Hong Kong: he was anxious to receive my support and co-operation in ensuring as far as possible that there should be no publicity on this matter. He had already spoken to Mr. Saunders of the Hongkong & Shanghai Bank who would be doing his best to keep the matter quiet: he would let me know nearer the time" the details of the Croziers' arrival in Hong Kong so that necessary action could be taken to minimise knowledge of the Croziers' arrival. He said that the N.C.N.A. Shanghai and the N.C.N.A. Peking had been very concerned about the release of the Croziers and had brought a great deal of pressure to bear on CHOU En Lai to reverse his decision. LI Cho-chih, in discussion with Jay, had said that he was sure that Jay did not fully appreciate the problems which CHOU En Lai had had to solve and the opposition he had had to overcome before getting the Croziers released. So far the N.C.N.A. Hong Kong were not aware of the intention of the Chinese to release the Croziers. In commenting on this Jay said that not only would they (N.C.N.A. Hong Kong) be very angry but in particular FEI Yi-ming would be upset as for long he had supported a policy of keeping Britons in China in detention as hostages.

This mention of FEI gave me an opportunity to raise

two points:-

(i)

I informed Jay that we had received reports to the effect that FEI was attempting to start up a new channel of communication into the H.K.G.: although it was not quite clear precisely hov FEI proposed to proceed, it was understood that FEI was discussing the possibility of either inviting the aged Dr. CHANG Shih- chao down to Hong Kong for discussions or (and this seemed more likely) making an approach to Government through a former Unofficial Member of Council. Referring back to the start of our discussion, I wondered whether the presence of Mr. Dick LEE in the Bank of China might have something to do with this. avare, as I has reported also to Jay in the past, that Mr. Dick LEE was keen to renev his old contacts with the local communists and perhaps might even be planning to panev a suggestion which he had made in May 1967 that I personally should meet LEUNG Wai-lam and others "For a cup of tea". The fact that Dick LEE had been seen in the Bank of China with members of the N.C.N.A. staff

/contd.

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obviously had set my mind thinking in this direction. At first Jay was inclined to cast serious doubts as to whether PEI would be so ill-advised as to try and start up another channel into the H.K.G. He also had serious doubts as to whether the local communists would be prepared to use somebody like Dick LEE even though it was known that he was very anxious, perhaps over- anxious, to renew his contacts with local communists. In spite of Jay's comments, however, I said quite firmly that it was my opinion that LI should, as a matter of some urgency, enquire of FEI whether indeed he and others had been considering this possibility, and if this proved to be the case, that LI should in no uncertain fashion tell them to cease their activities. It was important for Jay, LI and Peking to understand that the present channel was the only channel in existence and that the H.K.G. would not be prepared to consider the setting up of any other channel.

I said that the second point I had to make was a rather more serious one which had caused us a great deal of concern: reports received had also indicated that FEI was avare of at least part of the proposals which had been made concerning the release of the 11 convicted newsvorkers. I then proceeded to tell Jay that we had received reports that FEI had said very recently that he was avare that the H.K.G. had approached a "senior former member of the Bank of China" (undoubtedly, I said to Jay, a reference to himself) with the proposal that, in exchange for the release ofth Grey, the H.K.G. would be prepared to "deport" the 11 nevsvorkers: FEI had described the proposal as being "stupid" and "unacceptable". And then, embroidering a little, I said that additionally FEI had commented that the former Bank of China official had acted incredibly stupidly in this matter and consequently had been given a very serious rebuke by the Chinese authorities with the admonition that he should not be so silly in future. I said that we were seriously concerned about the security of the channel insofar as the Chinese vere concerned: that if FEI were aware of the proposals made on 27th January then presumably a number of other minor communist dignitaries would also be privy to the "secret discussions". Jay made no attempt to rebut anything that I said but appeared to accept the situation: by way of explanation and in defence of LI he said that he was quite sure that FEI did not know of the detail of the negotiations but it vas possible (and here he referred back to previous discussions) that LI, in his move to "muzzle" FEI and quieten down the Ta Kung Pao, might well have suggested that the reason for this move was that discussions vere under way concerning the release of the 11 newsworkers: that FEI, knowing that LI saw a great deal of Jay, might well have added two and two together and got somewhere near the right ansver. I said that I vas not prepared to accept this: that it was too much of a coincidence that FEI should get so near to the truth

SECRET

/contd..

Ꮀ

SECKET

SECRET

in his comments.

Knowing of Jay's dislike of FEI

I suggested that the sooner LI were told of this and our concern for the security of the channel the better. I suggested that in these comments of FEI's on the alleged "negotiations" I saw a specific attempt by FEI to assassinate the good character and standing of Jay: it seemed to me to be a question of self-protection on the part of Jay to ensure that his channel with me

I further commented should be protected completely. that it was my understanding that FEI was expecting to be recalled to Peking soon for consultations and that if this vere the case then undoubtedly he would have a further chance and this time where it mattered most to attack the character and standing of Jay himself. By this time Jay was convinced of the neɗd to ensure that FEI vas prevented from doing anything more to estab- lish a channel and in particular that there was need to re-check on the security of the channel, from the Chinese point of view.

As I vas about to leave Jay's office he asked whether I would authorise him to speak some time to Mr. Saunders of the Hongkong & Shanghai Bank with the request that, should somebody speak to Mr. Saunders about Jay's activities and in particular his contact with the H.K.G., Mr. Saunders be asked to refer such persons I said that I found this rather an odd request and to Jay himself.

He that I really sav no good reason for Jay to act in this way. explained that, originally when it had been suggested that a channel be set up in Hong Kong through Jay, Saunders was proposed as a apparently Jay had given the possible contact for the H.K.G.: impression to Peking and to LI Cho-chih that Saunders was to a certain extent avare of the existence of the channel and in broad

Whilst appreciating Jay's terms of what was being discussed. point I nevertheless said that I thought it would be most unfortunate if he vere to start sowing ideas and questions in the mind of Mr. Saunders: that I could not envisage circumstances in which Saunders would be approached (presumably by a local communist) with a question as to his knowledge of Jay's part in the "secret channel". ually Jay asked whether I would have any objection if he merely put the comment to Mr. Saunders that if anybody ever approached Saunders with questions about Jay's activities in Hong Kong then Saunders

I said that I saw no objection should refer that person to Jay.

Event-

to this but commented that it seemed a v ery odd thing to say to Mr. Saunders who might well start wondering why Jay was approaching him in this way and might even become "suspicious, say, of Jay's

Jay appeared to hoist legitimate activities in the money market.

this in, and said that he would think the matter over.

From the beginning and throughout this long discussion,

he livened up a Jay seemed depressed, vorried and pre-occupied: little when I taunted him with "FEI's comments", and briefly became his old confident self when talking of the need to "do something" about FEI.

ев

6th February, 1969

C.C.

D.S.B. H./A.R.G. B.S.S.

(J. Cater)

SECRET

الأمان

•

(!!

Political Adviser,

SECRET

About noon on Friday, 31st January, Mr. K.C. Jay telephoned asking for an early discussion: accordingly I agreed to meet him at about 5 p.m.

Jay said that in discussion with LI Cho-chih the previous day (30th January) LI had sought clarification of two points of detail in the proposal put to him on 27th January. They were:-

(i)

(ii)

referring to the need for the newsworkers to make a Formal application for release to China, Li asked what precisely the H.K.G. had in mind: he felt that a formal petition to the Governor would be difficult to obtain. I suggested to Jay that there had never been any question of a formal petition as such but that it vas essential for the Governor to have something in writing from the prisoners evidence 'that it was indeed their wish to be released to China. Jay then explained that he had originally, on Tuesday, 28th January, in discussion with LI, taken the more strict line of suggesting that a formal petition was required so that if there were any query raised by the Chinese on this there would be room to manoeuvre.

I said that I would consult A.E. the Governor on this and work out a form of words to cover the situation;

LI had also raised the question of how the nevsvorkers would be released to China would they first be released here in Hong Kong or perhaps taken a few at a time to the border, etc., etc. I explained to Jay that we proposed taking those news workers who had opted for release to China under escort to Lo Wu for handing over to the Chinese authorities at the border.

Timing, as I had already pointed out to him in previous discussions, vas, of course, important: it was our intention that the newsworkers should cross the border at a time when things are normally quiet and when there is no rail traffic between China and Hong Kong.

Jay was impressed by what he termed a real change in LI's attitude: whereas on Tuesday, 28th January, he had been rather offhand and critical of the H.K.G. proposals, he was nov quite co-operative. By way of example, Jay said that on the Tuesday (28th January) LI, in criticism of the proposals, had suggested that possibly the best thing would be to wait until September when 10 of the 11 journalists would be released in any event: LI now took the line that the sooner this question of Grey and the newsworkers was resolved the better and that with improving conditions between China and Hong Kong perhaps with a little good will on both sides the whole question could be satisfactorily cleared up. Although Jay felt that it was far too soon for any reaction to have been received from Peking to a proposal made only two days before, nevertheless from the long discussion which he had had with LI he gained the impression that somebody in authority and his guess is possibly the Communist Party H.Q. in Peking had advised LI of the need to adopt a co- operative attitude.

SECRET

/contd....

SECRET

Jay said that he had that day received information from Peking that the Croziers had been given the choice of either travelling by air from Shanghai to Canton or by train: Jay said that this vas unusual and he saw in it an attempt on the part of the Chinese authorities to be as helpful as possible with the Croziers.

As discussed with you, I said to Jay that he should be hearing from Government within the next few days, probably next He vas Wednesday or Thursday, about his appointment as a J.P. obviously pleased, but possibly because he felt a little guilty at shoving pleasure at once said that this vas really a matter For the H.K.G. and the Governor in particular to decide on the merits of the case.

at 12 noon.

I arranged to see Jay the following day (1st February)

II.

Meeting on Saturday, 1st February.

As agreed with H.E. the Governor, I said to Jay that it was important that H.E. should have some evidence in writing from the imprisoned nevsvorkers to the effect that they wished to be released to China. A formal petition was certainly not necessary: the application could be made either on the usual prisoners request form or if that vere too difficult it might be possible simply to have the prisoner dictate a statement to a prison officer and then sign or chop it. I suggested that the form of vords to be used might be along the following lines: "For personal reasons I wish to state that I desire to go to 'X' village in 'Y' province where I intend to reside in future without returning to Hong Kong. May I be released from prison for this purpose?" I explained to Jay that the purpose of mentioning a village or province vas basically to overcome any problem which might exist in requiring the prisoner to say in writing that he wished to leave Hong Kong "for China". Jay appreciated this point but then went on to express grave doubts as to the advisability of requiring the prisoner to include the

After phrase "without returning to Hong Kong" in the statement. some discussion I agreed that this was not absolutely essential although clearly it had been included in support and in extension of the point made in the original proposal that nevsvorkers being released to China were not to return to Hong Kong. In the circum- stances I agreed that this particular phrase should be deleted. Jay also suggested, and I agreed, that he should inform LI that this form of words had been suggested by me and not by the Governor so that here too there might be room to manoeuvre later on.

As agreed, I mentioned to Jay that a representative of the N.C.N.A. had telephoned your office seeking a meeting to discuss prison conditions. I said that, bearing in mind what had happened last November, ve vere concerned lest this might be an attempt by the N.C.N.A. either to muddy the waters on the present proposal or (and clearly as bad) an attempt by LEUNG Wai-lam to "get back into the game" and try to restore his battered prestige in Peking. On the other hand it vas possible that the N.C.N.A.

SECT

/contd.

SECRET

might be acting on instructions from Peking and in these circumstances we would not wish to snub them. Jay was confident that the local N.C.N.A. knew nothing of the present negotiations: it was possible that the N.C.N.A. Peking might have a vague idea that some form of discussion or dialogue was being carried out in Hong Kong but he very much doubted whether

He undertook to they would know or be told specific details, make enquiries about the situation, but counselled that mean- while, if the N.C.N.A. were to contact you again, you should insist on knowing precisely what they wished to discuss and exactly who would be seeing you: in'no circumstances did he think it wise that you should see such junior persons as TAM or PUN but that you should insist on seeing either the Director or at the very least one of the Deputy Directors.

III.

Meeting on 3rd February.

During the morning of 3rd February Jay telephoned to say that he would like to see me as soon as possible: I arranged to meet him at 12.15 p.m.

10.

Jay

Jay said that he had made enquiries locally concerning

It is, as Jay the N.C.N.A. request for an interview with you. suspected, a local initiative and the approach is not being made on the instructions of Peking. The subject for discussion is apparently not to be prison conditions but rather the incident which occurred outside the China Products Store in Kovloon which resulted in the arrest and conviction of store employees. had ascertained that it was not in fact a "protest" but allegedly a desire on the part of the N.C.N.A. to explain the situation to you. Jay said that the decision whether or not to agree to see the N.C.N.A. representatives obviously rested with you and the H.K.G. but that he could see little advantage coming From such a meeting: indeed, coming at this time it might be harmful although the fact that we had advised him of the N.C.N.A. approach clearly would help ensure that the N.C.N.A. did not cause too much trouble.

11.

Jay vent on to say that he had had further discussions with LI about the George Brown letter of 1967. He felt that possibly there had been some misunderstanding of what LI had meant or said about the letter when Jay put the H.K.G. proposals to him on 28th January, Apparently.there had been no specific Peking decision to turn down the George Brown proposal concerning the release of Anthony Grey but that the intentions of the Peking authorities had been made clear to LI in the contingency instructions which he had received for the November "negotiations" which in the event did not take place. According to LI, at that time he was advised that if the H.K.G. had countered the request for the release of 13-1 with a suggestion that the newsworkers be "expelled" to China, then he should reply that such a proposal was unaccept- able.

/contd..

SECRET

12.

Jay reported that LI was proposing that day to announce to the staff of the Bank of China that CHEUNG Wan- chung had been recalled to China on re-assignment and that

e would not be coming back to Hong Kong.

13.

Jay then, with a great deal of play-acting, said that he vas about to tell me something of the greatest secrecy and that I must undertake to inform nobody, not even H .E. the Governor. He had received a letter from CHOU En Lai to the effect that for some time he had been considering transferring LI Cho-chih from Hong Kong (not, Jay explained, because LI had done anything wrong but simply because he was due for transfer, possibly on promotion) but that he had been kept in Hong Kong because of the existence of this channel. However, it had now he had in become necessary for CHOU to reconsider this matter: mind the possibility of transferring LI from Hong Kong and promoting him to become Minister for Foreign Trade. Jay claims that his comments on this possibility had been requested by CHOU, also his views as to LI's successor.

4th February, 1969.

c.c.

D.S.B.

H ./A.R.G.

E.S.S.

lla

(J. Cater)

TOP

HONG

No.

SECRET

TSX 77...

Date 54869

KONG

RNMENT

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COPY

2005

COPY NO. 3

CYPHER/CATNAN

ROUTINE HONG KONG

SLEGRAM NUMBER 205

TO FOREIGN AND COMMONWEALTH OFFICE

DATED 6 MARCH 1969

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ADDRESSED FCO AS HYTEL NO. 205 OF 6TH MARCH RFI PEKING,

MY TELEGRAM NO. 134 # GREY.

34 0

CATER SAW CONTACT AGAIN ON 25 AND 27 FEBRUARY BUT LITTLE THAT

WAS NEW EMERGED, CONTACT SAID THAT IN LI CHO-CHIH'S NEW OUR

LATEST VARIATIONS CRELEASE TO HACAO OR AT SEA) WERE UNLIKELY

TO BE ACCEPTABLE IN PEKING.

2. FULL RECORD FOLLOWS BY BAG.

FCO PLEASE PASS ROUTINE PEKING.

SIR D TRENCH

FILES

FAR EASTERN DEPT.

HONG KONG DEPT

P.U.S.D.

MH. MORETON

SIR A. GALSWORTHY

SIR J. JOHNSTON

P.S. TO LORD SHEPHERD

PRIVATE SECRETARY.

XXXXX

REPEATED AS REQUESTED

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RECEIVED IN REGISTRY No.50

31 JUL 1969

has sex.

Private Secretary

Le 130/1

404A

ANTHONY GREY OF REUTERS

Lord Shepherd is to discuss Mr. Grey with the Secretary

(Lord Shepherd

of State this afternoon, and has asked that in the meantime

a note be submitted to the Secretary of State.

discussed the problem in detail yesterday with Sir. J. Johnston

and Far Eastern Department.)

SULMARY OF THE PROBLEM

Following a statement by the New China News Agency on

But

28 December, which sought to justify the continuing detention

of Mr. Grey by reference to the thirteen (now eleven) news-

workers in prison in Hong Kong, an offer was made by the Hong

Kong authorities through covert channels to release the

newsworkers to China for the remainder of their sentences.

The reaction by the Chinese has not been encouraging.

the Chinese may have regarded our offer as an indication

that we were weakening. It may be worth, therefore, holding

to a firm line in the covert exchanges for two or three weeks

more before concluding that our offer has been rejected.

Meanwhile Mr. Long of Reuters has been pressing us for the

release of all eleven newsworkers.

If we are driven to conclude that our offer has been

rejected, the alternative will be:-

a) to release the eleven; OF

to accept that there is practically no prospect of

Mr. Grey's release before September at the earliest.

/ 4.

TOP SECRET

To release the eleven would almost certainly secure

Mr. Grey's release. But it would be an immediate and

serious blow to confidence in Hong Kong. And it would have

grave long term implications: it could undermine respect for

the law in Hong Kong and encourage the Chinese to future

hostage-taking.

5. Ten of the eleven journalists are due out in September.

If Mr. Grey has not been released by then, we must press the

Governor to agree simultaneously to the release of the eleventh

(not due out until February 1971). Given the link

established in the Chinese statement of 28 December, there

can be little doubt that release of all eleven in September

would secure the release of Mr. Grey. But this would mean

a further delay of six months in settling the affair.

a) Would Mr. Grey's health stand up to this prolongation

of his ordeal? The latest indications are that he

continues to bear up well.

Would continuing refusal to meet the Chinese terms be

likely to result in a hardening in their policies

towards Hong Kong? They seem unlikely to give up

their present policy of non-violence simply on account

of our unwillingness to settle the Grey affair on

their terms.

Could we convince Parliament, Reuters and the public

that our refusal to accept the Chinese terms is justified?

We could meet public criticism by stressing

not so far done so

as we have

the dangers in releasing the

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/ newsworkers

TOP SECRET

newsworkers, and by revealing that we had pressed

the Chinese to agree to an exchange.

PRELIMINARY RECOMMENDATIONS

6. Far Eastern Department hope that the Secretary of State

could agree at this stage

that we should wait another three weeks before

concluding that our offer of a release of the

newsworkers to China (or Macao) has been rejected;

that, if we have then to conclude that it has been

rejected, we again consider whether the risks of the

premature release of the eleven newsworkers in Hong

Kong continue in our view to be such as to outweigh

the advantages of an early settlement of the Grey affair.

FURTHER BACKGROUND AND ARGUMENT

Origins of recent negotiation

7. On 28 December, 1968, the New China News Agency in Peking

published a report openly linking Mr. Grey with the communist newsworkers (then thirteen, now eleven in number) serving

prison sentences in Hong Kong. The report said that "since

the Hong Kong British authorities continue to keep the

thirteen patriotic Chinese journalists in gaol, the Chinese

Government is fully justified in continuing to restrict Grey's

freedom of movement".

8. In the wake of this statement the Chinese resumed their

unofficial contacts with the Hong Kong Government on the

subject of Mr. Grey, through covert channels in the Colony.

The first such approach in the present series was made in

/ January 1969,

TOP SECRET

-3-

TOP SECRET

January 1969, when the Chinese described the N.C.N.A.

statement as "the proposed swap for Grey", and indicated

that they expected a reply to their "proposal".

9. After very careful consideration Ministers concluded

that the release of the eleven remaining imprisoned newsworkers

in Hong Kong itself raised such difficulties as to be highly

undesirable. However it was decided that we should, through

the covert channel, reactivate an earlier suggestion that the

Chinese might accept the deportation of the eleven newsworkers

if presented as "release in China", in lieu of their release

in Hong Kong. While we were not sanguine of the chances of

such an exercise succeeding we felt that it was the only

possible way of making progress towards Mr. Grey's release

and that we owed it to him to make the attempt.

Negotiations

10. Since January Mr. Cater, a Hong Kong official, has been

in touch with the contact on the Chinese side on frequent

occasions.

On 27 January Mr. Cater told the contact that

we should be content to release all the eleven remaining

newsworkers to China provided that they gave an undertaking

(in writing if possible) to go willingly. Subsequently in

the course of continuing discussions it was made clear to the

contact that we should not necessarily take a rigid stand

against the return of the newsworkers to Hong Kong upon

completion of their sentences; that we should be flexible

about the form of their undertaking to go willingly to China;

and that we should be prepared to see them go to Macao rather

/ than the

TOP SECRET

than the mainland itself if the Chinese so preferred.

Chinese replies

11. The contact has two channels to Peking, one through an

important Bank of China representative in Hong Kong and the

other a more personal one direct to the office of Chou En-lai

in Peking. We have had replies of a sort to our proposals

through both channels.

In the first week of February the contact relayed from

the Bank of China official a message, presumably

emanating from Peking in the first instance, that the

proposal to release the newsworkers to China was

unacceptable. The reason given was that the communists

would be unable to persuade the eleven newsworkers to

return willingly to China.

On 21 and 22 February the contact relayed a message

purporting to come from Chou En-lai which stated that

1) the newsworkers should be released in Hong Kong

itself;

il)

a solution of the Grey question would be followed

by a significant improvement in Sino-British

relations (no details were given but intermediaries

inferred that these benefits would include the

release of some other British subjects in China

and improved trade);

iii) an early move by the British side towards a solution

was needed.

The contact went on to comment that if a settlement were

/ not

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- 5-

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not found in the next few months the political balance

in Peking might shift to Chou En-lai's disadvantage

and a tougher line be adopted over Mr. Grey. The

contact also attributed to the Bank of China official

the view that if the British tactics were to wait until

the completion of the sentences of ten of the newsworkers

in September 1969 and bargain subsequently in an attempt

to exchange Grey for the eleventh, then this would be

unacceptable to the Chinese.

Views of Far Eastern Department

12.

At the outset we were not inclined to give these

negotiations a very high chance of success and it must be

conceded that the indications so far are discouraging.

Nevertheless the negotiations have not formally broken down.

It is not possible to be sure whether the Chinese have said

their last word or whether their statements hitherto represent

a negotiating position.

13. One effect of entering into these negotiations has

undoubtedly been to encourage the Chinese in the belief that

we are aoftening on the question of Mr. Grey and that they

only have to push a little harder to gain a substantial

concession. In these circumstances there would seem to be

advantage in continuing to make clear to them the limits

within which we are prepared to negotiate.

14. In the message supposed to emanate from Chou En-lai the

Chinese offered unspecified improvements in Sino-British

relations. They imply that these would extend to both other

/ British

TOP SECRET

British subjects in China and trade. In this respect it is

important to realise that the other British subjects in

difficulties in China do not fall into the same category as

Mr. Grey, i.e. straight political hostages.

to have infinged Chinese laws or regulations;

They are alleged

and we believe

the Chinese will settle these cases according to the

particular circumstances.

This is not to say that solution

of the Grey case would not improve the atmosphere of Sino-

British relations and consequently enhance the chances for

the other British subjects; but even so it is not to be

expected that solution of the Grey problem would lead directly

to the release of the remainder. As far as trade is concerned

there are few indications that the state of our relationa

with the Chinese has been reflected in the field of trade.

Our exports to China for January 1969 were the best for three

yeara

15. Balancing the benefits offered in the message from Chou

En-lai, the Chinese have also made two veiled threats.

First,

if we do not encourage the "moderates" in Peking by an early

concession, they may be unable to hold the line against the

"radicals" regarding policy towards Hong Kong. We do not

know of course what precisely is happening in the echelons of

the top leadership in Peking at present. There are some

indications of serious policy differences. However, since

the beginning of 1968, even at moments of extreme internal

agitation, there has been no indication that the leaders were

prepared again to jeopardise their chances of recovering

/their

TOP SECRET

their following in Hong Kong or, more important, their large

foreign exchange earnings from the Colony, by further radical

initiatives.

We do not suppose they would take such a risk

now. The threat now presented to us appears to be a play-

back of speculation about the relative strength of factions in

Peking carried in the Western press in recent months and one

which the Chinese may therefore calculate would appeal to us.

16. The second Chinese threat concerns likely British tactics

in September 1969. At this point ten of the remaining

newsworkers will be due for release (with remission) from

prison. The eleventh is due out only in February 1971.

The Chinese must be aware that September will bring us the

best opportunity, assuming we are prepared to commute the

sentence of the eleventh newsworker, of settling the Grey

problem in a reasonable time and with minimum political

damage in Hong Kong. For obvious reasons the Chinese would

wish to steer us away from any such course; they want an

earlier and much bigger concession. In any case we are not

tempted to adopt precisely the tactics the Chinese imply to

be in our minds, i.e. to release the ten and try and bargain

for Mr. Grey with the remaining one. As far as we can

anticipate events at this stage, we should find it much more

convenient in September to release the eleven as a group and

throw the ball firmly into the Chinese court.

17. As I have suggested above, it is our view that the

present negotiations are not necessarily over. It is

important that we go back to the Chinese making it clear to

/them

TOP SECRET

them that the premature release in Hong Kong of the eleven

newsworkers is ruled out. If we can convince them of our

determination on this point it is just possible that they will

retreat from their present intransigence. It is the view of

the Governor of Hong Kong that we must wait a few weeks to

see if the affair develops this way. We share the Governor's

view and think that a period of about three weeks would be

appropriate.

Possible Failure of the Negotiations

18. If at the end of this period we find that the present

negotiations are a definite failure we shall have to consider

once again the alternatives.

It will then be for

consideration whether we should concede to Chinese pressure

and release all eleven newsworkers in the near future or

whether we should continue to resist.

way are clear.

The dangers of giving

The Governor of Hong Kong has throughout

opposed the premature release of convicted prisoners in Hong

Kong. We agree with the Governor that such a move would

damage public confidence in the Colony; would be interpreted

by the communists as a sign that we lacked firmness; and

by providing a precedent of willingness to disregard the courts

in a flagrant manner and for a political purpose impair the

future credibility of the sanction of imprisonment. The

likely encouragement to the Chinese to adopt a similar policy

again, if they now succeed, must also be taken into account.

We remain therefore of the view that the premature release of

al eleven newsworkers, particularly so soon after we had been

/ pressed

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- 9 -

TOP SECRET

pressed openly by the Chinese to do so, would be highly

damaging.

19. An extreme alternative is to wait until the release of

the last newsworker in February 1971. This alternative is

highly objectionable on humanitarian grounds and would be

difficult to justify in public.

20.

Our preferred alternative is to wait until September 1969

and, when ten of the newsworkers are released in the normal

way, to throw in the eleventh. We have already put this

proposal informally to the Governor of Hong Kong by personal

telegram. Understandably, he has refused to commit himself

at this stage. It may be objected that by throwing in the

eleventh newsworker we should be breaching the principle of

the sanctity of the courts, which we had striven all along to

maintain. There is an element of truth in this. But from

the political point of view there is a wide difference in

degree between the release of eleven and the release of one.

Having made the other ten serve out their sentences the

Governor would, in commuting the sentence of the eleventh, be

acting from a position of strength, or one that could be

presented as such.

21 It may also be argued that the release at any stage of

the eleven newsworkers will not automatically secure the

release of Mr. Grey. This is of course true. However, the

Chinese are on public record as justifying their continued

detention of Mr. Grey by reference to the "persecuted

patriotic newsworkers",

While there has been some variation

/ over

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-10-

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over numbers, the Chinese have always justified their

detention of Mr. Grey exclusively in the context of the

treatment of their newsworkers in Hong Kong. We do not

believe that they would start after the release of the

newsworkers to hold him against a wholely different category

of prisoner.

22. The feasibility of the September timetable must of course

depend on what we learn about the condition of Mr. Grey and,

closely related to this, the evolution of public and

parliamentary opinion in this country. The first point is

one which we continue to watch very carefully. At present,

although Mr. Grey's conditions of detention remain highly

unpleasant, we are not unduly concerned about his mental

equilibrium. Careful medical examination by Chinese doctors

in December appear to have relieved his mind about his

physical health; and his recent letters to his mother have

been relatively cheerful and extremely balanced.

I am

23. Whether or not public and parliamentary opinion can

continue to be contained depends largely on Reuters.

due to see Mr. Long this afternoon and hope to have permission

to inform him in general terms about our present negotiations

on Mr. Grey's behalf. This should help to convince him

that we are doing all we reasonably can.

24. We have another card up our sleeves. For tactical

reasons we have not wished to stimulate indignation against

the Chinese, since we were reluctant to be pushed into

unhelpful measures against them in this country. We have

/ therefore

TOP SECRET

therefore refrained from deploying fully the strong arguments

for resisting Chinese "blackmail" in Hong Kong. We have

however a good case and can deploy it when necessary.

the need arises it is open to us to make public their

continued refusal to entertain the idea of a reasonable

solution through deportation of the newsworkers to China.

The fact that the Chinese cannot persuade their own adherents

to return to the mainland would be particularly damaging to

them.

25. Two forms of objection may well be advanced in

opposition to the views outlined above.

It may be felt that undue stress has been placed on

the need to maintain public confidence in Hong Kong.

It is always difficult to pronounce with certainty on

the likely effect of any particular action in Hong Kong.

Nevertheless it remains the judgment of the Departments

concerned that in cases of doubt we must leave ourselves

a margin of error, since any action which led the

inhabitants of Hong Kong to conclude that we had lost

our nerve could be very quickly disastrous.

In any

case we must listen carefully to the arguments of the

Governor of Hong Kong who is better placed than we to

pass judgment.

It may be argued that the eleven remaining newsworkers

are a declining asset, that their value to the Chinese

diminishes as September approaches and that their

release at that time will therefore be regarded by the

/ Chinese

TOP SECRET

12-

[

TOP SECRET

Chinese as of practically no value.

There is an

element of truth in this although our experience of

the Chinese suggests that they will not be at a loss

as to how to present the release of the eleven, whenever

it comes, as a "victory". They will have prevailed to

the extent of having held on to Mr. Grey until we

"stopped the persecution of patriotic newsworkers in Hong

Kong". But the nub of the argument really lies elsewhere.

It is unfortunately true that while the value of these

men to the Chinese may decline as time goes by, the

damage to ourselves caused by their release at any point

between the present and September is likely to remain

fairly constant.

James may

(James Murray)

28 February, 1969.

Copies to: Mr. Godden

Sir J. Johnston

Sir A. Galsworthy

Mr. Carter

TOP SECRET

13 -

Mr. Mu

Murray

Mr. Cradock asked me to send you a copy of this letter

21/2/69

Ален

вило

With the Compliments of the

Political Adviser

Hang rộng

Ref. +84/68

cuter.

Jumpe

ра 4m

い

404

TOP SECRET

PERSONAL

ہیں یا نہانے کے

TOP SECRET

Office of the British Chargé

'Affaires

PERSONAL

Peking

7 February. 1969

!A•

辰

30th

bear Arthur,

102

7.x 1/64:

There is a suggestion in Hong Kong telegram number 27 (paragraph 3) and again in the paner on Grey (paragraph 19) m which rather disturbs me. The suggestion seems to be that the Chinese were ready to let Grey go quietly after Hsueh p'ing's release but changed their line to a demand for the newsworkers as a result of certain events in Hong Kong, namely my press conference, the meetin8 with you and Jamca Murray and the meeting with NCNA. I should like to let you have some comment on this in order to nail what might develop into an unfortunate myth. I am writing in similar terms to James Kurray.

I should certainly be very concerned at the thought that any remarks of mine in Hong Kong, even at a conference the general outlines of which had been earlier agreed with the Foreign Office and with the Governor, might have injured Grey'à chances. However, a fair examination of the evidence suggests that this theory will not hold and that the press conference almost certainly did not have a decisive effect one way or another,

(a) I think it inherently improbable that the Chinese in pique

over some remarks at a press conference would make such a major change of line as that suggested i.e. a shift from readiness to free Grey without any price to a demand for the release of 13 men.

(b) The press conference was on the evening of 30 October.

The telephone remiest from NCNA for a meeting to discusa another round of speciel visits was on the morning of " 1 November. The request for special visita was a concerted oneration involving action in Peking and Hong Kong. It seems to me almost impossible for the Chinese to have decided on and concerted such a change within the space of 24 hours.

was another sufficient reason for the approach by Peking and NOWA at that time, namely the need to blur the effect of the forthcoming release of Hsueh P'ing and emphasize the link between Grey and newsworkers still in prison. The timing of the annroach seems to have been dictated by that and I should imagine it was worked out some considerable time beforehand.

(a) The main lines of Chinese policy seem to have been consistent

throughout. The link with newsworkers in prison dates back to April. Surgestions by the Chinese vir covert channels that Grey might be exchanged for newaworkers occurred both before (8.6. on 2 September) and after the resa corference. A.F. Waddocks, Req.,

Hont Kong,

79 TOOPSEEBRET

TOP TOP SECRET

PERSONAL

(e) Encouraging Chinese statements on the theme that the release of Grey would not affect the struggle in Hong Kong also preceded and followed the nrega conference. November (paragraph-15 of the paper on Grey.)

e.g. 21

The press conference and subsequent publicity certainly nettled and embarrassed the Chinese, "hat surprised and upset them more was the degree of publicity over the November visit to Gre", which contrasted with the relatively, little publicity the subject had received in April. At the same time, as. I have suggested elsewhere, they were probably bewildered by our blowing hot and cold over the release of prisoners. Our first offer on this subject related only to Hauch but was made at a time when Hsueh was already virtually free. I think they; read it as an indication from our side that prisoners were negotiable. They took some time to come back with their suggestion, but when they did so in November and gave their counter-offer of an exchange for newsworkers, we surprised them by saying that early release was out of the question. Publicity was also blowing up about this time.

This is the best re-construction of events I can offer. It must all be a matter of speculation. But the theory that all was going swimmingly unt the press conference does not bear

examination.

Yours

мась

лоз

(Percy Cradock)

TOP

No.

CHET

78.5 Date 154669

KONG

COVERNMENT

ECR

MONG

TOP SECRET TOP SECRET

SECRET

3.45pm

Secretary of Stati

　Lord Shepherd wishes to talk to you for

for 10-15

minutes about Hong Kong.

The subject is set out in the attached submission

KOB 2/2

27/

4435

TOP SECRET

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Sir J. Johnston

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Mr. Godden

Private Secretary

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MR. ANTHONY GREY OF REUTERS

By du

314

PROBLEM

Flag A

Flag B

(307)

In his letter of 17 February to the Secretary of State,

Mr. Long, the General Manager of Reuters, requests that the

Chinese newspaper workers imprisoned in Hong Kong should be

released in order to secure Mr. Grey's freedom. In his

311 letter of 24 February he refers to a recent newspaper report

that the Chinese intend to bargain with us about accommodation

for our respective missions in London and Peking.

Mr. Long

is due to go abroad on 2 March, returning on 29 March.

RECOMMENDATION

RECEIV

NARCHIV

Flag C

.31

I recommend that:-

The Secretary of State should offer to see Mr. Long

when the latter returns from his forthcoming trip.

I should be authorised to inform Mr. Long when I see

him on 28 February in general terms of the progress of

the present exchanges with the Chinese through covert

channels in Hong Kong.

An interim reply be sent to Mr. Long on the lines of

the attached draft.

BACKGROUND

3. In essence Er. Long's proposals differ only slightly

from those made in his letter to the Secretary of State of

/ 23 July, 1968.

TOP SECRET

Flage

D & E

Flexis (102

Flag F

23 July, 1968.

(22) 0 /2 13/13

氏

On that occasion he seemed to advocate a

somewhat broader amnesty for prisoners in Hong Kong. On

the other hand, the tone of the present letter is decidedly

more impatient. The difficulties raised by proposals of

this kind were dealt with in the Secretary of State's letters

to Mr. Long of 26 July and 28 August. In addition I saw

Mr. Long on 17 October, 1968, and went in some detail through

the moves which had been made in Hong Kong to try to discover

Chinese intentions towards Mr. Grey. On 12 November the

Secretary of State discussed the problem with Mr. Long.

Subsequently Far Eastern Department have maintained close

contact with Er. Long and his colleagues at Reuters on the

developments outlined in his present letter.

4 I have not taken Mr. Long fully into my confidence

about the latest covert probe in Hong Kong of Chinese

intentions, although I have indicated to Mr. Chipp, the

Editor of Reuters, in general terms that we are exploring

the matter once again on the lines of Mr. George Brown's

letter to Ch'en Yi in 1967. (On that occasion the Chinese

were told that if they gave an assurance that they would

agree to allow all British subjects in China, including

Mr. Grey, who wished to leave, to do so, Mr. Brown might be

able to arrange the departure from Hong Kong of the Chinese

newspaper men and news agency personnel in prison there.)

I am, however, myself seeing Mr. Long on 28 February as a

result of an arrangement made a fortnight ago before my

departure on leave and had in any case intended to seek

/ authority

TOP SECRET

Flags

G & H

340 341

authority to bring him into the picture about the latest

covert exchanges in Hong Kong.

5. Meanwhile this latest probe of Chinese intentions has

been carried forward in two further meetings between

The

Mr. Cater, the representative of the Hong Kong Government,

and his contact on 21 and 22 February (Hong Kong telegrams

Nos. 184 and 185 of 25 February). The salient feature is

an alleged message from Chou En-lai to the effect that while

the release of the newsworkers might be a big price for the

Hong Kong Government to pay it was a small price for the

improved Sino-British relations which would follow.

Governor detects in the latest round of exchanges a new note

of urgency on the Chinese side which, however, he thinks may

be purely tactical. He considers that our only course in

the next few weeks is to hope that some progress can be made

on the basis of our January proposals (i.e. the return of

the news men to China). I think this is right; but I am

submitting separately with detailed argument.

ARGUMENT

6. It remains very important that we should continue to

carry Reuters with us. We have had a number of indications

recently that Mr. Long is not entirely happy about the way

we are handling the matter. In particular Mr. Long has

been strongly critical in private of our refusal to release

the newsworkers in Hong Kong. This was confirmed by a

Flag I report from Mr. Wilford in our Embassy in Washington of a

conversation which he had with Mr. Long recently.

TOP SECRET

- 3-

/7.

7. There

TOP SECRET

7. There are two principal aspects in which Mr. Long's

analysis of the problem is superficial:-

He skates very lightly over the risks for the longterm

in Hong Kong of releasing the newsworkers in Hong Kong,

referring only to the possibility that it would be seen

as "an act of weakness and might encourage the enemies

of British rule to foment further disorders". He omits

any reference to the effect it would have on the future

value of prison sentences as a deterrent or the

encouragement that it might give the Chinese towards

further hostage-taking in future.

He proceeds on the assumption that the release of the

11 newsworkers would certainly result in the release of

Mr. Grey.

I personally believe this to be the case;

but the Governor of Hong Kong would certainly not agree

that this is a foregone conclusion.

I would be reluctant, however, to become involved in

argument with Reuters on these points

though any reply to

Mr. Long must make a specific reservation about (a).

Moreover a detailed reply would have to take account of

Mr. Long's remark that he "cannot believe that anyone would

be prepared to contemplate Mr. Grey's detention until that

date" [1.e. February 1971_7. I personally agree with

Mr. Long and would hope that if Mr. Grey has not been released

by next September when 10 of the 11 newsworkers are due for

release, the Governor will simultaneously commute the sentence

of the 11th. But the Governor is not yet prepared to commit

/ himself

TOP SECRET

Flag J

Flag

himself to this (Hong Kong telegram No. 131 of 10 February).

It would be preferable therefore if our views could be

conveyed personally to Mr. Long either by the Secretary

of State or by Lord Shepherd. But it would be better to

delay this until, possibly after a further meeting between

Mr. Cater and his contact, we are in a better position to

form a view of future prospects. Mr. Long's early

departure is, however, a complication.

When I spoke to

him yesterday I told him that I would be recommending that

he should see a Minister but that in view of the Secretary

of State's preoccupations this week I doubted if it could

be fitted in before his departure. He said that he quite

understood this. I suggest, therefore, that the best way

to proceed might be to send him an interim reply proposing

a meeting on his return from abroad and telling him that

meantime I have been instructed to bring him into the

picture on recent developments in Hong Kong.

9.. Mr. Long's letter of 24 February was occasioned by a

piece of imaginative journalism in the "Daily Express" on

21 February.

Copy to: Mr. Carter

Jan Way.

(James Murray)

26 February, 1969.

I agree, tubject to the shight drafting amendments I

have suggested.

TOP SECRET

Behandlin

27/2

And then

17. Bok

CYPHER/CAT A

PRIORITY HONG KONG

TELEGRAM NO. 185

TOP SECRET

JAL

COPY NO:

TO FOREIGN AND COMMONWEALTH OFFICE

25 FEBRUARY 1969

Me wilso have seen.

Brünn Tels what

ADDRESSED FCO TELNO 185 OF 25 FEBRUARY RFI PEKING dcused swith

MY TELEGRAM 184.

340

I HAVE THE FOLLOWING COMMENTS ON THESE EXCHANGES:-

with hand shepher

pa je vou

(A) THERE APPEARS TO BE A NEW NOTE OF URGENCY ON THE CHINESE SIDE

BUT THIS MAY BE PURELY TACTICAL, I.E. THE DESIRE TO TRY HARD FOR

A VICTORY LONG BEFORE SEPTEMBER WHEN ITS VALUE WOULD BE MUCH LESS.

(B) THERE IS SOME EFFORT TO APPEAL TO LONDON BY HOLDING OUT

THE POSSIBILITY OF THE RELEASE OF BRITISH SUBJECTS AND IMPROVED TRADE

WITH BRITAIN.

INDICATES A READINESS TO MAKE FURTHER MOVES, AND POSSIBLY AN

UNDERESTIMATION OF THE DIFFICULTIES FOR US OF RELEASING PRISONERS

IN HONG KONG.

2. I THINK OUR ONLY COURSE IN THE NEXT FEW WEEKS IS TO HOPE

THAT SOME PROGRESS CAN BE MADE ON THE BASIS OF OUR JANUARY

PROPOSALS. WE HAVE DONE AIL WE CAN TO MAKE THEM AS PALATABLE

AS POSSIBLE BUT WE HAVE NOT YET SEEN ANY WILLINGNESS OM THE

CHINESE SIDE TO TAKE THEM SERIOUSLY.

CFCO PLS PASS TO DEKING)

SIR D.TRENCH

[REPEATED AS REQUESTED]

FILES

F.E.D.

H.K.D.

P.U.S.D.

MR. MORETON

SIR A.GALSWORTHY

SIR J.JOHNSTON

P.S. TO LORD SHEPHERD PRIVATE SECRETARY

-TOP SECRET

COPY NO.

390

CYPHER/CAT A

PRIORITY HONG KONG

TOP SECRET

'TO POREIGN AND COMMONWELATH OFFICE

TELEGRAM NO. 184

TOP SECRET

25 FEBRUARY 1969

AUDRESSED FCO TELNO 184 OF 25 FEBRUARY RFI PEKING

MY TELEGRAM 156: GREY.

376

the Wilson has seen.

pa for 26/2

CATER SAW CONTACT AGAIN ON 21 FEBRUARY.

CONTACT SAID THAT DURING

THE PRECEDING WECK, WHICH INCLUDED THE NEW YEAR HOLIDAY, HE

HAD RECEIVED A MESSAGE FROM CHOU EN LAI AND HAD TOW DISCUSSIONS

WITH LO CHO-CHIH AND A FOUR AND A HALF HOUR DISCUSSION WITH

LEUNG VAI LAN, THE DIRECTOR N.C.N.A.

2. THE HESSAGE FROM CHOU A LEGEDLY SAID THAT CHOU APPRECIATED

THE DIFFICULT SITUATION FACING THE HONG KONG GOVERNMENT OVER

RELEASING THE NEVSVORKERS IN HONG KONG, BUT PEKING WOULD HELP

AS FAR AS POSSIBLE AND WOULD GUARANTEE NO PULLICITY OR

PROPAGANDA ABOUT A VICTORY BEING SCORED. CHOU ALLEGEDLY ARGUED

THAT, WHILST IT WOULD BE A BIG PRICE FOR THE HONG KONG GOVERNMENT

TO PAY, IT WAS A SMALL PRICE FOR THE IMPROVED SINO/BRITISH

RELATIONS WHICH WOULD FOLLOW. THE GREY AFFAIR WAS A KNOT,

THE UNTYING OF WHICH WOULD LEAD TO AN IMPROVEMENT IN RELATIONS.

THE FAILURE TO UNTIE IT WAS DELAYING THE FINAL AND FULL SOLUTION

OF THE HONG KONG PROBLEM. CHOU HAD NOT BEEN SPECIFIC ABOUT

THE DETAILED IMPROVEMENTS WHICH WOULD FOLLOW A SETTLEMENT

BUT LI CHO-CRTH HAD ALLEGENLY SUGGESTED TO CONTACT THAT IT WOULD

INCLUDE THE RELEASE OF SOME OTHER BRITISH SUBJECTS IN CHERA AND

IMPROVED TRADE BETVEEN BRITAIN AND CHINA. CHOU IS ALSO ALLEGED

TO HAVE SAID IT WAS NOT (KPOSSIBLE FOR THE HONG KONG GOVERNMENT

TO RELEASE THE NEWSWORKERS IN HONG KONG BEFORE THE EXPIRY OF THEIR

PRISON SENTENCE. CHOU IS ALSO ALLEGED TO HAVE EMPHASISED THE

NEED FOR AN EARLY SOLUTION,

ACCORDING TO CONTACT, BOTH LI CHO CHIH

13.

AND LEUNG WAI LAM ALSO EMPHASISED THE NEED FOR AN EARLY SOLUTION AS TIME WAS GETTING SHORT.

TOP SECRET

TOP SECRET - 2 -

3. LEUNG WAI LANKS REMARKS APPARENTLY ADDED LITTLE TO THIS.

CONTACT BELIEVES THAT LEUNG KNOWS OF HIS DISCUSSIONS WITH CATER

BUT SAYS THAT NEITHER HE NOR LEUNG REFERRED TO THEM EXPLICITLY,

LEUNG^S ONLY ADDITIONAL POINT WAS HIS CLAIM THAT HE HAD SEEN

CHOU EN LAT HIMSELF IN PEKING AND DIOU HAD CLAIMED THAT HE HAD

SPENT FIVE DAYS TRYING TO CONVINCE CHAIRMAN HAO OF THE CORRECTNESS

OF HIS POLICY TOWARDS HONG KONG.

4. CATER GAVE AN ACOUNT OF THIS DISCUSSION TO ME, CRADOCK AND

DENSON ON 21 FEBRUAPY. WE CONSIDERED THAT THE CHINESE APPEAR TO

BE COMING TO THE INCORRECT VIEW THAT OUR PROPOSALS IN

JANUARY C MY TELEGRAM 87) REPRESENTED A REAL BREAK THROUGH FOR

THE CHINESE AND THAT A LITTLE MORE PRESSURE WOULD INDUCE US TO

AGREE TO RELEASE THE NEWSWORKERS IN HONG KONG. WE DECIDED THAT

CATER SHOULD DO EVERYTHING POSSIBLE TO CONVINCE CONTACT THAT FOR

US THERE 13 ALL THE DIFF RENCE IN THE WORLD BETWEEN RELEASING

IN HONG KONG AND RELEASING TO CHINA AND THAT HE SHOULD EXPLORE

FURTHER THE CHANCES OF MAKING OUR JANUARY PROPOSALS ACCEPTASLE

TO THE CHINESE.

5. CATEÂ SAY CONTACT FOR A SECOND TIME OF 21 FEBRUARY AND SPOKE ON

THOSE LINES. IN PARTICULAR HE EMPHASISED THE POSSIBILITY OF

RELEASING THE NEWSWORKERS TO MACAO. IN REPLY TO A QUESTION

FROM CONTACT, HE SAID HAT THE STATEMENT OF WILLINGNESS TO LEAVE

HONG KONG WHICH WE WANT FROM THE PRISONERS WOULD NOT HAVE TO BE

IN WRITING. WE COULD ACCEPT AN ORAL STATEMENT IN FRONT OF A

PRISON OFFICER AND ONE OTHER WITNESS.

16.

TOP SECRET

HONG KONG TELNO 184 TO FCO

TOP SECRET

- 3 -

6.CATER. SAW CONTACT AGAIN ON 22 FEBRUARY TO CONFIRM THAT THE POINTS

ABOUT RELEASE TO MACAO AND AN ORAL STATEMENT HAD MY APPROVAL.

HE EMPHASISED ONCE AGAIN THAT THERE COULD BE NO QUESTION OF RE EASING THE PRISONERS IN HONG KONG BEFORE THEIR SENTENCES EXPIRED AND THAT IF THE CHINESE GOVERNMENT WERE SERIOUS IN WANTING

AN EAFLY SOLUTION THEY SHOULD TAKE UP OUR JANAUFY,OFFER. CATER ASKED WHY THE CHINESE NOW SEEM TO BE IN SUCH A HURRY. CONTACT SUGGESTED THAT IT MIGHT BE CONNECTED WITH CHOU EN LAI^S POSITION IN PEKING AND THAT IF A SETTLEKENT YERE NOT FOUND IN THE NEXT FEW MONTHS THE JALACE OF POWER HIGHT SHIFT AND A TOUGHER LINE DE ADOPTED OVER GREY.

7. CONTACT THEN ADDED THAT LI CHO CHIH HAD SAID TO HIM THAT SOMEBODY HAD SUGGESTED TO LI THAT THE BRITISH TACTICS WOULD BE TO WAIT UNTIL SEPTEMBER WHEN 10 OF THE NEWSWORKERS WOULD BE PELEASED AND THEN TO TRY TO SWOP GREY FOR WONG CHAK, THE ONLY PRISONER THEN REMAINING, ACCORDING TO LI, SUCH ACTION WOULD

NOT BE ACCEPTABLE. THOSE TACTICS WOULD BE CHILD'S PLAY.

8. CONTACT ALSO SAID HE HAD A DEFINITE IMPRESSION THAT

GREY'S CONDITIONS OF CONFINEMENT HAD BEEN MUCH IMPROVED SINCE NOVEMBER.

9. SEE MY IMMEDIATELY FOLLOWING TELEGRAM.

FCO PLEASE PASS TO PEKING,

SIR D. TRENCH

FILES

F. EASTERN D.

H.K.D.

P.U.S.D.

MR. MORETON

/REPEATED AS REQUESTED/

SIR A. GALSWORTHY

SIR.J. JOHNSTON

P.S. TO LORD SHEPHERD

PRIVATE SECRETARY

TOP SECRET

388

Mr. James Murray

Lord Shepherd has seen telegram No. 87 of

5 February from Peking about Grey and has commented as follows:-

"May I see the department - I am not

very happy with this advice?"

Perhaps you and Mr. Carter (to whom I am copying this minute) can spare a few moments to talk this over with Lord Shepherd, perhaps tomorrow morning at 10.30 or some time tomorrow afternoon.

RECEIVED IN

ARC

(C H. Godden)

6 February, 1969

Mo Carter and I discussed this with Lad

Shef hand this morning.

Be slobe ausent subnetting a draft fel. refly to Mo Castool.

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TOP SHORET Hallowing for Commerce

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TOP SHORET

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d'Affaires,

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6 February, 1969

O.R.K the fore of panta FEC

Mr. Momoy

bear James,

of Grey.

690 87 ** JEONS

NI G...

Thank you for your letter of 30 January on the subject

I was not disappointed by FCO telegram number 67′ and your letter helpɛ me to understand its background. In any event the telegram agreed on the essential point that we should go ahead with the presert exercise. I am rather more hopeful about its success than I was a little while ago, It might just work. Certainly we cannot afford to let such a chance slin,

On the question of September, I entirely agree with you that we should fight to keep that option open and, if the present exercise fails, should do our best to obtain release of the 11th men in September. It may be the best we can do.

It.

On your paragraph 2, I am afraid I cannot entirely agree with you that it is better to have a ransom paid reluctantly and with fuss than to have a ransom paid on demand, though I would prefer to put it as a choice between

(a) a concession obviously wrung out of us by public pressure and

(b) a concession made without strong public pressure and at a

time of our choosing.

The second can always be presented as a deliberate act of statesmanship and as oroceeding in part from a wish on our side to improve relations, whereas the first is patently a collapse, showing us to be both weak and hostile. But this now may be something of an academic point since I agree with you about September.

Your paragraph 5 raises an interesting question, namely the effect of my press conference in Hong Kong and the related meetings at the time. Your suggestion is that the Chinese were perhaps moved by this press conference to show Grey in "lenie conditions of detention. A similar suggestion occurs, though (30 in rather less pleasant form, in Hong Kong telegram number 27 (paragraph 3) and again in the Hong Kong parer on Grey (paragraph 19). There the thought seems to be that the Chinese were ready to let Grey go quietly after Hauch P'ing's release but changed their line after certain events in Hong Kong, according to the telegram my press conference, our meeting and the discussion with NONA. I shall confine myself with dealing with this last suggestion though many of the arguments apply equally to that in your letter.

I should certainly be very concerned at the thought that any remarks of mine in Hong Kong, even at a conference the general

James Hurray, Esq., C.M.G.

Par Patern Pepartment.

TOP SECRET

outlines of which had been earlier agreed with you and with the Governor, might have injured Grey's chances. However, an examination of the evidence suggests that this theory will not hold and that the press conference almost certainly did not have n decisive effect one way or another.

(x)

I think it inherently improbable that the Chinese in pique over some predictable remarks at a press conference should make such a major charge of line as that suggested by Hong Kong i.e. a shift from readiness to free Grey without any price to a derand for the release of 11 men,

The (b) The press conference was on the evening of 30 October.

telephone request from NCWA for a meeting to discuss another round of special visits was on the morning of 1 November. The request for special visits was a concerted operation

It seems to me involving action in Peking and Hong Kong. almost impossible for the Chinese to have decided or and corcerted such a change within the space of 24 hours.

wan another sufficient reason for the approach by Peking and NONA at that time, namely the need to blur the effect of the forthcoming release of Hauch P'ing and emphasize the

The link between Grey and newsworkers still in prisor. timing of the approach seems to have been dictated by that and I would imagine it was worked out some considerable time beforehand.

(a) The rain lines of Chinese policy seem to have been

consistent throughout. The link with newsworkers in arison dates back to April. Suggestions by the Chinese vis covert channels that Grey might be exchanged for newaworkers occurred both before (e.g. on 24 September) and after the press conference.

(e) Encouraging Chinese statements on the theme that the release of Grey would not affect the struggle in Hong Kong algo preceded and followed the press conference. November (paragraph 15 of the Hong Kong paner).

e.g. 21

The press conference and subaement publicity certainly nettled and embarrassed the Chinese. What surprised and upset them more was the degree of wublicity over the November visit to orey, which contrasted with the relatively little publicity

At the same time, as I the subject had received in April. have suggested elsewhere, they were probably bewildered by our Our blowing hot and cold over the early release of prisorers. first offer on this subject related only to Hsueh but was mede I think they At a time when Houch was already virtually free, read it es en indication from our side that prisoners were negotiable. They took some time to come back with their suggestion but when they did so in November and gave their counter-offer of an exchange for newsworkers, we surprised them

Publicity by saying that early relcase was out of the question. was alao blowing up about this time.

This to the best re-construction of vents I can offer though, as you rightly say, it must all be a matter of speculatior.

The SPCRET

TOP SECRET

Thank you also for your manuscript letter and its enclosures. The latter were good for my education on the realities of the situation in the Office.

Jour

رحبا

Клеваком

(Percy Cradock)

TOP SECRET

Tsx 4/68

Enter TS snizegment hy

more of the 18

Top SECRET The detailed card

political Adviser

way in which the Cater but are

context.

See minuli

376

prefusal to

He later intemler 62. pajanja

In spite of the

As you are aware, I arranged to meet 1. Jay at 3 p.n. yesterday, 27th January. importance of the meeting, or perhaps because of it, this was one of the shortest meetings which I have had with him: was brisk and businesslike, and directly he appreciated that I had something of substance to say to him he asked whether I would object to his taking notes of the discussion: I readily agreed to this.

I started by informing him that the message I had to pass to him concerned a decision of the British Government which had been reached with the mvice and concurrence of H.2. the Governor. I then proceeded to make the following pointa: Jay noted then down in writing. For the first time he allowed se to complete what I had to say without interruption or comment of any kind: -...

(1)

(2)

RECEIVED IN

ARVES NË 24

1.3 1303

EC Heli

Referring to our discussion of 7th January concerning the possible release of newsworkers

I emphasised that release in Hong Kong was quite out of the question.

Kaking reference to the comment by LI Cho-chih passed on on 7th January, that it was up to the f.A.0. to find a way round the probless involved in releasing the newsworkers, I said that this matter had now received very considerable consideration in depth: that although it had seldom happened in the past nevertheless there vere precedents for prisoners being released to their own country at their own request. I emphasised that any such release had to be at the request of the prisoner. I also mentioned in passing that the H.K.G. had under consideration at this moment a request from a Filipino presently in Laichikok Female Prison who wished to return to the Philippines.

(3) I said that the British Government and H.s. were

prepared to consider commuting sentences of any of the"newsworkers who formally expressed willingness to be released to China and whom the Chinese authorities undertook to accept. Later, in discussing this point, the question of numbers to be offered initially arossi it will be remembered that Jay's original advice had been that we should not offer all 11 at first. I said that it was our opinion that there was little to be gained in this type of bargaining and that X*x*x*x*** apámánoblotx the proposal stood a better chance of acceptance if it were left at the simple proposition that we were prepared to consider commuting sentences, etc. of any of the newsworkers who fomally expressed willingness to be released to China. Later in discussion Jay enquired whether it was the intention that those newsworkers who requested release to China night be permitted to return to liong Long:

liong Long: I said that the proposition

/contd...

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(4)

(5)

тор

SECRET

- 2

was that such people requesting release to China would not be allowed back into Hong Kong.

Referring to our conversation of 7th January Jay said that the possibility had been discussed of these people being allowed back into Hong Kong after expiry of sentence. I said that this point would certainly raise grave difficulties: that if the Chinese were to make a firm proposal on this H.B. might be prepared to consider it but very obviously any such arrangement could only refer to expiration of full sentence and not sentence after remission. Jay rather surprisingly voloed the opinion that the Chinese were in any event likely to accept the proposition as it stood, 1.8. that prisoners asking for release to China would not be permitted back into Hong Kong.

opri

If the above were agreed, then we would expect appropriate assurances about the release of Anthony Gray. I suggested that it would probably be enbarrassing to both sides if Grey were released simultaneously or immediately after the release of the newsworkers but that once agrement were reached on the release of Grey for the newsworkers we would require that Grey should be informed at once that he would soon be released, As for the time between the release of the nevsworkers and that of Anthony Grey, I suggested this was a matter for discussion but that our present feeling van that a period of about two weeks was about right. I said that whilst the timing of the releaze of the newsworkers would have to be left to the H.K.G., nevertheless it would be necessary to have discussions and obtain advios from the Chinese as to precisely how much notice they would need in order to make arrange- ments to receive the nevsvorkers, etc., eto. But these were details, I suggested, which, along with many others, would have to be worked out once agreement in principle had been reached. I also said that one further requirement in regard to Grey would be that his living conditions should be improved directly agreement on release was reached.

Referring back to the conversation of 7th January, I noted the Chinese undertaking that there would be no propaganda whatsoever about this matter: we would expect them to stand by this undertaking. I said that for our part, if asked, we should deny that any bargain had been made with the Chinese authorities on the release of Grey: however, it would have to be understood that neither the H.k.G. nor the British Government had control over press comment which might well speculate that negotiations had taken place. Whilst the H.K.G. would not be making an immediate press release on the release of the newsworkers, nevertheless it would be necessary for the press and the public to be told within a day or two of release: the precise form of vorde had not, of course, yet been decided but they would probably be along the lines that the newsworkers had "asked to be released to China om compassionate grounds".

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/oontd...

(6)

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Referring back to points made in sub-paragrapha 2 and 3 above, I said that if some of the newsworkers refused to express villingness to be released to China, this would be a problem for the Chinese to resolve, not the H.K.G. We would be prepared to release all who stated they wished to go, provided the Chinese give an assurance that Grey vill be released: In other words, the proposal is not necessarily 11 - 1. If, say, three were to refuse to go to China, then we should expect that the Chinese would still release Grey even though only eight newsworkers vere released. Jay thoroughly understood this point and indeed later in the discussion suggested that perhaps it would be better if we were to ask for the release of Grey before we released the newsworkers. I said that this had indeed been considered but it was felt that the pro- posal, nov sade stood a better chance of acceptance. Jay suggested that whilst he would certainly transmit this proposition as it was put to him, nevertheless on a purely personal basis he felt that it would be reasonable for him to suggest that, as a response to the British/H.K.G. proposals, the Chinese sight be prepared to release Grey first. I said that quite frankly I saw little chance of the Chinese responding in this way but if they were to do so then clearly this would be a matter for consideration.

I emphasised to Jay that it was my personal opinion that the proposals nov made were as good as anybody could expect: if they were not accepted, then I saw no other possible solution: indeed, non-acceptance would probably mean a complete breakdown of indeed, non-acceptance negotiations. I saw the proposition as a solution to the major problems involved:-

(a)

it provided an acceptable solution to the problema involved in the axereise of the Royal Prerogative;

(D)

from the Chinese viewpoint it avoided use of the word and the mot of "deportation"; and

(0)

it did not throw doubt on the right of Chinese to live in Hong Kong - a point which I was svare the Chinese regarded most seriously.

I discussed with Jay the transmission of the message to Peking: he said that he would certainly be passing the message through LI Cho-ahih but at the same time would be reporting personally and directly to CHOU In Lai's personal office.

in He would emphasise the need for a quick decision in this matter.

in commenting generally on the proposal, Jay thought it sxsellent, indeed "rather better" than he had expected. discussed briefly with me the possibility which he had mentioned

/contd...

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Top

SECRET

on 7th January that perhaps the proposal should be seen as coming from his originally rather than officially from the he H.K.G., but after reflection max/agreed that it was much better that this should be seen as a straightforward

proposal from the British side. He thought that the pressure ôn CHOU Ba Lai to agree to the proposal would be very strong: CHOU for a long time had been preaching the need for improved relationships with Hong Kong and Britain and he would not wish to appear to be going against his om advice. Jay felt that a positive move of this type could only be for

In any event, the good, that even if the Chinese were to reject the proposal the position would then be that it was for then to make the next move.

28th January, 1969.

(J. Cater)

of the

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Top SECREI

Arhout-

6/2

CYPHER/CAT A

ROUTINE HONG KONG

TOP SECRET

376

COPY NO.

TO FOREIGN AND COMMONWEALTH OFFICE

RECEIVE

VIGRAM NUMBER 156

15 FEBRUARY 1969

¡AR

17PEN ww

TOP SECRET

тра

ADDRESSED FCO AS MYTEL NO. 156 OF 15TH FEBRUARY RFI PEKING.

(312)

PEKING TELEGRAM NO. 108 ↑ GREY.

357

MY TELEGRAM NO. 138 WAS ONLY A VERY SHORT SUMMARY AND COMMENTARY

ON SEVERAL LENGTHY MEETINGS. I SUGGEST THAT THE FULL REPORTS,

WHICH WERE SENT BY BAG ON 13TH FEBRUARY, INCLUDING THE LATEST

ON A FURTHER MEETING HELD ON 12TH FEBRUARY WHICH IS A SHADE

MORE HOPEFUL, SHOULD BE STUDIED BEFORE COMING TO ANY DEFINITE

CONCLUSION. VE ARE ALSO UNDERTAKING A FRESH APPRECIATION HERE.

2. FOR THE MOMENT, I CONSIDER WE SHOULD TAKE NO FRESH INITIATIVES,

BUT SEE WHAT COMES OF OUT OFFERS TO BE GENERALLY HELPFUL WITHIN

OUR TERMS.

FOO PLEASE PASS ROUTINE PEKING.

SIR D. TRENCH

FILES

F.F.D.

H.K.DEPT.

P.U.S.D.

MR. MORETON

SIR A. GALSWORTHY

SIR J. JOHNSTON

P.S. TO LOPO SHEPHERD PRIVATE SECRETARY

NNNNN

REPEATED AS REQUESTED/

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Cypher/Cat A

TOP SECRET

TOP COPY (112

COPY NO:

ICEDITE PEKING TO FOREIGN AND COMMONWEALTH OFFICE

Telno 108

1 SECRET

13 February, 1969

I ford it praty dekowaging

Addressed to FCO telegram No.108 of 13 February,

Repented for information to Hong Kong,

Hong Kong telegram No.138:

Grey.

1351

141

Boy 20 M2 Wom lovefer the 2014/2 lazı/? 1. Mungay R

I do not think we should be too discouraged by this

initial reaction.

O.R.

Kipin

Feb.

It is odd that only alleged grounds for rejection are the unwillingness of prisoners to return to mainland. It is hard to believe that Peking would rind this obstacle insuperable. The Communists may be seeking a firmer assurance from us that prisoners would be allowed to return to Hong Kong.

They may also wish to deduct remission, enabling prisoners to return

earlier.

3. It is important that our proposals have not been rejected out of hand as disguised deportation. It seems to me we still have an opening to work on, and I agree with Cater's suggestions in paragraph 3 of telegram under reference. Even if only a few prisoners were persuaded to return to the mainland it would ease the problem considerably, particularly if this group included man not due for release until 1971.

4. If Chinese do react positively to this line, it could be hinted to them that we would be content to see journalists lie low in Macao until period of their sentences is concluded.

FCO pass Immediate Hong Kong.

Mr. Cradock.

FILES

F.East. Dept.

H.K.Dept.

P.U..D.

Mr. Noreton

Sir A.Galsworthy Sir J.Johnston

88888

[Repeated as remuested]

P.S. to Lord Shepherd

Private Secretary

ADVANCE COPY SENT

TOP SECRET

351

اجرا

CYPHER/CAT A

PRIORITY HONG KONG

TEL NO 136

во

Fortautily Cortot Los his

dired chand LF Peking

TOP SECR the kind

of unbofffel

TOP SECRET

TC:

COPY NO:

TO FOREIGN AND COMMONWEALTH OFFICE

سلام

11 FELNWARY 1969 15

enthich fe

13/12

не зверн

REIVED IN

Les

formed

lw14/2

ESSED F.C.0, TELNO 138 OF 11 FEBRUARY RFI PEKING.

348

11 FEB 1989

辰

FEC 134/1

MY TELEGRAM 108:GREY,

Ꮀ

CATER HAS HAD THREE FURTHER MEETINGS WITH CONTACT WHO HAS TOLD

HIM THAT LI HAS FASSED A MESSAGE TO THE EFFECT THAT THE PROPOSAL TO

HE HAD,

ZASE THE NEWSVORKERS TO CHINA IS UNACCEPTABLE.

HOWEVER, AS YET HEARD NOTHING ON HIS OWN CHANNEL TO FEKING.

2. LI CHO-CHIH TOLD CONTACT IN CONFIDENCE THAT THE REASON FOR THIS

HOW WAS THAT IT WOULD DE EMBARRASSING FOR THE COMMUNISTS TO HAVE

TC TRY TO PERSUADE OR ORDER THE ELEVEN TO GO WILLINGLY,

WAS ONLY TOO LIKELY THAT SOME OF THEM WOULD REFUSE TO LEAVE THE

THE PROPOSAL WAS EVEN MORE DIFFICULT FOR THEM THAN

COLURY.

HERELY RELEASING GREY.

3. CATER SUCGESTED TO CONTACT THAT THE COMMUNISTS SHOULD AT LEAST

BE ASKED TO CONSIDER WHETHER THEY WOULD NOT LIKE TO SEE THE

ARE.

11 NEWSWORKERS FIRST IN ORDER TO FIND OUT HOW UNWILLING THEY

WE WOULD HELP THEM DO SO WITHOUT FULLICITY IF THEY WISHED:

/OR HELP

TOP SECRET

-2-

OR HELP IN ANY OTHER WAY TO GET OVER THEIR DIFFICULTIES WHICH

THEY MIGHT CARE TO PUT FORWARD.

CATER ALSO SUGGESTED THAT IF

PEKING PREFERRED, WE COULD DEPORT THE ELEVEN AT LO WU, TO MACAO

CONTACT SAID THAT HE WOULD PUT THESE IDEAS FORWARD

OR ELSEWHERE.

AS HIS OWN.

ALTHOUGH WE HAVE DONE CUR BEST TO KEEP OUR PROPOSAL ALIVE,

THE PROSPECTS OF SUCCESS ARE NOT AT PRESENT VERY GOOD.

IT MAY BE HOWEVER THAT SOMETHING RAY COME OF OUR LATEST SUGGESTIONS.

COPIES OF REPORTS FOLLOW BY BAG.

CFCO PLS PASS TO PEKING)

SIR D.TRENCH

FILES

F.I.D.

R.K.D.

P.0.5.D.

P.S.

[REPEATED S REQUESTED]

SIR A.GʻL6WORTHY

3IR J.JOHNSTON

NR. MORETON,

P.S. TO LORD SHEPHARD

}

TOP SECRET

342

TOP SECRET

COPY NO.

Cypher/Cat A

PRIORITY PEKING PO FOREIGN AND COMMONWEALTH OFFICE

PRIORITY PEVING TELEGRAM NO. 35 20 HONG KONG

TOP SECRET

1 CG

RECEIVED IN

6 FERRU, ARÇ| 1950N=.31

FEBRU||ARÇ,

Addressed to Hong Kong tele, rem No. 35 of 6 Febru Repeated for information to PCO.

Hong Kong telegram No. 108: Grey.

- 7 FEB 1969

FEC1341.

AF Boy Fun

pa was 7/2

These meetings provide grounds for cautious optimism. However, Chinese reaction may be one of suspicion and distrusť, particularly over the issue of how to disguise temporary deportation.

2. It might help to allay their fears if we were to suggest that prisoners could return to China by way of Kacao rather than Lo u. The Communist Press could presumably explain their immediate departure from the colony by stressing their need for recuperation following their imprisonment. We could point out to contect that a

precedent exists in those prisoners who have returned to China upon completion of their scntences, and in the case of sick left wing prisoner whose sentence was recently commuted, and who is said to have gone to lacao for treatment.

FCO pass priority Hong Kong.

11/20

Mr. Cradock.

FILES

Far Eastern Dept.

Hong Kong Dept.

Private Secretary P.S. to Lord Shepherd.

Sir A. Galsworthy

Sir J. Johnston Mr. Koreton.

Repeated es requested_/

XXXXX

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(352

Cypher/Cat A

TOP COPY

TOP SECRET

PEKING TO FOREIGN AND COLLIONWEALTH OFFICE

COM

RECEIVED IN ARCHIVES No.31

- 6 JAN 1969

Telno 87

5 February, 1969

TOP SECRET

Addressed to FCO telegram No.87 of 5 February, Repeated for information to Hong Kong.

2.95

As I indicated in paragraph 5 of my telegram No.30, I think it desirable to remind the Chinese during course of our contacts in Hong Kong over Grey that failure to settle question soon will involve them in continuing embarrassment and damage to their prestige. The recent demonstration by "Friends of China" in London suggests that Chinese are seeking to put pressure on us. We should move cuickly to show them that the publicity boot is on the other foot.

For reasons which I have already explained publicity in the United Kingdom is probably undesirable. But I recommend that we seek to stimulate comment on the Grey case in foreign Press, particularly in Belgium and Italy, who have recently expressed interest in recognition of China.

FCO pass Hong Kong.

Mr. Cradock.

FILES

F.East. Dept.

4.K.D.

P.U.S.D.

P.3.

P.S. TO Lord Shepherd

Sir A.Galsworthy

"r. Moreton,

Sir. J. Johnston

[Repeated as requested]

پل

5/2

mind enge/2 ugif

Mr A

bapy No. 1 (Adurance) destroyed.

88888

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血缘

Summer's

337

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17(357

3/2

RECEIVED IN ARCHIVES NË,31

- 5 JAN 1969

FEC135/1

Dear James,

Office of the British Chargé

d'Affaires

Peking

28 January, 1969

Jann

Mo Moreton,

Uunay it fel

qvc 4/2-

I have received a copy of the Governor's letter

to Galsworthy of 7 January on the subject of Grey and of the attached paper, minus certain paragraphs which were telegraphed to me.

The conclusion of the paper is that there is no price for Grey. The letter makes the same point and goes on to a more general proposition, opposing "the view generally that concessions deliberately made as such would bring resulte" (paragraph 1).

Some three days after writing this letter the Governor stated in his telegram 28 "On balance, however, it now looks as if they probably will release Grey if 11 newsworkers were released and that they would be glad of a bargain, but this does not mean that Grey would only be released on these terms. They may well be ready to accept less." In the ane telegram the Governor suggested an offer of releasing newsworkers to China in return for Grey. This disposes of the idea that there is no price for Grey and of the more general contention that concessions will not work.

Since the arguments in letter and paper have now been abandoned by Hong Kong I shall not waste time making further comments. If, however, there were any dispositions in the future to revive these contentions I should wish to reserve for myself, or my successor, the opportunity to deal with them in detail.

Hong Kong

I am copying this letter to Arthur Haddocks in

Yours wer

Вася валом

(Percy Cradock)

Janes Murray, Eaq., C.M.G.,

Far Eastern Department,

POO

TOP SECRET

337

·333

Tough going. It will inm a

Mr with lazz

topy:- to Hong Kong Dept.

"6A"/2/69.

HKK 1/12 120)

CYPHER/CAT A

PRIORITY HONG KONG TO

TELEGRAM NO. 108

TOP SECRET

TOP SE CRET

Me ihw

The 4F6

3 FEBRUARY 1969

my sure.

COPY NO.

FOREIGN AND COMMONWEALTH OFFICE

paja 4/2

RECEIVED IN FARCHIVES No.31

ADORESSED FCO AS MY TEL NO. 108 OF 3RD FEBRUARY RFI PEKING

MY TELEGRAM NO. 871 GREY.

·3 JAN 1969

"FEC139/1.

CATER HAS HAD FURTHER MEETINGS WITH CONTACT WHO TOLD HIM THAT

HE HAD INFORMED LI CHO- CHIH ON 28 JANUARY OF THE MESSAGE

CATER PASSED ON 27 JANUARY, LI'S FIRST REACTION HAD BEEN

THAT HE DID NOT THINK HE COULD PASS IT TO PEKING. LI ALLEGEDLY

SAID THAT A SIMILAR PROPOSAL HAD ALREADY BEEN MADE BY THE

BRITISH AND REJECTED BY PEKING. LI EXPLAINED THAT HE HAD IN

HIND YOUR PREDECESSOR'S MESSAGE CONTAINED IN C.O. TELEGRAM

. 1801 OF 31 AUGUST, 1967. LI SAID THAT PEKING'S FAILURE

TO REPLY TO THAT MESSAGE HEANT THAT THE PROPOSAL HAD BEEN

REJECTED.

CONTACT OF COURSE KNEW NOTHING OF THAT 1967 MESSAGE AND

REFERRED TO US FOR INFORMATION, HE WAS ALLOWED TO READ THAT

MESSAGE AND IT WAS EXPLAINED TO HIM THAT THE REFERENCE IN IT

TO GREY WAS INCIDENTAL AND THAT THE SITUATION THEN WAS VERY

DIFFERENT FROM WHAT IT IS NOW.

3. CONTACT THEN HAD A FURTHER MEETING WITH LI AND CLAIMS

THAT HE USED THE ARGUMENTS WE HAD GIVEN HIM AND THAT LI APPEARED

TO ACCEPT THIS EXPLANATION WITHOUT ANY FURTHER SERIOUS ARGUMENT.

LI UNDERTOOK TO TRANSIT OUR PROPOSAL TO PEKING WHICH HAS IN

ANY CASE BEEN SENT SEPARATELY BY CONTACT.

A. ANOTHER OBJECTION WHICH WAS RAISED BY L1 AT THE FIRST MEETING

UITH CONTACT WAS THAT THERE MIGHT BE SONE DIFFICULTY IN GETTING

THE IMPRISONED NEWSVORKERS TO CHOOSE RELEASE TO CHINA WITH NO

RIGHT TO RETURN TO HONG KONG RATHER THAN A FEW MONTHS IN PRISON

HERC AND FREEDOM TO REMAIN INDEFINITELY. CONTACT CLAIMS HE

TOP

SECRFT

ד יד

/CHIDED

ப

TOP SECRET

CHIDED LI ON THIS, SAYING THAT HE FOUND IT ALMOST UNBEL (EVABLE -

THAT LI'SHOULD THINK PATRIOTIC COMPATRIOTS WOULD PREFER IMPRISON- MENT IN HONG KONG TO FREEDOM IN CHINA AND THAT LI SEEMED

UNCOMFORTABLE IN DISCUSSING THIS POINT.

5. CONTACT SAID HE FORMED THE OPINION THAT LI'S INITIAL COMMENTS

WERE PROBABLY THOSE TO BE EXPECTED FROM A COMMUNIST NEGOTIATOR,

WHOSE INITIAL REACTION TO ANY PROPOSAL WAS SURE TO BE CRITICAL.

6. AT A LATER MEETING BETWEEN CATER AND CONTACT ON 31 JANUARY

CATER WAS ASKED TO SUPPLY THE FORM OF WORDS WHICH THE NEWSWORKERS

WOULD HAVE TO SUBMIT IN ORDER TO CLAIM RETURN TO CHINA.

7. AT HIS NEXT MEETING ON 1 FEBRUARY CATER REPLIED THAT

THERE WAS NO STANDARD FORM AND THAT WE WOULD BE CONTENT WITH

ANY REASONABLE LANGUAGE WHICH MADE IT CLEAR THAT THE PRISONER

CONCERNED WAS WILLING TO GO,

FCO PLEASE PASS PRIORITY PEKING.

SIR O. TRENCH

FILES

FAR EASTERN DEPT.

HONG KONG DEPT.

P.U.S.D.

PRIVATE SECRETARY

P.S. TO LORD SHEPHERD

SIR A. GAL SWORTHY

SIR J. JOHNSTON

151. MORETON

PATENKIN

[REPEATED AS REQUESTED/

TOP SECRET

ነ

FLAG H

Fr.

1. Kofeton

TOP SECRET

Mr. Anthony Grey

Im Jam Jonny

ナ

Gue in

RECEIVED IN

ARCHIVES No.31.

29 JAN 1969

FEa34c

In consequence of the meeting held this morning by

341

tpako

Alo 29/1

Lord shepherd, I attach a redraft of the telegram attached

to my submission of 17 January.

The relevant passage of Mr. George Brown's letter of

31 August to Chen Xi reads as follows:-

"If you give me your assurance that you agree to this

.e. the departure of all British subjects in China wishing to leave including Mr. Grey7 but the Chinese

newspapermen and news agency personnel recently

sentenced in Hong Kong pose a problem for you, I may

be able to arrange their departure from Hong Kong for

China."

Since this language, particularly the link with British subjects

presumably leaving China for good, seems to me to imply

permanent departure, and since we wish to leave unspecified at

this stage whether or not repatriation should be permanent, I

think it might be better if Mr. Cater did not refer to

Mr. Brown's letter. If however we have subsequently to justify

our actions publicly Mr. Brown's letter can be used to

demonstrate that we have followed a consistent policy on this

matter of release of journalists to China.

3. Hong Kong Department ag

Copies to

Sir A. Galeworthy

Sir J. Johnston

Mr. Carter

(James Murray) 24 January, 1969

TOP SECRET

TOP SECRET ·

Sú 7. Folunoló

manuscript changes

apress

salje d

to the time

I have taken

û he

draft telegram

Sir

A. Gals withing is

in content

to lean thes

for the

вависимо

ام

Ул. ост

A T

The Bayay

Jo Gain + pa

207,

24/

TOP SECRET

RECEIVED IN !ARC V.S No.31

29 JAN 1969

340

29/1

as the

сперимска

Mr. Anthony Grey

FECIZE/1.

I also entertain misgivings about the course proposed.

If one could leave aside the humanitarian ractor, our course

would be plain. We should patiently aim to bring the Chinese

to the realisation that we will not respona to blackmail or

this kind, to the point at which they decide to release

Mr. Grey without exacting a price. while we show ourselves

ready to discuss a price, the Chinese are conrirmed in the

beller that in the restriction of Mr. Grey they are holding

a card which they can use to advantage against us in Hong

Kong. In brutal terms, we should aim to give them the

impression that we had decided to write off Mr. Grey, while

at the same time periodically manipulating public comment

so as to embarrass the Chinese over his continued restriction.

This might produce a rire Chinese proposal which we could

unen consider from a position of greater strength: and would

almost certainly ensure at least that he would be released in

September at the end of the Hong Kong sentences.

Humanitarian considerations make it necessary to consider

a derogation from this "ideal" policy. But the derogation

contemplated nas grave drawbacks. It is difficult to believe

that the Chinese will change their ground on deportation to

Chine, however it is dressed up. And I find the idea of

letting the convicted prisoners spend the rest or their

sentences in China, undergoing re-indoctrination before a

triumphal guaranteed return to the Colony in September (which

is where we seem likely to finish up) little improvement on

releasing them in Hong Kong. Even though the Governor says

/he

TOP SECRET

he would go along with this as a last resort, it seems to

me that this risks Peking drawing the conclusion that the

Grey restriction nas been a successful operation which has

kept us on the move over detainees and emergency regulations

and which has finally prized the "newsworkers" out of our

clutches: and we could expect - face the like again.

It would be difficult to abandon the probe at this

point. But the course proposed goes less var than

Mr. Cradock thinks would be necessary to be sure of

Mr. Grey's release (his telegram No.30 at flag F): and too

far, in my view, to prevent a Chinese conclusion that they

have made a successful use of a political hostage. I believe

therefore if we must pursue the probe that we ought to

consider confining the next exchange to the much more

defensible proposition that we would release to China (to

remain there) those of the "newsworkers" who wished to be

so repatriated, provided Grey is released.

You will no doubt wish to discuss, in view of the

variant opinions expressed on this most difficult subject.

BB Lakewolin

(J.B. JOHNSTON)

25.1.69.

Copy to:

Sir A. Galsworthy

Mr. Moreton

Kr. J. Kurray

kr. Carter

but Turjadi

Very d

TOP SECRET

Mr. Anthony Grey

RECEIVED IN ARCHIVES No.31

29 JAN 1969

FECI3/1.

339

pakozall

Mr. Moreton rightly points to the considerable risks involved in the course now proposed. This is essentially a matter of personal judgment, not to say guesswork. My own judgment coincides with that

expressed by the Governor in his letter to me of January 7th, at Flag C, namely that our best way of helping Mr. Grey is to continue to demonstrate firmly to the Chinese that their attempts to use him as a lever for political ends will bring them no dividends, combined with a judicious stimulation/publicity from time to time.

2. I take this view also because I too feel considerable doubt whether the line proposed in the draft telegram below the submission will in fact succeed. I would not challenge the view that if we could release in Hong Kong all 11 of the remaining news workers serving prison sentences in Hong Kong, the probability is that the Chinese would respond by releasing Mr. Grey. But I am quite clear in my mind that we could not pay this price, i.e. release in Hong Kong: the risks to our internal position there would be too serious and far reaching. The line advocated in paragraph 5 of the draft telegram is therefore the furthest we can go, save for the one possible additional concession we would still keep up our sleeves, namely that we might have to accept back into Hong Kong after their sentence had run out the people whom we would have released to China.

3. I believe therefore that this move is unlikely to succeed, and that we shall then be driven back on the stance which the Governor

feels to be the best.

4. However, I recognise that there are arguments for making now the attempt advocated in the draft telegram. The advantages of doing so

are

(a) if it should succeed we should have got out Mr. Grey, (b) if it fails, we shall at least have satisfied ourselves that

we have explored this one avenue which does seem to offer some faint hope; the price we shall have paid will not be too damaging to our position in Hong Kong; and it will no doubt be helpful in fending off further pressure over the next weeks if we are able to say that we have explored very confidentially the Chinese position and are satisfied that there is no basis

on which we could do a deal.

TOP SECRET

The

TOP SECRET

The main disadvantage, as I see it, is that if we do then have to fall back on the stance advocated by the Governor, as I personally think we shall, we will then take rather longer to convince the Chinese that they cannot use Mr. Grey to get further concessions out of us.

5. In short, my own view is that if we feel we must make a further effort now, the line advocated in the draft telegram is the right one. But I do not myself believe that it will get Mr. Grey out; I think it may actually delay his release; and I believe that the better hope lies in taking the firm line advocated by the Governor in

his letter.

Copies to

Mr. J. Murray

Mr. J.O. Moreton Mr. W.S. Carter

ANG.

(A.N. Galsworthy) 21st January, 1969

2571-

170

Lour Shepherd

Sünd. Galsworthy

TOP SECRET

r. freton

Theater

que mi

Mr. Anthony Grey

RECEIVED IN

ARCHIVES No.31

29 JAN 1969

338

pako 24/1

PROBLEM

On 28 December the New China News Agency published a report,

datelined Peking, openly linking Mr. Grey with the Communist news

workers (then thirteen, now eleven in number) serving prison

sentences in Hong Kong. The report said that "Since the Hong Kong

British authorities continue to keep the thirteen patriotic Chinese

journalists in jail, the Chinese Government is fully justified in

continuing to restrict Grey's freedom of movement"

2. In the wake of the NCNA report the Chinese have resumed

unofficial contacts on the subject of Mr. Grey through covert

channels in Hong Kong. During the first week of January the

contact who has been used in the past alleged to Mr. Cater, a

Hong Kong official, that the Chinese expected a reply to the NCNA

report which he called "the proposed swap for Grey". The contact

stated that it was desirable that some kind of counter-offer should

be made to Peking at this stage. He reacted enthusiastically to

Kr. Cater's personal speculation that it might be possible to

rele.se some of the news workers to China until the expiry of

their sentences and said he thought it likely that Peking would

accept such a compromise. The Governor of Hong Kong has indicated

that he is prepared to consider a solution involving deportation

of the news workers, subject to certain conditions.

- 1 -

TOP SECRET

FLAG A

FLAG B

RECOMMENDATION

3. I recommend that we authorise the Governor of Hong Kong to

proceed on the general lines proposed in his telegrams No. 28 of

10 January and No. 44 of 16 January, with certain modifications.

A draft telegram is attached. Hong Kong Department concur.

ARGUMENT

The NCNA Statement of 28 December

4. The Chargé d'Affaires in Peking has argued that the NONA

statement names an official price for the release of Mr. Grey and

therefore creates a new situation (Peking telegram No. 3 of

2 January). In my commentary of 9 January on Mr. Cradock's

telegram (also attached) I took the view that the statement was in

large part a defensive response by the Chinese to our earlier

publicity campaign and that the Chinese had not in fact named a

specific price for Grey. The Chinese have in my view been very

careful in all their recent utterances on Mr. Grey to avoid

committing themselves to the statement that were the eleven

remaining news workers released Mr. Grey himself would automatically

be released; or to the position that he will necessarily be held

until they are all out. The price remains therefore to some

extent negotiable.

Release of the News Workers in Hong Kong

5. of the eleven news workers remaining in prison in Hong Kong

ten are due to be released (assuming they receive full remission)

in September 1969 and the remaining one in February 1971. In his

TOP SECRET

FLAG C

telegram No. 3 of 2 January, despatched before the most recent

approuch by our contact in Hong Kong, Mr. Cradock urged the early

release of all eleven. The Governor of Hong Kong has throughout

opposed the premature release of convicted prisoners in Hong Kong

And we share the Governor's view that such a move would damage

public confidence in Hong Kong; be interpreted by the Communists

as a sign that we lacked firmness; and by providing a precedent

of willingness to disregard the Courts for an immediate political

purpose impair the future credibility of the sanction of

imprisonment. While it is the opinion of Far Eastern Department

that the release at this juncture of the remaining eleven convicted

news workers in Hong Kong would in all probability secure the

release of Kr. Grey this remains an opinion and is something

which cannot be proved; and even if it could be proved we remain

opposed to the premature release in the Colony of these prisoners

for the reasons given above. Apart from these negative considera-

tions, it is only fair to add that the Governor has in addition

argued persuasively (his letter of 7 January to Sir Arthur

Galsworthy enclosing a thoughtful study of the Grey case) that

the best way of helping Mr. Grey is to continue to demonstrate

firmly to the Chinese that their attempt to use him as a lever for

political ends will bring no dividende.

Consequences of Mr. Grey's Continued Detention

6. It is of course possible that, if we stood firm, the Chinese,

calculating that not only did they secure no tangible benefit by

continuing to hold Mr. Grey but also that the treatment of him

- 3-

TOP SECRET

continued to damage their reputation in third countries, might

release him. But I see no immediate prospect of this. The

earliest occasion on which we would have good reason to expect

further progress towards his release would be in September 1969

when ten of the remaining eleven news workers will have completed

their sentences. (We could then reasonably expect the Governor

to commute the sentence of the eleventh.) In the meantime, we

may be brought by humanitarian considerations and by pressure of

public opinion in this country which is in its turn directly

related to reports of Er. Grey's health, to considering again

the unwelcome step of releasing the convicted prisoners in Rong

Kong. If, therefore, there is any third way it merits careful

consideration. such a way has now perhaps been provided by the

covert channel.

Release of the News Workers to China

7. During the series of meetings with Mr. Cater at the

beginning of January our contact indicated the following:

(a) The Chinese considered that they had brought their

price for Grey into the open and expected a reaction.

(b) They believed that it was the British side who were

dragging their feet.

for a settlement; they were aware of British

difficulties but would still like to see H.M.G.

release the news workers (i.e. release in Hong Kong);

TOP SECRET

FLAG D

this might be done in batches, the release of all

finally securing Grey's release.

(d) The impossibility of such a course being explained to

the contact, he reacted immediately and with enthusiasm

to the idea of a compromise involving the release of

some of the news workers to China until the expiry of

their sentences.

(e) The contact thought that the Hong Kong Government should

make an initial proposal, that Peking would accept a

compromise and that H.M.G. should negotiate with

care, making a low offer at the outset (Hong Kong

telegram No. 27 of 10 January).

Reviewing these overtures the Governor has commented that

even if the Chinese are still not committing themselves to a firm

offer their suggestions are becoming more specific; and that if

the eleven news workers were released this would probably secure

the release of Mr. Grey. The Governor remains opposed (rightly

in our view) to the premature release of the news workers in Hong

Kong itself. He would like any confrontation prisoners deported

from Hong Kong to go for good and notes the discouraging earlier

refusals by the Chinese to accept such prisoners into China.

However, the Governor points out that if Mr. Grey is in fact of

sufficient embarrassment the Chinese may have come to the point

of reconsidering their earlier attitude. The Governor says he

would therefore be prepared to allow an indication to be given

to the Chinese that we might consider releasing a small number

- 5 -

TOP SECRET

FLAG E

FLAG F

of the news workers subject to two conditions:

(a) That they specifically request repatriation, and

(b) that they leave the Colony permanently and willingly.

The Governor proposes to use the covert channel to indicate

an interest in a solution on these lines, while avoiding at this

stage any pore specific proposal than that relayed, we hope

authoritatively, by the contact. (Hong Kong telegram No. 28.)

9. The Chargé d'Affaires in Peking who holds strongly to the

view that the Chinese are anxious to settle the Grey question

and believes that they have as good as named a clear price, is

not over-sanguine about the possibility of securing Mr. Grey's

release by the deportation of the eleven news workers. He has

stressed that settlement through deportation is a second best for

the Chinese compared with the release of the eleven prisoners in

Hong Kong. He points to the discouraging precedents and the

possibility that negotiations through this channel will be

unnecessarily protracted. He makes three recommendations of

substance:

(a) The news workers should be released in Hong Kong (prior

to their departure for China) rather than at the border,.

(b) They should be allowed to return to Hong Kong on expiry

of sentence.

release in batches might be possible.

(Peking telegram No. 30 of 14 January).

- 6 -

_OP SECRET

FLAG G

TOP SECRET

The Governor has now telegraphed further to meet

(Hong Kong telegram No. 44). He

10.

Mr. Cradock's objections.

points out once again the serious objections to releasing

convicted prisoners in Hong Kong itself and of his consistency

in this view. He points out that permanent deportation is

preferable to the softer sanction of merely requiring the prisoners to leave Hong Kong for the duration of their sentences over the border, and provides a better justification locally for his use of the Royal Prorogative. But he adde perhaps somewhat surprisingly that he would in the final instance reluctantly

accept the latter.

11.

Far Eastern Department are not sanguine about the chances

of success. The Governor remarked during the course of the

1967 "confrontation" that much the best way of solving the

problem of "confrontation" prisoners would have been their deportation. Regrettably a test case early in 1968 indicated

that the Chinese were not prepared to allow the Hong Kong

authorities to put such persons across the border. In Peking they told the Chargé d'Affaires officially that such a solution

was ruled out, arguing that since Hong Kong is part of China the

inhabitants of the Colony cannot be deported from one part of

China to another. If the Chinese attitude on this question

has now changed so much the better; but the evidence is as yet

slender. A second difficulty lies in the likely attitude of

It seems at least the imprisoned news workers themselves.

- 7 -

TOP SECRET

possible that faced with the reality of China as opposed to the

myth of the Cultural Revolution a number of the news workers might

decline to go there. This would clearly make any solution

difficult to achieve:

we could not force the news workers across

the border against their will; and the Chinese would be most

anxious to avoid bringing things to the point of a public admission

that their news workers did not wish to return to the motherland.

A final difficulty is that of securing any guarantee from the newe

workers that once out of Hong Kong they would stay out.

It is

likely that the majority could prove a right of residence in the

Colony and we should perhaps be on difficult legal ground in

continuing to exclude them against their will after the expiry

of their sentences. In the solution of all these difficulties

we should need the goodwill of the Chinese authorities. This wil1

be forthcoming only if (as remains to be proved) they are genuinely

anxious to end the Grey affair. Nevertheless, since the Governor

and Mr. Cradock are both agreed that an attempt to solve the

case through "deportation" is worth a try, I think we should go

ahead.

Clearly the responsibility for conducting the operation

must lie with the Governor of Hong Kong; and we believe that he

has met Mr. Craddock's points of detail.

Tactica

12. My views on tactics (which differ from what the Governor

proposes in three minor respects set out in (b) below) are these:

- 7 -

TOP SECRET

(a) The Governor should instruct Hr. Cater to indicate

to the Chinese through the contact our interest in a

solution based on deportation of the news workers

(described for the purposes of the exercise as "release

to China!).

(b) To avoid giving the potentially disastrous impression

that we are softening under pressure we should indicate

at the outset rather more precisely than the Governor at

present suggests, the limits within which we are

prepared to discuss the Grey case, i.e.

(1) We should make it clear at the start that release

in Hong Kong itself is ruled out for all or any

of the convicted news workers. We should wish thus

to discourage any Chinese attempt to obtain a

"mix"

for instance six deportations and five

releases in Hong Kong.

(ii) We should state, also at the start, that we

have no objection to the departure of all eleven

newa workers to China should they give an under-

taking (in writing if possible) to go willingly.

(iii) We should try to avoid arriving at what may be

the crux of the negotiations the issue of

subsequent return to Hong Kong at the outset.

Perhaps the best tactics would be for the

Governor to avoid any initial reference to this

TOP SECRET

possibility; if the Chinese return with a demand

for clarification he could then seek to avoid

commitment (for instance by undertaking to consider

any request for deported news workers to return

to Hong Kong if and when they make such a request);

only in the last resort should the Governor

concede a prior guarantee that they may return

to Hong Kong on the expiry of their sentences,

Our differences with the Governor are however on

questions of tactics. We share very closely his

views on the substance of what we can or cannot

concede.

Other British Subjects

13. In the event that we do secure the release of Mr. Grey by

the means outlined above we shall be confronted with another very

real problem. While we shall no doubt gain some credit for

securing the release of Mr. Grey we are bound at the same time to

be asked why it was necessary to make concessions in the ratio of

eleven to one. We shall be told that we should have attempted to

include other British subjects in any bargain.

This is a very

real difficulty but it is one we shall have to try and deal with

by a statement of the facts. Mr. Grey was detained in reprisal

for action against the Communist press and its employees. Even

though the persons may have changed since June 1967 it is the

category of news workers for which Mr. Grey continues to be held in

reprisal. There has been no official or semi-official attempt by

- 9 -

TOP SECRET

the Chinese to link him with prisoners in Hong Kong outside this

field. The Chinese took action against Kr. Grey because they are

extremely sensitive about the continued functioning of their

propaganda machine, their biggest weapon in territories outside

China. They may also be presumed to be anxious to demonstrate

to their correspondents generally that they will in all

circumstances have the full backing of the Chinese Government.

Without demonstrations of this kind they would find it hard to

keep up the morale of their press workers who are often

particularly exposed to hostile attentions particularly in the

countries of South East Asia. By contrast there is little to

indicate that the remaining British subjects are being held

similarly as hostages. They, like the majority of other

foreigners in trouble in China are held for a variety of

reasons, involving alleged misdemeanours on their part. Their

cases will only be solved slowly and with difficulty, and there

is little we can in fact do to help them. We can only hope

that if we secure the release of Mr. Grey this will remove a

major stumbling block in improving Sino-British relations and

somewhat facilitate the solution of the other cases in their

tum. I should wish to recommend most strongly that in undertaking

negotiations for the release of Mr. Grey we resist the

temptation of trying to make the exercise a package deal

involving the cases of other British subjects. I am sure this

- 10 -

TOP SECRET

would not help these British subjects - and would immediately

bring the effort for Mr. Grey to a standstill.

Copy to:

Private Secretary Mr. Godden

Sir A. Galsworthy Sir J. Johnston Mr. Carter

од

(James Kurray)

17 January, 1969

(i)

(ii)

There are considerable risks in the course proposed:-

That this degree of "give" in our position will be interpreted by the Chinese as weakness and lead them to press for more.

That even if the Chinese agree to release Grey on these terms they may regard the price we have paid as justifying the taking of further hostages in the future.

(iii) That once we have made the offer we shall not get Grey

for less and that we may, if negotiations break down, in fact be delaying his release.

i.e. one for

(iv) That if the offer succeeds, Ministers will be under

strong criticism for an "unequal" bargain

eleven.

Nevertheless, in view of the arguments in the submission and in particular since the Governor is willing to go so far, on balance I support the action recommended.

TOP SECRET

عليمية

(J.". Moreton) 17 January 1969.

NOTHING TO BE WRITTEN IN THIS MARGIN

* Date and time (G.M.T.) telegram should

reach addressco(s) -

Registry No.

DEPARTMENT

Far Eastern

SECURITY CLASSIFICATION

Top Saccar

Secret

Confidential

Restricted

Unclassified

[First Draft]

PRIORITY MARKINGS

Flash Immediate Priority

Aoutine

(Date)

Despatched

PRIVACY MARKING

In Confidence

En Clair.

[

Code

Cypher

Draft Telegram to:-

HƯNG KUNG

No.

(Date)

[Security_classification] TOP SORET

Privacy marking ]

-if any 1

[Codeword-if any]

MAY 14 KA

Addressed to

HONG KONG

telegram No....

.....(đate) ....

And to

repeated for information to

And to:-

Saving to...

יויװr11ייו

PEKING

.... BILLI'I

Repeat to:-

PEKING

Saving to:-

Distribution:

FILES

Far Eastern

Dept. Hong Kong Dept. PUSD

Frivate Sec. Copies to:-

25/Lord Shep-

herd

Sir A. Gals-

worthy

Sir J. Johnston Mr. Moreton

Your telegram No. 44 of 16 January7: Grey.

We are inclined to share Cradock's view

(Peking telegram No. 3) that the release in Hong

Kong of the eleven newspaper workers would secure

the release of Grey though we admit that the evidence

is not conclusive. We accept however that this

step would carry grave dangers for the future

security of Hong Kong. We would want to avoid a

situation in which an evident deterioration in

Grey's mental and physical health leads to wide-

spread pressure that on humanitarian grounds we

should accept risks in Hong Kong. Like Cradock therefore (Peking telegram No. 30) we see the need

for speed.

Flam E

We are not optimistic that the Chinese would

be willing to strike a bargain whereby in return

for Grey you in effect released the news

workers to China. Much must depend on how

embarrassing they are finding Grey. But such a

bargain may seem to them to come too close to

compromising the principle of the right of all

Chinese to live in Hong Kong. Moreover it may

face them with practical difficulties in that

the news workers themselves may well be reluctant

to return to China even for a period.

However, given the evidence that the

Chinese authorities expect a reaction from us to

their latest move and the desirability of

demonstrating that we are prepared to go some way

to help them over their difficulties with their

followers in Hong Kong, we agree that an

approach generally along the lines you suggest

would be worth trying and are grateful for your

proposals.

But

We accept that the intiial offer should

leave scope for subsequent manoeuvre.

since it is important that contact puts our

offer correctly to the Chinese, we gee

advantage in defining slightly more precisely then you at present envisage the limits of

our position:

(a)

We suggest that contact should be told

that whatever the form in which he puts

our offer he must emphasise that

release in the Colony is out of the

question.

#1033) DA 39200571

(77 sorts)

NOTHING TO BE WRITTEN IN THIS MARGIN

Dd. 32855 B4 (4200)

NOTHING TO BE WRITTEN IN THIS MARGIN

Clay D

TOP SECRET

(b) Despite contact's advice that we

(c)

should not offer all eleven at first

(your telegram no. 27) we see little

to be gained by leaving it vague

whether or not our offer applies to

all eleven.

We are inclined to accept Cradock's

view (Peking telegram no. 20) that

if there is to be any chance of

success the prisoners would have to

be released to China only until

expiry of sentence, and we note that

you would in the final instance

reluctantly accept this. It might

conceivably be possible to reach a

half-way position whereby we agreed

that any question of re-entry after

expiry of sentence would have to be

considered case by case at the time.

It might be best therefore

if our initial approach left it

unclear whether we were suggesting

that they should return to China

for good or merely until expiry of

the sentence. We would in any case

wish to reconsider the matter in the

light of Chinese reactions.

Subject to your views therefore

we think that Cater should now approach contact

on the following lines;-

/(a) ...

TOP SECRET

(a) Unecnditional Release in the

Colony is out of the question.

(b) You would be prepared to consider

commuting sentences of any of the

news workers who formally

expressed willingness to be

repatriated to China, and whom

the Chinese authorities undertook

to accept.

assurances from the Chinese that

they would in return release Grey.

After careful consideration

The

we have reluctantly decided against the

inclusion in your offer of any reference

to other British subjects in detention.

Chinese maintain a clear distinction between

Grey, who is held as a political hostage for

alleged misdemeanours by the Hong Kong

authorities, and the other British nationals,

who are held for alleged misdemeanours of

their own. To inject the others into our

offer would not in our view help to secure

their release and would frustrate any hopes

of a successful bargain over Grey.

NOTHING TO BE WRITTEN IN THIS MARGIN

13/1.

TOP SECRET Sie A Solowning has seen.

Gutes.

GOVERNMENT HOUSE

HONG KONG

KRECEIVED IN

337

ARCHIVES No.31

7th January, 1969.

Dear Arthur

29 JAN 1969

FECIBC/1.

الله معاهم

I have, as you know, never been convinced that Grey's release (or any Chinese action towards us, here in Hong Kong or elsewhere) was in fact substantially influenced by or conditional upon any concessions we make to then. But since, during our talks in London, the view was categorically expressed by James Murray that, in particular, the release of Grey would follow upon the release of all detainees and the 13 (now 11) "newsworkers"; and that there was evidence in support of this view; I again, on my return, went over what we have on record bearing on the subject and it is not inconsiderable in quantity to see if I might not, after all, have been wrong in opposing this opinion and the view generally that concessions deliberately made as such would bring results.

After looking through the papers, it seemed to me that it might be worthwhile to have the evidence on Grey drawn together, and this has now been done (ny telegram 2286 refers). The attached paper No. PA/1763 is the result, and, although the paper could scarcely be expected to be conclusive, I am still convinced that I was not wrong.

There is, of course, the one deduction in doubtful support of making concessions to be drawn from the lifting of restrictions on the Embassy staff in Peking following upon our relaxation of restrictions on the Chinese Embassy staff in London, but I can find no other evidence which impugns my central argument. This is, if you recall, that although the Chinese have avowedly followed a policy of "tit-for-tat", it is fallacious to take it for granted from this that they will also pursue a policy of what I inelegantly called "untit-for-untat".

Sir Arthur Galsworthy, KCMG,

Foreign and Commonwealth Office, Downing Street,

London, S.W.1.

TOP SECRET

/contd....

TOP SECRET

GOVERNMENT HOUSE

HONG KONG.

Page 2

The paper, in paragraph 20, summarises what we know of present communist thinking, and to me the clear conclusion is that Grey will not be released in recognition of any concessionary moves in Hong Kong (cf. "there is no price for Grey") but only as a result of Peking's calculations as to whether or not retaining or releasing him advances or hampers their overall foreign policy. Nevertheless, local communists, as the paper points out, are free to try to use Grey's predicament as a means of squeezing concessions out of us if they can, always provided they do not commit Peking into releasing him. It follows then that their tactics are to hint at Grey's release if we do this or that, in the hope that we will fall for the hints and respond; when they will be in a position to play the same game all over again with a fresh lot of hints about a new and enhanced price for Grey. It is, after all, in fact what they have done so far. Nevertheless, whether we respond or not, they will release Grey if and when, and only when, he becomes more of an embarrassment to them than an asset. Any concessions they get out of us would be a bonus, and, of course, would tend if anything towards tipping the scales against releasing him.

Furthermore, I cannot but think we shall be in a very curious position indeed with our own public opinion if we released the remaining 11 "newsworkers" and only got Grey in return we got him. People are bound to ask why we did not get all our prisoners back,

supposing

In short, I continue to think we should go on dealing with the remaining detainees and prisoners as we are now, releasing the detainees as the security position permits and the prisoners as their sentences expire. I think we would be very wrong to consider releasing the "newsworkers" until we were very sure of getting an adequate quid pro quo not just Grey in return.

As for poor Grey and the others, I honestly think that the best thing we can do is make it clear we will not try to enter into a bargain for then while continuing to embarrass them with periodic publicity followed by quite long periods of silence to give them a chance to let him go without appearing to be bowing to outside pressure. The threat to use publicity pressure should, however, be apparent in the background since they certainly appear to be sensitive to it.

TOP SECRET

/contd....

TOP SECRET

GOVERNMENT HOUSE

HONG KONG,

Page

Finally, I should add that this letter representa my personal views. They are views which generally express official opinion here, but, in a matter such as this, no doubt everyone who wrote on the subject would place the gloss and emphasis slightly differently. It is best therefore to make it clear that this way

of looking at things is my own only.

Yours ever

David.

TOP SECRET

Attachment to FEC130/1337

SPECIAL BRANCH HONG KONG

- 2 JAN 1969

TOP SECRET

Reference: PA/1763

INTRODUCTION

TOP SECRET

ANTHONY GREY

Pago No. 1 of 10Fages

Copy No. 6 of 20Copies

Special Branch,

Hong Kong Police.

2nd January, 1969.

INDICATIONS OF C.P.G. ATTITUDE

TOWARDS HIS RELEASE

On 21st July, 1967, Anthony Grey, Reuters' correspondent in

Peking, was aussoned to the News Department of the C.P.G. Ministry of Foreign Affairs (M.F.A.) to "talk about his work". From the H.F.A.

Grey was driven, under escort, to his hous where he has since been

confined. Grey was the only British correspondent in Peking at that time and his detention was clearly in retaliation for the arrest, arising from criminal offences, of New China News Agency (N.C.N.A.) reporter HSUE Ping in Hong Kong a few days earlier. Although the C.P.G. has never made a clear-

cut statement as to the conditions necessary to secure Grey's release there have been, both at the time restrictions were originally placed on him and

since, a number of Chinese communist pronouncements, official and unofficial,

as to the reason for his detention. This note examines these statements,

together with intelligence received from covert sources relating to this

subject, in an attempt to assess the current attitude of the C.P.G. towards Grey's release and the price, if any, in the form of concessions by the Hong Kong Government, likely to be accepted by the C.P.G.

C.P.G. STATEMENTS OF GREY

At the time the restrictions were originally placed on Groy's movements the C.P.G. overtly linked his detention with the imprisonment in Hong Kong of a number of employees of the N.C.N.A. and communist newspapers, According to a subsequent telephone call from Grey, he was told at his interview at the H.F.A. on 21st July, 1967, that his movements were being restricted because of "illegal persecutions and fascist atrocities in

Hong Kong against Chinese compatriots". In answer to a query from Grey

TOP SECRET

12....

TOP SECRET

Page 2

about the possible length of detention it was stated "There is no need to

answer you now. The Hong Kong British authorities could release all the

compatriots without conditions". In an N.C.N.A, news release of the same

date the M.F.A. stated Grey had been detained because "the British

Government and the Hong Kong British authorities had paid no heed to the

Chinese Government's serious warnings and carried out serious persecution

against correspondents of N.C.H.A. and other patriotic reporters and have

taken such a step as illegally sentencing them". In addition to mentioning

HSUE Ping this release specifically named two other N.C.N.A. correspondents

and referred to five other communist news workers. There is little doubt that

these others were members of a group of reporters arrested outside Government

House on 15th July, 1967, who were sentenced, fined and released within a

few days. Apart from this group there was one other communist reporter

serving a prison sentence at the time Grey's movements were restricted,

He was not referred to in the K.F.A. statement and in any event he also

has since completed his sentence and been released.

Statements made by C.P.G. representatives since Grey's detention

have been extremely vague and ambiguous; at times they have linked the

release of Grey with confrontation in Hong Kong as a whole and at other times it has been connected simply with the arrest of journalists. In May, 1968, an H.F.A. official in Peking answered a protest about Grey by the British

Charge d'Affaires by stating "You should consider the question of patriotic

journalists and news workers imprisoned in Hong Kong and you will find the answer yourselves, The Grey question is not an isolated one but part of the Hong Kong problem". In September, in reply to a Foreign Office protest, a member of the Chinese Mission in London said "Grey's freedom is limited

because of unreasonable arrests of N.C.N.A. journalists and other patriotic correspondents in Hong Kong" while the following week the same official

remarked "Restrictions on Grey's freedom are due to British policies in

Hong Kong, specifically the unjustifiable arrest of N.C.N.A. and other

patriotic journalists. The Chinese Government and people are deeply

concerned at the long sentences imposed". However, on 2nd November, in

conversation with the Political Adviser in Hong Kong about visits to

imprisoned journalists, an N.C.N.A. official linked Grey's detention with

confrontation prisoners in general rather than just the news workers.

On the 4th December, a delegation of journalists who called on the

Chinese Hission in London to present a petition for Grey's release was

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told "How can you expect us to release Grey when 13 patriotic journalists remain in detention in Hong Kong". This remark was somewhat distorted by some newspapers which claimed that the official had specifically stated that the restrictions on Grey would not be lifted until all imprisoned communist news workers in Hong Kong had been released. The next official C.P.G. comment on Grey was made on 9th December to a member of the British Mission in Peking, following a further protest and request for Grey's release on the grounds that all communist news workers imprisoned in Hong Kong at the time of his detention had now been released. The C.P.G. official said "Since the 1967 statement by the C.P.G. the British side has gone further in persecuting and arresting large numbers of patriotic countrymen and press workers. The solution (to the detention of Grey) can only come through an act by the British Government",

The last C.P.G, pronouncement, to date, on the Grey question was contained in an article published by N.C.N.A. Peking on 27th December. The article, two-thirds of which consisted of refutation of statements by the Prime Minister and the Foreign Secretary, compared the lenient treatment accorded Grey with the "savage persecution" of compatriots in Hong Kong; it also declared that the C.P.G. had not shifted its ground, for although the communist journalists who were in prison in Hong Kong at the time of Grey's detention had been released the Hong Kong authorities

It concluded that "Since the had since imprisoned other news workers. Hong Kong British authorities continue to keep the 13 patriotic Chinese Journalists in jail, the Chinese Government is fully justified in continuing to restrict Grey's freedom of movement. This is the consistent stand of the Chinese Government. In its anti-China outcry on the Grey question the British Government will absolutely achieve nothing in its effort to force the Chinese Government to change its stand. This unreasonable action does not help to solve the question but only makes it more complicated". The article then finished with a routine KAO quotation.

LOCAL COMMUNIST STATEMENTS

Apart from what can be accepted as official C.P.G. statements there have been a number of comments on the subject of Grey by prominent communists in Hong Kong in conversation with neutral journalists. As.long ago as January, 1968, Hans Bargman, a West German newspaper correspondent in Peking, while on holiday in Hong Kong was allegedly told by an N.G.N.A.

when HSUEH Ping is official here that "the price for Grey had not gone up

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released Grey will be allowed to leave China". However, in September, Bargman claimed he was told by the same official that "Grey's situation

is connected with atrocities in Hong Kong and questions about his release

should be addressed to Peking".

In August, 1968, Sam JAFFE, the Hong Kong correspondent of the American Broadcasting Company, was told by the Chief Reporter of the N.C.N.A. that "Anthony Grey will be released shortly after our journalist is

released in October". Jaffe assumed this was a reference to HSUEH Ping

at this time there appeared to be a general misconception about the date of HSUH's release; he was, in fact, released on schedule on 16th November,

On 20th December, FAI Yi Wan, Publisher of the Ta Kung Pao, held a

press conference as the climax of a communist propaganda campaign in Hong Kong alleging inhuman treatment of confrontation prisoners/detainees

and demanding their release, This conference was initiated on C.P.G.

instructions, to counter Western publicity concerning Grey's plight. In

answer to a question on Anthony Grey he said "Since our Government's

announcement to restrict the movement of Anthony Grey, the Hong Kong British authorities have not ceased their unreasonable persecution of the patriotic journalists in Hong Kong. Nor did they

Nor did they promptly free HSUE Ping and the

others. On the contrary, the Hong Kong British authorities aggravated the

situation by arresting and jailing more than 10 other patriotic journalists

in Hong Kong. Up till the present, there are still 13 patriotic journalists incarcerated in the prisons. Therefore the responsibility for the continuing restriction of Grey's movement lies entirely with the British side". The

A.F.P. correspondent in Hong Kong, who has fairly frequent contact with FAI Yi Man, and who had attended the press conference, claimed, in a conversation with the Political Adviser on 23rd December, that earlier that

day FAI had told him categorically Grey would be released when the 13

newspaper men were let out of prison. This is somewhat different to the

carefully worded statement made by FAI three days before. Although a

prominent comunist United Front worker in the Colony, FAI cannot be considered a leading communist official and if the correspondent's story is true it is unlikely FAI would have made such a statement without the

authority of at least senior local communists, It is, of course, possible

also that FAI's remarks were misinterpreted in a manner similar to the misconceptions which have appeared from time to time in the Western press

concerning communist statements on Grey.

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An unofficial communist voice, that of Dr. T.P. WU, a member of the All Circles Anti-Persecution Struggle Committee, said in an interview on 14th December, with a local English language newspaper, that "Grey would be held until the last Chinese was restored to freedom in Hong Kong". However, WU has no official standing in local communist circles and his frequent pronouncements often embarrass the local communists more than the Hong Kong Government.

COMMUNICATIONS THROUGH COVERT CHANNELS

10.

In March, 1968, LI Choh Chih, General Manager of the Bong Kong Branch of the Bank of China sought to establish a channel of communication to the Hong Kong Government through a former senior employee of the Bank of China who still acts as an exchange broker for the Bank and who is a member of the Banking Advisory Committee. LI was allegedly acting on instructions from CHOU En Lai, the Chinese Premier. While little that is really constructive has come through this link so far there has, on occasion, been reference to Anthony Grey. On 17th September, 1968, the contact said to the Hong Kong He Government representative that HSUER Ping was not the price for Grey. claimed Peking was embarrassed by the continued detention of Grey and it was only a matter of time before he was released. The contact claimed he would write to CHOU En Lai's secretary, a channel of communication which he used periodically, by-passing LI Choh Chih, and ask whether anything could be done about Gray. Four days later the contact stated that LI too had said Grey was an embarrassment to Peking; however they were not interested in an exchange of Grey for HSUEH but the Hong Kong Government should, nevertheless, be sounded out on the possibility of an early release for HSUEH. On the 24th September, the contact claimed he had heard from CHOU En Lai to the effect that CHOU was concerned about Grey and he would be released when the opportunity occurs". The contact also mentioned that LI had received instructions to proceed with discussions to explore the possibility of an exchange of prisoners but he felt the C.P.G. would ask for more than just HSUMH possibly all the imprisoned news workers. contact was of the opinion that Grey would be released at the latest by 1st January as "this is the target date for complete de-escalation". On 14th October, the contact claimed to have received a reply from CHOU En Lai's secretary. While nothing specific was included about conditions for Grey' a release it was stated that Peking did not intend "to ask for the impossible

from the Hong Kong Government",

The

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Three weeks later, on 6th November, the contact reported that LI asked him to pass a message to the Hong Kong Government to the effect that if there was a genuine desire to improve Sino-British and Sino-Hong Kong

relations it was possible to come to some arrangements on the basis that

the Hong Kong Government could take steps to de-escalate and the Chinese

would reciprocate; the Chinese could do "various things including the

release of Grey" contact added. LI was reported to have stressed that the

exchange of Grey for HSUER Ping was not possible but an exchange for all news

workers might be. The contact opined that this proposal had originated

from Peking and he suggested that three or four news workers might be let

out as an act of clemency.

12.

On the 22nd November, the contact claimed that the local branch

of N.C.N.A. had informed Peking that the Hong Kong Government was softening and

might be prepared to pay a price for the release of Grey. Peking was, he

said, putting pressure on the H.C.N.A., Hong Kong, to produce something to

support its theory. The last mention of Grey through this channel was

received on 10th December when the contact claimed that the remarks made

by the Chinese Hission in London about Grey (paragraph 4 refers) were not

authorised by Peking. Peking was, he said, very concerned about the

publicity being given in the West about Grey but was still contemplating

his release. However, he said, "in view of the publicity it may now take some time and there may be a gradual easing of restrictions rather than a

complete release".

INTELLIGENCE FROM DELICATE SOURCES

13.

In October, 1968, a report from a completely reliable and delicate

Special Branch source gave strong indications that the C.P.G. was considering

the early release of Grey and was preparing local communist circles for

this eventuality. On the 9th October, at a meeting of senior officials in

communist film circles, an N.C.N.A. official outlined a directive reportedly

given by CHOU En Lai to a Hong Kong delegation which had visited Peking.

Although no date was given for the directive it was believed to have been

passed over in the latter half of September. The directive, which dealt with

the general conduct of Chinese communist affairs in Hong Kong, made reference

to Grey, stating his release would in no way affect the Hong Kong struggle.

It stressed that the present situation was more favourable to Sino-British relations and nothing should stand in the way (of further improvement). It

was emphasised that the essence of this directive should be disseminated to

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the communist lower echelons by the 20th October, a significant date in

that an erroneous belief was widely held in Hong Kong at the time that

HSUE Ping was scheduled for release from prison on the 19th October.

14.

A more detailed insight into the contents of the CHOU En Lai

directive was obtained on 17th October when the same N.C.N.A. official gave

a lengthy briefing on its contents to a group of senior local communists.

In referring to Grey he claimed that this release would have no effect on

the proletarian world revolution but, on the other hand, if he was not

released it would be difficult to carry on the struggle in Hong Kong".

He did not explain this point but went on to say that "the Hong Kong

struggle must not be allowed to interfere with the foreign policy of

China which included the release of Grey",

15.

On the 21st November, at a meeting of senior officials in local

publishing circles it was said that "after careful assessment Peking had

concluded that Grey's release would not affect China's overall policy but

compatriots (in Hong Kong) must not expect the release of confrontation

prisoners in reciprocation". A week later the same officials admitted that

the continued detention of Grey was now the main issue (between China and

Britain); it was stated that Peking had rejected Britain's protests about

Grey's detention and said that even if Grey was released the Hong Kong

Government would not release detainees or journalists,

16.

The next move of significance came on 10th December when the

official in charge of communist publishing circles briefed his subordinates

on a massive propaganda campaign which, apparently, local communists had

been instructed by Peking to launch as a counter to the Western publicity

about the conditions of Grey's detention in Peking. This campaign, which was to concentrate on alleged maltreatment of detainees/prisoners in Hong

Kong and demand their release, was launched almost immediately and is still

continuing. Its high-point was the press conference given by FAI Yi Man (paragraph 8 refers). It is of especial interest that it was emphasised that

the campaign should not, in any way, relate the release of Grey to the

release of detainees/prisoners in Hong Kong indicating, perhaps, that the

C.P.G. did not wish to be placed in a position which would leave no room

for manoeuvre,

17.

The last information received from delicate and secret sources

relating to Grey concerns a conversation on 23rd December between FAI Yi Man

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and LEUNG Wai Lam, Director of the Hong Kong Branch of the N.C.N.A. în

which FAI admitted Grey's detention had been an error of judgement;

it had bean thought that it would prevent the Hong Kong authorities from arresting other "compatriote" in Hong Kong. It was apparent from the conversation, which was virtually a monologue by FAI, that FAI did not have any idea as to current thinking and actions in Peking. At one stage he said the Hong Kong Government was trying to create an atmosphere favourable to Grey's release and he went on to say that he thought

negotiations between the British and the M.F.A. must be taking place in Peking. LEUNG did not comment on these observations which, it is significant, were made on the same day as FAI's interview with the A.F.P. correspondent (see paragraph 8).

FURTHER POINTS OF INTEREST

18.

emerges.

The various comments and observations on Grey have been quoted

in some detail in an effort to see if any overall picture or pattern

There is little doubt that Grey was originally incarcerated in retaliation for the arrest of HSUEH Hing. However, the C.P.0., although inferring strongly that Grey's detention is still connected with the imprisonment of communist journalists in Hong Kong, has been very careful not to specify conditions for his release, thus leaving themselves some latitude for manoeuvre, The offer, made by Her Majesty's Government through diplomatic channels in December, 1967, and repeated in March, 1968, to exchange Grey for HSUER Ping was ignored completely by the C.P.G. thus seemingly indicating, at that stage, they wanted rather more than HSUEK. Nevertheless, there is every reason to believe that in early Cctober, 1968, they were considering seriously the release of Grey at the end of that month, by which time they apparently thought HSUE Ping would have completed his sentence. It will always be a matter of speculation as to whether Grey would have been released if RSUEH had come out of prison in October - certainly by the time he was released in November the situation

had already changed,

19.

At the end of October the Acting Charge d'Affaires in Peking visited Hong Kong for dental treatment and consultations with Government and a senior member of the Foreign Office who visited the Colony at the same time, At a press conference following his arrival the Acting Charge made some reference to the "scandalous" treatment of Grey by the C.P.G.

and this was taken up by the world press and marked the revival of interest

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of the Western press in Grey's situation. These remarks undoubtedly stung the C.P.G. and the local communists and evoked an upsurge in virulence in

the communist press here in retaliation. }

20.

Grey's detention in Peking must be viewed against the canvas of

overall C.P.G. foreign policy; this was made very clear in the directive

from CHOU En Lai. It is necessary, therefore, to examine the present

communist thinking in regard to Hong Kong; this, based on intelligence

from reliable sources, can be summed up as follows:-

(a)

Local communists pursued blundering tactics in 1967.

They must desist from these tactics and continue the

struggle by different means entirely;

(b)

(c)

(a)

(6)

CONCLUSIONS

21.

As a first ain they must win over the support of "the

70% of uncommitted people" in Hong Kong by flexible application of the teaching of MAO, by winning whatever they can in negotiations over minor issues, by realistically exploiting situations as they arise to the fullest practicable extent and, of course, by propaganda

and education;

They can expect no material support in their struggle

from Peking; there is no intention of taking over Hong

Kong at the present time;

Events in Hong Kong must not be allowed to interfere

with or affect Peking's foreign policy plans and foreign

relations, including relations with Britain. All

relations with foreign countries will be directed from

Feking and all actions subordinated to overall policy;

No suggestion must be made that Grey's release is specifically

linked with the release of the detainees, the news workers

or anything else. The situation must be left fluid, to

enable Peking to deal with Grey as best suits their

foreign policy.

Although Grey's continued detention has been linked, both

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officially and unofficially, with the arrest; of "patriotic news workers", and the latest statements come closest to "putting a price on his head" the C.P.C. has deliberately avoided giving any undertaking that Grey will be released if the remaining 12 staff members of communist news agencies and newspapers are given their freedom. Therefore, there is no guarantee that any such concession by the Hong Kong Government would achieve its desired effect. Indeed, on the basis of the material in this paper it is clear that Grey's release is dependent solely on Peking's calculations as to whether or not retaining or releasing him advances or hamper their overall foreign policy. Nevertheless, while Grey remains in detention the local communists are in a position to use his predicament as implied blackmail in any attempts to squeeze concessions from the Hong Kong Government. However, it is clear that they are under instructions not to commit Peking to a position which leaves no room for manoeuvre. Similarly, of course, they are free to try to make the best use they can of criticisms of the Emergency Regulations from liberal-minded non- communists, and from allegations about the mistreatment of detainees and prisoners. There is no doubt that much of the recent publicity over Grey has touched Peking on the raw, and the prosent propaganda line about the Emergency Regulations, detainees and prisoners is directed from there in an endeavour to counteract the bad impression Grey's case has made inter- nationally. The latest N.C.N.A. release makes it clear, however, that Peking has no intention of bowing to any form of pressure and therefore the chances for Grey's release in the immediate future must be very slim. Peking has, in effect, warned Britain that she will not do anything to alleviate the conditions of Grey's detention while international pressure is being applied.

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COPY Nd2..

CYPHER/CAT A

PRIORITY HONG KONG

TELEGRAM NUMBER 87 Aha!

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TO FOREIGN AND COMITONWEALTH OFFICE

28 JAAUARY 1959

Mr him for 2011. 1hr Musin

The Cayde Im

RECEIVED WITHOUT PREAMBLE/

REC ARCH

No.31

28 JAN 1969

307

FEC/30/1

YOUR TELEGRAM NO 57: GREY.

330

نہیں

CATER CARRIED OUT THESE INSTRUCTIONS ON 27 JANUARY, AFTER

CONSULTATION WITH NE ON HOW CERTAIN SUPPLEMENTARY MATTERS WHICH OCCURRED TO US OUGHT TO BE HANDLED.

2. CONTACT ASKED HIN ABOUT THE POSSIBLE RETURN TO HONG KONG

OF RELEASED NEVSVORKERS. CATES REPLIED ON THE LIES OF

PA: 503) OF TELERIAN UNDER REFERENCE, MAKING IT CLEAR THAT HE VAS SPEAKING OF EXPIRY OF FULL, SENTENCE NOT OF SENTENCE LESS RŒMISSION,

3. 19

1: ADDITION TO THE DETAILS 1: YOUR TELEGRAM UNDER REFERENCE CATER SAID THAT IF THE ARRANGEMENTS VIRE AGREED WE WOULD AVOID

SO FAR AS POSSIBLE MAKING PUBLIC STATENRITS OR COMMENTS.

IF ASKED, NC WOULD DENY THAT A DARGAB HAD VEEN STRUCA WITH THE

CHINESE GOVERNMENT. IT WOULD PRODADLY SUIT VS BOTH REST IF

GREY WERE RELEASED ABOUT TWO WEEKS AFTER THE NEWS WORKERS

SUTICOLON BUT AS SOON AS AGREENENT WAS REACHED WE WOULD EXPECT

HIM TO BE TOLD OF HIS LIPENDING RELEASE AND WOULD EXPECT HIS

14.

CONDITIONS TO BE IMPLOYER.

32,169.

TOP

SECRET

TOP

SECRET 2-

4. FOR THE FIRST TIME IN THIS SERIES OF MEETINGS CONTACT WAS

QUSINESSLIKE, LISTENED CAREFULLY TO CATER AND TOOK NOTES.

HE SAID HE WOULD PASS THE MESSAGE TO PIXING BOTH THROUGH LI CHO-CHIH AND DIRECTLY TO CHOU EN LAI'S PERSONAL OFFICE.

CONTACT WAS PLEASED WITH OUR PROPOSAL, HE THOUGHT IT EXCELLENT,

INDEED'RATHER BEITER THAN HE HAD EXPECTED, AND EXPRESSED

OPTIMISM THAT IT WOULD PROVE ACCEPTABLE.

ぢゅ

FULL TEXT OF CATER'S REPORT WILL DE SENT TO LONDON AND PEKING

BY FIRST OPPORTUNITY.

(F.C.O. PLS PASS PRIORITY TO PEKING

SIR D. TRENCH

/REPEATED AS REQUESTED/

FILES

F. EASTERN.D.

H.K.D.

P.U.S.D.

PRIVATE SECRETARY

P.S. TO LORD SHEPHERD

SIR A. GAL SWORTHY

SIR J. JOHNSTON MR. MORETON

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CYPHER/CAT 'A'

>IORITY HONG KONG

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сытры

Fari cumph 0227/1

COPY NO

Ir29'5

∙10

Mr Will 2.10 (Top con in Mer

Thursory)

TO FOREIGN AND COMMONWEALTH

(332)

RECEIVED IN ARCHIVES No.31

TELEGRAM NUMBER 82

27 JANUARY 1969.

pale 11 27 JAN 1969

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ADDRESSED TO F.C.0. TELNO 82 OF 27TH JANUARY. RFI PEKING.

330CUR TELEGRAM NO 67: GREY.

MY ONLY COMMENT IS THAT IF WE ARE FORCED TO ACCEPT RETURN ON

EXPIRATION OF SENTENCE, THIS SHOULD NOT BE ON EXPIRATION OF

SENTENCE AFTER REMISSION BUT AFTER EXPIRATION OF FULL SENTENCE CYOUR

PARA. 400) REFERS).

4(8) actually fr

2. CATER WILL NOW BE AUTHORIZED TO MAKE AN APPROACH ON THE LINES

PROPOSED IN YOUR TELEGRAM.

F.C.O. PLEASE PASS PRIORITY TO PEKING.

SIR D. TRENCH

[REPEATED AS REQUESTED]

FILE S

F.E.D.

P.U.S.D.

PRIVATE SECTETARY

P.S. TO LORD SHEPHERD

SIR J. JOHNSTON

KR. MORETON

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305

COPY NO....

380

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CYPHER/CAT A

ROUTINE FOREIGN AND COMMONWEALTH OF RECEIVED IN TELEGRAM NUMBER 67

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TOP COPY

2/2

per TO HONG KONG

[ARCHIVES No.31

27 JAN 1969

24 JANUARY 1969

(F.E.D.)

FEC13C/ Proza/1

Coquel t

HAKK I/K

ADDRESSED TO HONG KONG TELEGRAM NUMBER 07′ OF 24 JANUARY REPEATED FOR INFORMATION TO PEKING.

YOUR TELEGRAM NO. 44. [OF 16 JANUARY: GREY).

1264

WE ARE INCLINED TO SHARE CRADOCK'S VIEW (PEKING TELEGRAM NO.3) THAT THE RELEASE IN HONG KONG OF THE ELEVEN NEWSPAPER WORKERS WOULD SECURE THE RELEASE OF GREY, THOUGH WE ADMIT THAT THE EVIDENCE IS NOT CONCLUSIVE. WE ACCEPT HOWEVER THAT THIS STEP WOULD CARRY GRAVE DANGERS FOR THE FUTURE SECURITY OF HONG KONG.

WE WOULD WANT TO AVOID A SITUATION IN WHICH AN EVIDENT DETERIORATION IN GREY'S MENTAL AND PHYSICAL HEALTH LEADS TO WIDESPREAD PRESSURE THAT ON HUMANITARIAN GROUNDS WE SHOULD ACCEPT RISKS IN HONG KONG. LIKE CRADOCK THEREFORE (PEKING TELEGRAM NO.30) WE SEE ADVANTAGE IN AN EARLY SETTLEMENT OF THE CASE.

295

2. WE ARE NOT AT ALL OPTIMISTIC THAT THE CHINESE WOULD BE WILLING TO STRIKE A BARGAIN WHEREBY IN RETURN FOR GREY YOU IN EFFECT RELEASED THE NEWS WORKERS TO CHIPA. MUCH MUST DEPEND ON HOW EMBARRASSING THEY ARE FINDING GREY. BUT SUCH A BARGAIN MAY SEEM TO THEM TO COME TOO CLOSE TO COMPROMISING THE PRINCIPLE OF THE RIGHT OF ALL CHINESE TO LIVE IN HONG KONG. MOREOVER IT MAY FACE THEM WITH PRACTICAL DIFFICULTIES IN THAT THE NEWS WORKERS THEMSELVES MAY WELL BE RELUCTANT TO RETURN TO CHINA EVEN FOR A PERION 3. HOWEVER, GIVEN THE EVIDENCE THAT THE CHINESE AUTHORITIES EXPECT A REACTION FROM US TO THEIR LATEST MOVE, THE DESIRABILITY OF DEMONSTRATING THAT WE ARE PREPARED TO GO SOME WAY TO HELP THEM OVER, THEIR DIFFICULTIES WITH THEIR FOLLOWERS IN HONG KONG, AND THE IMPORTANCE OF MAINTAINING OUR CHANNEL OF COMMUNICATIONS THROUGH THE CONTACT, WE AGREE THAT AN APPROACH GENERALLY ALONG THE LINES YOU SUGGEST WOULD BE WORTH TRYING AND ARE GRATEFUL FOR YOUR

/PROPOSALS

LAUT

#IF

MEAT

305

332

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PROPOSALS.

4. WE ACCEPT THAT THE INITIAL OFFER SHOULD LEAVE SCOPE FOR SUBSEQUENT MANOEUVRE. WE HAVE HOWEVER THE FOLLOWING COMMENTS ON

YOUR PRESENT PROPOSED TACTICS.

(A) WE SUGGEST THAT SINCE IT IS IMPORTANT THAT HE CONVEYS OUR VIEWS CORRECTLY TO THE CHINESE, CONTACT SHOULD BE TOLD THAT

WHATEVER THE FORM IN WHICH HE PUTS OUR OFFER HE MUST EMPHASISE

THAT RELEASE IN THE COLONY IS OUT OF THE QUESTION.

(B) DESPITE CONTACT'S ADVICE THAT WE SHOULD NOT OFFER ALL ELEVEN AT FIRST (YOUR TELEGRAM NO.27) WE SEE LITTLE TO BE GAINED BY 304LEAVING VAGUE WHETHER OR NOT OUR OFFER APPLIES TO ALL ELEVEN.

(C) WE THINK THAT IF WE INSIST AT THE OUTSET THAT REPATRIATION MUST BE PERMANENT, WE INCREASE THE LIKELIHOOD THAT THE CHINESE WILL SIMPLY REJECT OUR OVERTURE OUT OF HAND AND AS A MATTER OF PRINCIPLE, CONVERSELY ANY SLIGHT CHANCE THERE MAY BE OF SUCCESS WOULD BE IMPROVED IF IT APPEARED THAT WE DID NOT ENTIRELY EXCLUDE THAT THE PRISONERS COULD RETURN TO HONG KONG ON THE EXPIRY OF SENTENCE, WE SHARE YOUR DISTASTE FOR THIS LATTER COURSE: A TRIUMPHAL RETURN ACROSS THE BORDER IN SEPTEMBER MIGHT BE

ALMOST AS DAMAGING TO CONFIDENCE AS RELEASE IN THE COLONY NOW. BUT WE ACCEPT THAT WE MIGHT EVENTUALLY BE DRIVEN TO THIS CONCESSION IF WE WERE UNDER GREAT PRESSURE ON HUMANITARIAN GROUNDS TO DO SOMETHING FOR GREY, AND THIS WAS THE FIRM PRICE FOR HIS RELEASE. IT MIGHT BE BEST, THEREFORE, IF OUR INITIAL APPROACH DID NOT SPECIFICALLY INDICATE WHETHER REPATRIATION WOULD BE PERMANENT OR NOT. WE COULD THEN RECONSIDER THE MATTER IN THE LIGHT OF AMY CHINESE REACTION. IT MIGHT CONCEIVABLY BE POSSIBLE TO REACH A HALF-WAY POSITION WHEREBY THE CHINESE ACCEPTED THAT ANY QUESTION OF RE-ENTRY AFTER EXPIRY OF SENTENCE WOULD HAVE TO BE CONSIDERED CASE BY CASE AT THE TIME.

15. SUBJECT

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FOREIGN AND COMMONWEALTH OFFICE TO HONG KONG

-3-

5. SUBJECT TO YOUR VIEWS THEREFORE WE THINK THAT CATER SHOULD NOW APPROACH CONTACT ON THE FOLLOWING LINES:

(A) RELEASE IN COLONY IS OUT OF THE QUESTION.

(B) YOU WOULD BE PREPARED TO CONSIDER COMMUTING SENTENCES OF ANY OF THE NEWS WORKERS WHO FORMALLY EXPRESSED WILLINGNESS TO BE REPATRIATED TO CHINA, AND WHOM THE CHINESE AUTHORITIES UNDERTOOK TO ACCEPT. (IF CONTACT ASKED SPECIFICALLY ABOUT REPATRIATION ONLY UNTIL THE EXPIRY OF SENTENCES, CATER MIGHT REPLY THAT THIS WOULD RAISE GRAVE DIFFICULTIES: BUT IF THE CHINESE WERE TO MAKE A FIRM PROPOSAL ON THESE LINES HE THINKS YOU MIGHT BE PREPARED TO CONSIDER IT).

6.) AFTER CAREFUL CONSIDERATION WE HAVE RELUCTANTLY DECIDED AGAINST THE INCLUSION IN YOUR OFFER OF ANY REFERENCE TO OTHER BRITISH SUBJECTS IN DETENTION. THE CHINESE MAINTAIN A CLEAR DISTINCTION BETWEEN GREY, WHO IS HELD AS A POLITICAL HOSTAGE

FOR ALLEGED MISDEMEANOURS BY THE HONG KONG AUTHORITIES, AND THE OTHER BAITISH NATIONALS, WHO ARE HELD FOR ALLEGED MISDEMEANOURS OF THEIR OWN. TO INJECT THE OTHERS INTO OUR OFFER WOULD NOT IN OUR VIEW HELP TO SECURE THEIR RELEASE AND WOULD FRUSTRATE ANY HOPES OF A SUCCESSFUL BARGAIN OVER GREY.

STEWART

FILES

F.E.D.

P.U.S.D.

PRIVATE SECRETARY

P.S. TO LORD SHEPHERD

SIR A. GALSWORTHY

SIR J. JOHNSON

MR. MORETON

FFFFF

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NOTHING TO BE WRITTEN IN THIS MARGIN

Registry 'No.

FTOP SECRET

DEPARTMENT Far Eastern ·

SECURITY CLASSIFICATION

XIOD X

Confidential

PRIORITY MARKINGS (Date)....

}

* Date and time (G.M.Të filegram should

reach addressge).

2441

330

EE CYPHER

Restricted

PRIVACY MARKING

In Confidence

En Clair. Cloda Cypher

Draft Telegram to:-

HONG KONG

No+67

(Date)

And to:-

24/1

Repet to:-

PAKING

Saving to:-

Distribution:-

FILES

Far Eastern Dept. PUSD

Frivate Secretary Få/Lord Shepherd Sir Al Galsworthy

Copier to !----

to:- Sir J. Johnston Moreton

ве

24/11

Routine

[Secu

Security classification] TOF SECRET

-if any

[ Privacy marking

-if any 1.

[Codeword-if any]

IL-

Addressed to HÙNG KANG

telegram No.

---INT

(date)

24 January

And to

repeated for information to

Saving too.....

PEKING

++-----------

Your telegram No. 44 of 16 January: Grey.

We are inclined to share Cradock's view

(Peking telegram No. 3) that the release in Hong

Kong of the eleven newspaper workers would

secure the release of Grey, though we admit that the

evidence is not conclusive. We accept however that

this step would carry grave dangers for the future

security of Hong Kong. We would want to avoid a

situation in which an evident deterioration in

Grey's mental and physical health leads to wide-

spread pressure that on humanitarian grounds we

should accept risks in Hong Kong. Like Cradock

therefore (Peking telegram No. 30) we see advantage

FanF in an early settlement of the case.

2. We are not at all optimistic that the Chinese

would be willing to strike a bargain whereby in

TOP SECRET

return

NOTHING TO BE WRITTEN IN THIS MARGIN

WBL 51-7406

* TOP SECRET

return for Grey you in effect released the

news workers to China. Much must depend

on how embarrassing they are finding Grey.

But such a bargain may seem to them to come

too close to compromising the principle of

the right of all Chinese to live in Hong

Kong. Moreover it may face them with

practical difficulties in that the news-

workers themselves may well be reluctant to

return to China even for a period.

3. However, given the evidence that the

Chinese authorities expect a reaction from us

to their latest move, the desirability of

demonstrating that we are prepared to go

some way to help them over their

difficulties with their followers in Hong

Kong, and the importance of maintaining our

channel of communications through the

contact, we agree that an approach generally

along the lines you suggest would be worth

trying and are grateful for your proposals.

4. We accept that the initial offer should

leave scope for subsequent manoeuvre.

have however the following comments on your

present proposed tactics.

(a) We suggest that since it is

important that he conveys our

views correctly to the Chinese,

contact should be told that what-

ever the form in which he puts our

offer he must emphasise that

release in the Colony is out of the

question.

TOP SECRET

NOTHING TO BE WRITTEN IN THIS MARGIN

WEBL 50-7400

TOP SECRET

From D

(b) Despite contact's advice that we

should not offer all eleven at first

(your telegram No. 27) we see little

to be gained by leaving vague

whether or not our offer applies to

all eleven.

outset that repatriation must be

permanent, we increase the likelihood

that the Chinese will simply reject

our overture out of hand and as a

matter of principle. Conversely

any slight chance there may be of

(it appeared success would be improved if we that we did not cutiuly excule, h wore prepared to agbee that the

prisoners could return to Hong Kong

on the expiry of sentence. Te share

your distaste for this latter course;

a triumphal return across the border

in September might be almost as

damaging to confidence as release

in the Colony now. But we accept

that we might eventually be driven

to this concession if we were under

great pressure on humanitarian

grounds to do something for Grey,

and this was the firm price for hie

release. It might be best, therefore,

if our initial approach did not

specifically indicate whether

repatriation would be permanent or

rot. We could then reconsider the

matter in the light of any Chinese

TOP SECRET

reaction

NOTHING TO BE WRITTEN IN THIS MARGIN

WEBL 51-1006

TOP DEURET

reaction. It might conceivably

be possible to reach a half-way

position whereby the Chinese

accepted that any question of

re-entry after expiry of sentence

would have to be considered case by

case at the time.

5. Subject to your views therefore we think

that Cater should now approach contact on

the following lines:

(a) Release in the Colony is out of the

(A)

question.

You would be prepared to consider

commuting sentences of any of the

news workers who formally expressed

willingness to be repatriated to

China, and whom the Chinese

authorities undertook to accept.

(If contact asked specifically about

repatriation only until the expiry

of sentences, Cater might reply that

this would raise grave difficulties;

but if the Chinese were to make a

firm proposal on these lines,H ho thinks yo

might be prepared to consider it.)

assurances from the Chinese that

they would in return release Grey.

6. After careful consideration we have

reluctantly decided against the inclusion in

your offer of any reference to other British

TOP SLORET

/subjects

NOTHING TO BE WRITTEN IN THIS MARGIN

WOEL 51-2406)

TOF SECRET

subjects in detention.

The Chinese

maintain a clear distinction between Grey,

who is held as a political hostage for alleged

Disdemeanours by the Hong Kong authorities,

and the other British nationals, who are

held for alleged misdemeanours of their own.

To inject the others into our offer would

not in our view help to secure their release

and would frustrate any hopes of a successful

bargain over Grey.

- 5-

TOP SECRET

And

B$241,

CYPHER/CAT A

ТОР

This cross

為

with our reply Li (287

SECRET

BOR & pazy/1 фигур

• Wilm Mr wibomis

tu umwam

TOP

327

COPY NO.Í...

.P IN

ARCIVES No.31

PRIORITY HONG KONG TO FOREIGN AND COMMONWEALTH OFFICE 4 JAN 1969

TEL NO.77

Nun Jm

24 JANUARY 1969

EC 1301

TOP SECRET

ADDRESSED FCO TELEGRAM 77 OF 24 JANUARY RFI PEKING,

MY TELEGRAM 28: GREY.

ALTHOUGH I HAVE NOT RECEIVED YOUR VIEWS ON TELEGRAM UNDER REFERENCE

CATER FOUND IT NECESSARY TO SEE HIS CONTACT AGAIN ON 20 JANUARY,

2. CATER SAID THAT THE POSSIBILITY THEY HAD DiscussED ON 7

JANUARY WAS STILL BEING EXAMINED AND HE HOPED TO BE ABLE TO SPEAK TO

CONTACT FAIRLY SOON, CONTACT SAID THAT HE HAD INFORMED LO CHO-CHIR

SIMPLY THAT THE GREY ISSUE APPEARED TO BE DEADLOCKED.

3. CONTACT ALSO SAID THAT HE BELIEVED CHO EN-LAI HAD GIVEN

INSTRUCTIONS TO IMPROVE THE CONDITIONS IN WHICH GREY IS HELD, FOR

EXAMPLE, BY ALLOWING HIM TO HOVE MORE FREELY AROUND HIS HOUSE.

CONTACT APPEARS TO BE CONVINCED THAT GREY'S LIVING CONDITIONS

HAVE BEEN IMPROVED AND SAID HE WOULD ENQUIRE OF PEKING TO ENSURE

THAT IT WAS SO.

FCO PLEASE PASS ROUTINE TO PEKING.

SIR D. TRENCH

[REPEATED AS REQUESTED].

FILES:

FAR EASTERN DEPT

H.K. DEPT

P.U.S.D.

P.S. TO LORD SHEPHERD

HR. HORTON

SIR A. GALSWORTHY

P.S.

TOP SECRET

CYPHER/CAT A

TATE JONG KONG

TELEGRAM NUMBER 44

TOP SECRET

Enter

Winter entorns in 16/1

TC FOREIGN AND COMMONWEALTH OFFICE

16 JANUARY 1969

COPY NO.

Jos

paparny

H.K

ADDRESSED FCO AS MYTEL 44 OF 16TH JANUARY REPEATED FOR INFORMATION

PEKING.

PEK ING TELNO. 30.

RECEIVED IN

ARCHIVES No.31

GREY.

17 JAN 1969

FeaBel

PERHAPS IT MIGHT HELP FIRST TO RESTATE TIN, KUNG""" POSITION

OVER THE RELEASING OF CONVICTED PRISONERS.

2. THE GRAVE OBJECTION TO RELEASING PRISONERS IN HONG KONG

WITH NO OBLIGATION TO LEAVE IS THAT IT DESTROYS THE CREDIBILITY

OF THE SANCTION OF IMPRISONMENT FOR CRIMINAL ACTIVITIES

AND OPENS THE WAY FOR PRESSURE TO BE APPLIED AT ANY TIME IN

THE FUTURE TO ENFORCE /NY RELEASE DESIRED. THE CONSEQUENT

DANGERS TO HONG KONG'S FUTURE SECURITY ARE SO SERIOUS AS TO BE

THE ONLY TIME WE HAVE INTIMATED THAT EARLY

UNACCEPTABLE.

RELEASE IN HONG KONG MIGHT BE POSSIBLE WAS THE TENTATIVE

SUGGESTION MADE BY CATER TO CONTACT THAT SHUEH MIGHT BE

RELEASED A MONTH OR SO EARLY, A COURSE WHICH CONTACT ADVISED

STRONGLY AGAINST CHYTEL 2001 OF 20 SEPTEL BLR 1968 REFERS);

IT MAY OR MAY NOT HAVE BEEN PASSED ON BY HIM

P13/18.

(28)

3. RELEASE TO CHINA FOR DURATION OF SENTENCE IS ONLY MARGINALLY

LESS OBJECTIONABLE.

WHILE IT PROTECTS THE PUBLIC FOR THE

PERIOD ENVISAGED BY THE COURTS, IT TOO LARGELY DESTROYS

THE CREDIBILITY OF THE SANCTION OF IMPRISONMENT AND FAILS TO

GIVE THE PUBLIC ANY ADDITIONAL PROTECTION.

4. RELEASE TO CHINA WITH NO RETURN ON THE OTHER HAND PROTECTS

THE PUBLIC FROM THE PERSONS CONCERNED PERMANANTLY AND IS

THEREFORE ACCEPTABLE IN SPITE OF THE FACT THAT IT TOO TO SOME

EXTENT ERODES THE CREDIBILITY OF THE SANCTION OF IMPRISONMENT.

5. REVERTING

TOP SECRET

-2-

5. REVERTING TO PEKING TELNO. 30, THERE ARE A NUMBER OF POINTS IN THE FIRST TWO PARAGRAPHS I WOULD WISH TO HAVE AN OPPORTUNITY

TO HAVE OF CHALLENGING IF THE ARGUMENTS THEREIN ARE THOUGHT

FORCE, NOTABLY THE CONTINUED ASSUMPTION, WHICH I HOLD 10 BE

IN ANY UNWARRANTED THAT THE ASKING PRICE IS THE ONLY PRICE.

CASE THE EXTRACT QUOTED FROM PARA 6 OF MY TELNO 27 MUST BE

RELATED TO THE LAST TWO SENTENCES OF PARA 5 THIS EXCHANGE

RELATED TO THE POSSIBILITY OF A RELEASE FOR GREY DURING

THE COURSE OF RELEASING NEWSWORKERS IN BATCHES AND MERELY

RE-ITERATES THE ASKING PRICE.

HOWEVER, SINCE CHARGE D' AFFAIRES AGREES THAT SOMETHING

304

ON THE LINES PROPOSED MIGHT BE TRIED I WILL CONFINE MY COMMENTS

TO HIS PARA 3:-

(A) SPEED IS OBVIOUSLY DESIRABLE BUT THE EARLY RELEASE OF

GREY IS NOT THE ONLY CONSIDERATION SEMI COLON

(B) IT IS IMPORTANT FOR THE FUTURE THAT I BE PROVIDED WITH

SOME DEFENSIELE JUSTIFICATION FOR USING THE PREROGATIVE

AND THIS CAN BEST BE DONE BY OBTAINING FROM THE PRISONERS

BEFORE THEIR RELEASE A REQUEST C IN WRITING IF POSSIBLE)

TO BE ALLOWED TO RETURN TO CHINA AND AN UNDERTAKING THAT

IF ESCORTED TO THE BORDER THEY WILL CROSS WILLINGLY.

RETURN TO CHINA FOR GOOD, BUT I WOULD RELUCTANTLY ACCEPT THAT WE

MIGHT HAVE TO CONCEDE PERMISSION TO RETURN AFTER THE EXPIRY OF

THEIR FULL SENTENCE.

(D) IF THE OTHER CONDITIONS ARE ACCEPTABLE I SHOULD NOT OBJECT, TO

RELEASING AS MANY OF THE ELEVEN AS INDICATED WILLINGNESS TO GO, BUT

I SEE NO ADVANTAGE IN STARTING WITH THAT OFFER.

TOP SECRET

/(E) I AGREE

TOP SECRET

HONG KONG TELEGRAM NO. 44 TO FOREIGN AND COMMONWEALTH OFFICE

-3-

(E) 1 AGREE THAT WE WOULD NOT REPRESENT THE RELEASES AS DEPORT-

ATION, BUT IT MIGHT BE DIFFICULT TO CONTROL THE PRESS.

FCO PLEASE PASS IMMEDIATE TO PEKING.

SIR D. TRENCH

FILES

FAR EASTERN DEPT. HONG KONG DEPT. P.U.S.D.

PRIVATE SECRETARY P.S./LORD SHLPHERD SIA GALOMÄRTHY

SORSTÜN

XXXXX

/ REPEATED AS REQUESTED/

AETATICE COPIES SENT

TOP SECRET

127

No. 4) Sent to cleared with Frodest.

Copy of this tel (cory No Miss OL-PLE (PUSD)

Cypher/Cat A

TOP

SECRET

COPY NO..

(Mr. C. Wilson) 24/1/69. Tur cur

INMEDIATE PEKING TO FOREIGN AND COMMONWEALTH OFFICE

Telno 30 14 January, 1969

TOP SECRET

(Amended fo)

La Permal 33)

سنا

Врас

Addressed to FCO telno 30 of 14 January Repeated for information to: Hong Kong.

(a)

Hong Kong telno 27.

(b)

(295)

RECEIVED IN ARCHIVES No.31

1'5 JAN 1969

FEC139/1

The following points emerge clearly from this report:

The Chinese want to get the Grey question 'settled, though naturally on terms acceptable to then,

Their price is clear the remaining News workers. The same message comes to us via public official channels

P1ing

(NON4 of 28 December), via shen pting (your telne 16); féc14/1

Faji

and via special channel, In fact we now have it absolutely clearly in question and answer form, see paragraph 6 of telegram under referénce: "Was Peking 148

saying they wanted release of all News workers before they would release Grey. Contact confirmed that". There can now be no doubt that if we paid this price we would get Grey.

Chinese hove

As thing with see it

changing line. In September we approached them and intimated that earlier release of a prisoner was possible. When they came back with counter proposal of release of News workers in early November we changed our line, said we could not consider early release and at about same time turned on publicity. Each side has mystified the other.

2. The question now is whether Chinese, while insisting on release of 11 News workmen, might settle for release to China

The and whether it would be in our interest to try this. objections are:

(a) It is a second best. We are shying away from paying

full price which we know would be effective in the case of Grey and for which there are good arguments on general grounds. Attempts to whittle down Chinese teras have hitherto not been successful.

(b) Experience on permanent release to China is very

discouraging (the attempt with film stars in March 1968; Lo Kuei-Po's rejection of idea in April 1968),

by a channel which over the last 6 months, has wasted precious time and produced much mystification,

TOP SECRET

13. Nevertheless

TOP

SECRET

-2-

Nevertheless since the Chinese seem to want a response and contact reacted well to Cater's proposal it may be just worth trying subject to strict conditions,

(4)

The need for speed, both on humanitarian grounds and in order to clear away this major obstacle to better relations as soon as possible. We cannot afford to waste another few months,

(b) We must be ready to release News workmen in Hong Kong (on understanding that they seek early repatriation). (c) We must allow them to return to Hong Kong on expiry

of sentence. This has now been suggested to Chinese by Cater. Anything less was rejected by Lo Kuei-po in April 1968 (Peking telno 302). It should not present difficulties to Hong Kong since even if we sat tight the prisoners would be free in Colony on expiry of sentence.

(a)

(e)

We must be prepared to release all 11. Having gone on public record the Chinese will not accept less. Surrender in batches may however be possible.

We should be ready to give an assurance that we shall not represent the releases as deportation.

4. At what stage we conceded points (b) - (e) above would be for tactical decision; but they seem essential elements in package.

5. Finally while we do not want another all-out publicity campaign or demands in British Press, it would be useful if during discussions the Chinese were reminded of continuing effect of Grey's detention on world opinion by further articles in foreign (repeat foreign) Press along lines of recent articles

in Ceylon.

FCO pass Immediate Hong Kong.

Mr. Cradock

[Repeated as requested]

FILES

Far Eastern Dept

Hong Kong Dept

P.U.S.D.

Private Secretary

P.S. to Lord Shepherd

Sir A. Galsworthy

Kr. Moreton

bbbbb

TOP SECRET

ADVANCE COPIES SENT

тор сору

CYPHER/CAT A

COPY NO..2.

TOP SECRET

Mp4 1711

PRIORITY HONG KONG TO FOREIGN AND COMMONWEALTH OFFICE

10 JANUARY 1969

TELNO 28

TOP SECRET

ADDRESSED FCO AS MYTEL NO. 28 OF LOTI JANUARY

RFI

RECEIVED IN ARCHIVES 16.31

Not wet

Read

AND SINGAPORE.

MY TELEGRAM NO. 27 PARA I (c)

GREY.

10 JAN 1969

FEC134/1.

I FIND THESE EXCHANGES STILL CONSISTENT WITH THE VIEW THAT

PEKING ARE ONLY WILLING TO RELEASE GREY WHEN IT SUITS THEIR

OVERALL POLICY (ADDING ONLY THAT IT IS PERHAPS DEGINNING TO

LOOK RATHER HORE AS THOUGH IT WOULD`SUIT THEIR POLICY TO 00

SO SOUND, BUT THAT THEY ARE ENDEVOURING TO EXTRACT A GOOD

PRICE FIAST IF THEY CANM THEY SEEM TO BE GETTING RATHER

MORE SPECIFIC IN THEIR SUGGESTIONS WHILE STILL NOT COMMITTING

THEKSELVES FIRMLY, ON BALANCE, HOWEVER, IT NOW LOOKS AS IF

THEY PROBABLY WOULD RELEASE GREY IF THE 11 QUOTE NEWSWORKERS

UNQUOTE WERE RELEASED, AND THAT THEY WOULD BE GLAD OF THE

BARGAIN, BUT THIS DOES NOT HEAN THAT GREY WOULD ONLY BE RELEASED

Puhy ON THESE TERMS. THEY MAY WELL BE READY TO ACCEPT LESS

I AM STILL STRONGLY OPPOSED TO THE PREXATURE RELEASE OF THE

QUOTE NEZZWORKERS UNQUOTE HERE IN HONG KONG,

2. AS I SAID IN MY TELEGRAM NO. 1909 OF 26TH DECEMDEN, 1967,

IN GENERAL THE MORS COMMUNISTS WE CAN GET OUT OF THE COLONY

THE SCTTER, ALTHOUM ONCE WE AGREE TO UNIT THE DENTENCES

OF ANY CONVICTED PRISONERS WE UNDOUBTELY COML ENTO SLINGAY

ROUND, THE SUCCESS OF THE CHANGE SOLD OF COURSE D. PENJ

HAINLY ON THE GOOD FAITH OF THE MIRESE GOVERNTIENT, MOVES,

S LIKE THE IDEA O" ALLOJING ALION; ON LÄPIAY OF PUUTISICE

>IDE? IT 2014 KERSTLED THAT THEY AGD Q 2: GOOD,

OP SECRET

/3. OUR

TOP SECRET

3. OUR EFFORTS TO GET RID OF THE TWO FILM STARS (MY TELEGIAN

NO. 338 OF 16TH MARCH) PROVIDE A DISCOURAGING PRECEDENT BUT

IT MAY BE THAT THE CHINESE GOVERNMENT HAVE COME TO THE POINT.

VIERE THEY MIGHT RECONSIDER THE POSSIBILITY OF RELEASING TO CHINA.

4. ALTHOUHI THERE ARE OBVIOUS DANGERS IN ANY FORM OF NEGOTIATION,

I WOULD FOR HUMANITARIAN REASONS NOT BE TOO AVERSE TO ALLOWING

AN INDICATION TO BE GIVEN THAT WE NIGHT CONSIDER RELEASING A SMALL

NUMBER OF NEWSWORKERS PROVIDED THEY COULD BE INDUCED BY THE CHINESE

TO REQUEST REPATRIATION, WHICH WOULD PROVIDE A BASIS OF SORTS FOR

USING THE PREROGATIVE, AND LEAVE THE COLONY PERMANENTLY AND WILLINGLY

RELEASE TO CHINA VOULD BE IN LINE WITH THE STATEMENT READ OUT TO

VICE-HINISTER LO BY HOPSON ON 13TH APRIL CYOUR TELEGRAM 356 TO

PEKING OF 11TH APRIL), DUT I SEE NO REASON ON OUR FIRST APPROACH TO

MAKE ANY HORE SPECIFIC OFFERS THAN THEY ARE MAKING. I DO NOT MUCH

LIKE THE SUGGESTION THAT WE MUST MAKE PROPOSALS SEMICOLON BUT IN

CATER'S VIEW THIS NEANS MAKING PROPOSALS TO CONTACT WHO WOULD

PASS THEM ON TO PEKING AS HIS OWN IDEAS, IN THE KNOWLEDGE THAT WE

WOULD BE LIKELY TO CONCUR IF THEY FOUND FAVOUR IN PEKING,

1 5. WOULD YOU WISH CATER TO GIVE AN INDICATION ALONG. THESE LINES ?

IF THERE WAS A FAVOURABLE REACTION, WE WOULD THEN WORK OUT & MORE

SPECIFIC PROPOSAL FOR TRANSMISSION THROUGH CONTACT, WHICH COULD

MEET ANY REASONABLE ADDITIONAL POINTS THEY NADE EXCEPT THAT I

WOULD NOT BE PREPARED TO COMPROMISE ON THE PRINCIPLE OF REPATRIATION

BEING REQUESTED AND A WILLING DEPARTURE,

6. EVEN IF THIS GETS NOWHERE, IT WOULD MEET CONTACT'S POINT ABOUT

THE IMPORTANCE OF SOME COUNTER PROPOSAL COMING FROM US AND WOULD

HELP TO TEST THE EXTENT OF THEIR DESIRE TO CET RID OF GREY,

FCO PLEASE PASS PRIORITY TO PEKING.

SIR D. TRENCH

FILES

P.E.D.

F.S. TO LORD SHEPHERD

SIR A. GALSWORTHY

[REPEATED AS REQUESTED]

MR. MORETON

H.K. DEPT.

P.U.S.D.

PRIVATE SECRETARY

TOP SECRET

Pry

(45)

CYPHER/CAT A

PRIORITY HONG KONG

TELEGRAM NUMBER 27

ТОР

SECRET

Entity

TOP COPY

TO FOREIGN AND COMMONWEALTH OFFIC

TOP SECRET

13 JANUARY 196RECEIVED IN

B04

ARCHIVES No.31

17 JAN 1969

ры

17/1

Fecisel

ADDRESSED F.0.0. TELNO 27 OF 10TH JANUARY RFI PEKING AND

POLAD SINGAPORE.

MY TELEGRAM 2258:GREY.

CATER HAD FOUR MORE MEETINGS WITH CONTACT ON 20 DECEMRER AND

ON 2, 4 AND 7 JANUARY, THE MEETING ON 20 DECEMBER COVERED

MINOR LOCAL MATTERS ONLY.

2. AT THE MEETING ON 2 JANUARY CONTACT SAID THAT JUST BEFORE

CHRISTMAS LI CHO CHIH HAD ASKED HIM WHETHER THERE WAS ANY

REACTION FROM THE HONG KONG GOVERNMENT TO THE PROPOSED SWOP

FOR GREY. CONTACT HAD TOLD HIM THERE WAS NONE. LI HAD THEN

GONE TO CHINA, CONTACT TOLD CATER THAT ON 1 JANUARY LI HAD

COMMUNICATED WITH HIM FROM CANTON AND EVIDENTLY ON PEKING'S

BEPALF HAD ONCE AGAIN ASKED WHETHER THERE WAS ANY REACTION TO

THE CHINESE PROPOSAL FOR THE RELEASE OF GREY AND IF NOT,

WHITHER CONTACT COULD SUGGEST ANYTHING TO PEKING IN ORDER

TO OVERCOME THE PROBLEM OF GREY AND THE IMPRISONED NEWSWORKERS,

CONTACT SAID TO CATER THAT WE SHOULD NOT DELAY OUR REPLY,

THAT PEKING HAD BROUGHT THEIR PRICE FOR GREY INTO THE OPEN AND

WOULD EXPECT SOME REACTION,

CATOR REPLIED THAT WE WERE RATHER BEWILDERED ABOUT THE GREY

SITUATION. THERE HAD BEEN VARIOUS STATEMENTS BY THE CHINESE

ТОР

SECRET

/THROUGH

TOP

SECRET

THROUGH VARIOUS DIFFERENT CHANNELS.

IN ADDITION, PEKING HAD

SHIFTED ITS CROUND CORSIDERABLY SINCE GREY WAS FIRST DETAINED. CATER ALSO ARGUED THAT DURING THE LAST YEAR WE HAD DONE A GREAT

DEAL TO DI-ESCALATE BUT THERE HAD BEEN HARDLY ANY RESPONSE

FROM PEKING.

CONTACT WAS VERY UPSET AND COUNTERATTACKED BY

ALLEGING THAT IT HAD TAKEN US A LONG TIME IN FEPRUARY AND MARCH TO. AGREE TO ESTABLISH THE PRESENT CHANNEL AND AGAIN TO RESPOND

TO THE SUGGESTIONS MADE THROUGH HIM IN NOVEMBER OVER THE EXCHANGE OF GREY FOR THE NEWSWORKERS. CONTACT SAID THAT EARLIER IN OCTOBER

HE HAD GOOD REASON TO THINK THAT GREY'S RELEASE WAS IMMINENT BUT IT HAD BEEN UPSET BY THE PRESS CONFERENCE GIVEN HERE BY CRADOCK, BY THE MEETING OF CRADOCK, MUPRAY AND POLITICAL ADVISER AND BY THE DISCUSSIONS HERE WITH NONA WHICH HAD BEEN MIS- REPORTED TO PÊKING. CATER REFUTED THE CHARGES ABOUT DELAY. HE ADDED THAT SO FAR AS EXCHANGING GREY FOR THE NEWSWORKERS WAS CONCERNED, HE, CATER, HAD REPEATEDLY POINTED OUT THE SERIOUS DIFFICULTIES IT PRESENTED FOR US. CATER SUGGESTED THAT IF PEKING REALLY WANTED TO IMPROVE RELATIONS THEY SHOULD RELEASE GREY AND

CONTACT WE WOULD RESPOND WITH FURTHER MEASURES OF DE-ESCALATION. DID NOT THINK MUCH OF THAT IDEA AND WANTED TO KNOW PRECISELY

WHAT WE HAD IN MIND.

AT THE MEETING ON 4 JANUARY CATER, WHO HAD DISCUSSED THE MATTER WITH ME, REPEATED HIS ARGUMENTS WITH ADDITIONAL MATERIAL ON THE PEKING GOVERNMENT'S STATEMENTS OF JULY 1967 ABOUT GREY

AND ON OUR MEASURES OF DE-ESCALATION, ESPECIALLY OVER THE RELEASE OF DETAINEES, THE GRANTING OF PERMISSION TO REOPEN THE CHUNG WAH SCHOOL UNDER ANOTHER NAME AND OUR RESTRAINT IN TOLERATING LIBELLOUS AND SEDITIOUS STATEMENTS IN THE COMMUNIST PRESS. WE HAD IN FACT DE-ESCALATED TO A CONSIDERABLE EXTENT IN VIEW OF PEKING'S ATTITUDES AS REPORTED TO US BY HIM,

то TOP

SECRET.

/CONTACT

TOP

SECRET

HONG KONG TELEGRAM NO. 27 TO FCO

CONTACT APPEARED TO TAKE THESE POINTS AND CONSIDER THEM USEFUL

MATERIAL FOR HIM TO USE. CATER ALSO SUGGESTED THAT THE CHINESE

GOVERNMENT SHOULD DO SOMETHING ABOUT OTHER BRITONS WRONGLY

AINED IN CHINA AS WELL AS ABOUT GREY. HE TOLD CONTACT

THAT IT WAS ''EXTREMELY DIFFICULT, VIRTUALLY IMPOSSIBLE''

TO RELEASE THE NEWSWORKERS IN HONG KONG IN EXCHANGE FOR GREY.

THE RECENT STATEMENTS MADE BY THE COMMUNISTS HAD MADE IT EVEN

KORE DIFFICULT. CONTACT TOOK CAREFUL NOTE OF THIS LANGUAGE.

5. AT THE MEETING ON 7 JANUARY CONTACT SAID THAT HE HAD A.

VERY LONG DISCUSSION ON 6 JANUARY WITH LI CHO-SHIH. CONTACT

SAID THAT LI HAD BEEN TO PEKING. CONTACT WAS SURE THAT LI HAD

RECEIVED INSTRUCTIONS AND COMMENTS WITH THE APPROVAL OF CHOU

EN LAI.' LI HAD TOLD CONTACT THAT THE PEKING GOVERNKENT WAS NOW

RECALLING SOME OF THE LEADING COMMUNISTS. IN HONG KONG WHO HAD ORGAN-

THE TROUBLES IN 1967. LI HAD TOLD CONTACT THAT PEKING, AND

IN PARTICULAR CHOU EN LAI, WERE VERY EMBARRASSED OVER GREY AND

ANXIOUS TO SEE THE MATTER SETTLED. CONTACT CLAIMED THAT HE HAD

THEN SPOKEN TO LI ALONG THE LINES OF CATER'S REMARKS IN PARA A

ABOVE. LI SAID THAT PEKING WERE WELL AWARE OF THE DIFFICULTIES

WHICH FACED US IN RELEASING THE NEWSWORKERS BUT THAT WAS

ENTIRELY A PROBLEH FOR THE HONG KONG GOVERNMENT AND NOT SOME-

THING THAT PEKING COULD DO ANYTHING ABOUT. LI ALLEGEDLY ASKED

THAT A MESSAGE BE PASSED TO CATER TO THE EFFECT THAT PEKING HAD NO

INTENTION OF MAKING PROPAGANDA OUT OF THIS ISSUE. IF THE

NEWSWORKERS WERE RELEASED THERE WOULD FE NO QUESTION OF CROWING

OVER A VICTORY OBTAINED AT OUR EXPENSE. IT WAS SIMPLY A QUESTION

OF THE HONG KONG GOVERNMENT FINDING A WAY ROUND THE PROBLEM,

PERHAPS BY RELEASING A FEW NEWSWORKERS AT A TIME ON SOME PRETEXT

OR OTHER. WHEN THAT HAD BEEN DONE PEKING WOULD RELEASE GREY.

TOP SECRET

/6. CATER

TOP, SECRET

6. CATER THEN ASKED CONTACT WHAT PRECISELY WAS BEING SUGGESTED.

WAS PEKING SAYING THAT THEY WANTED THE RELEASE OF ALL 11

NEWSWORKERS BEFORE THEY WOULD RELEASE GREY?

GOVERNMENT

CONTACT CONFIRMED THAT.

FEIGNING SOME ANGER, CATER THEN SAID HE FOUND THIS AN INCREDIBLE PROPOSAL. IN SPITE OF THE SUBSTANTIAL LEGAL PROBLEMS WHICH HAD

SEEN FULLY EXPLAINED, PEKING WAS STILL DEMANDING THE SAME

PRICE. CONTACT CLAIMED THAT HE HAD POINTED THAT OUT TO LI

WHO HAD REPLIED THAT THE CHINESE HAD JUST AS MUCH DIFFICULTY

IN RELEASING GREY. LI ALLEGEDLY SAID THAT THE PEKING

HAD THOUGHT OF CHARGING AND SENTENCING GREY BUT CHOU EN LAI

PERSONALLY HAD INTERVENED ON THE GROUNDS THAT TO DO SO WOULD

MAKE MATTERS WORSE SINCE IT WOULD BE IMPOSSIBLE TO RELEASE

HIN BEFORE THE SENTENCE WAS SERVED. CONTACT CLAIMS THAT HE

IMMEDIATELY POINTED OUT TO LI THAT THAT WAS PRECISELY THE

PROBLEM WHICH CONFRONTED US.

7. CONTACT COMMENTED ON HIS DISCUSSION WITH LI TO THE EFFECT THAT LI HAD OBVIOUSLY RECEIVED SPECIFIC INSTRUCTIONS TO DE-ESCALATE THE SITUATION IN HONG KONG. IN CONTACT'S VIEW, PEKING WANTED TO DO SOMETHING ABOUT GREY BUT FOUND IT VERY DIFFICULT TO 'DISMOUNT". CONTACT THOUGHT IT MOST DESIRABLE THAT SOME KIND OF OFFER SHOULD BE MADE TO PEKING, EVEN IF IT WERE ONLY THE OFFER OF TWO OR THREE

REVSVORKERS AND EVEN IF IT WERE NECESSARY TO INVENT REASONS FOR

RELEASING THEM,

6. CATER WENT OVER OUR POSITION AGAIN AND THEN SUGGESTED AS HIS OWN

PERSONAL OPINION THAT A POSSIBLE COMPROVISE

POSSIBLE COMPROMISE MIGHT BE TO RELEASE

SOME OF THE NEWSWORKERS TO CHINA UNTIL THE EXPIRY OF THEIR SENTENCES. CONTACT REACTED IMMEDIATELY AND ENTHUSIASTICALLY TO THIS

SUGGESTION, BUT CONSIDERED IT IMPORTANT THAT THE HONG KONG GOVERN- MENT SHOULD BE IN A POSITION OF MAKING A PROPOSAL. HE THOUGHT IT LIKELY THAT PEKING WOULD ACCEPT SUCH A COMPROMISE, AND EVEN IF THEY

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/WERE

TOP SECRET

HONG KONG TELEGRAM NO, 27 TO FCO

VERE UNWILLING TO DISCUSS IT, AT LEAST THE PRESSURE WOULD HAVE BEEN

PUT ON THEM. HE SUGGESTED THAT WE SHOULD NOT OFFER ALL 11 AT FIRST

AND WE SHOULD GIVE NO IMPRESSION THAT IT WAS EASY TO ARRANGE. HE

FURTHER SUGGESTED THAT THE PROPOSAL SHOULD BE PUT AS THOUGH IT

CAME FROM HIM WITH THE IDEA THAT HE COULD THEN APPROACH THE HONG

KONG GOVERNMENT THROUGH CATER TO SEE IF WE WERE PREPARED TO CO-

OPERATE. CATER DID NOT REMIND CONTACT OF THE EARLIER, RATHER

DISCOURAGING HISTORY OF RELEASING TO CHINA', HE SAID THAT THERE

MIGHT BE SERIOUS LEGAL OBJECTIONS ON OUR SIDE BUT THAT HE WOULD

TRY TO OBTAIN THE REACTIONS OF THE GOVERNMENT WITHIN A FEW DAYS,

FCO PLEASE PASS PRIORITY TO PEKING.

SIR D. TRENCH

FILES

FAR EASTERN DEPT.

P.S. TO LORD SHEPHERD

SIR A. GALSWORTHY

MR. MORETON

HONG KONG DEPT.

P.U.S.D.

PRIVATE SECRETARY

[REPEATED AS REQUESTED/

тор

SECRET

NNNNN

288

in Dept.

TOP COPY TOP SECRET

CYPHER/CAT A

HONG KONG TO PEKING

TELNO 6

10 JANUARY, 1969

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RECEIVED I

ARCHIVES No.31

13 JAN 1969

FEC1 3C/1

ADDRESSED PEKING AS HYT-L NO. 6 OF 19TH JANUARY.

M.1.P.T.

INTELLIGENCE FRUM DELICATE SOURCES.

13.

COPY NO:

289

ра

IN OCTOBER 1968, A REPORT FROM A COMPLETELY RELIABLE

AND DELICATE SPECIAL BRANCH SOURCе GAVE STRONG INDICATION

THAT THE C.P.G. WAS CONSIDERING The EARLY RELEASE OF GREY

AND WAS PREPARING LOCAL COMMUNIST CIRCLES FOR THIS EVENTUALITY.

ON THE 9TH OCTOаck, AT A MEETING OF SENIOR OFFICIALS IN

COMMUNIST FILM CIRCLES, AN N.C.N.A. OFFICIAL OUTLINED

A DIRECTIVE REPORTEDLY GIVEN BY CHOU EN LAI TO A HONG KONG

DELEGATION WHICH HAD VISITED PEKING ALTHOUGH NO DATE WAS

GIVEN FOR THE DIRECTIVE IT WAS BELIEVED TO HAVE BEEN PASSED

OVER IN THE LATTER HALF OF SEPTEMBER. THE DIRECTIVE, WHICH

DEALT WITH THE GENERAL CONDUCT OF CHINESE COMMUNIST AFFAIRS

IN HONG KONG, MADE REFERENCE TO GREY, STATING HIS RELEASE

WOULD IN NO WAY AFFECT The HONG KUNG STRUGGLE. IT STRESSED

THAT THE PRESENT SITUATION WAS NUKE PAVOURABLE TO SINO-BRITISH

RELATIONS AND NOTHING SHOULD STAND IN THE WAY COF FURTHER

IMPROVEMENT). IT WAS EMPHASISED THAT THE ESSENCE OF THIS DIRECTIVE SHOULD be DISSEMINATED TO THE COMMUNIST LOVSK

¿Chaluns d¥ lhe 24TH OCTOBER, A SIGNIFICAT DATE IN THAT AN ERKONCLUS BELIEF WAS WIJELY HELD IN HONG KONG AT THE TIME

THAT HSUEH PING WAS SCHEDULED FOR RELEASE FROM PRISON ON THE

19TH OCTOBER.

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/14. A MORE

14.

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-2-

A MORE DETAILED INSIGHT INTO THE CONTENTS OF THE CHOU EN LAI -` DIRECTIVE WAS OBTAINED ON 17TH OCTOBER WHEN THE SAME N.C.N.A.

OFFICIAL GAVE A LENGTHY BRIEFING ON ITS CONTENTS TO A GROUP OF SENIOR LOCAL COMMUNISTS. IN REFERRING TO GREY HE CLAIMED THAT

"HIS RELEASE WOULD HAVE NO EFFECT ON THE PROLETARIAN WORLD REVOLUTISH BUT, ON THE OTHER HAND, IF HE WAS NOT RELEASED IT WOULD BE DIFFICUL TO CARRY ON THE STRUGGLE IN HONG KONG". HE DID NOT EXPLAIN THIS

POINT BUT WENT ON TO SAY THAT "THE HONG KONG STRUGGLE MUST NOT BE

ALLOWED TO INTERFERE WITH THE FOREIGN POLICY OF CHINA WHICH INCLUDED THE RELEASE OF GREY".

15.

ON THE 21ST NOVEMBER, AT A MEETING OF SENIOR OFFICIALS IN LOCAL PUBLISHING CIRCLES IT WAS SAID THAT "AFTER CAREFUL ASSESS- MENT PEKING HAD CONCLUDED THAT GREY'S RELEASE WOULD NOT AFFECT CHINA'S OVERALL POLICY BUT COMPATRIOTS (IN HONG KONG) MUST NOT EXPECT THE RELEASE OF CONFRONTATION PRISONERS IN RECIPROCATION". A WEEK LATER

THE SAME OFFICIALS ADMITTED THAT THE CONTINUED DETENTION OF GREY WAS NOW THE MAIN ISSUE (BETWEEN CHINA AND BRITAIN); IT WAS STATED THAT PEKING HAD REJECTED BRITAIN'S PROTESTS ABOUT GREY'S DETENTION

AND SAID THAT EVEN IF GREY WAS RELEASED THE HONG KONG GOVERMENT

WOULD NOT RELEASE DETAINEES OR JOURNALISTS.

16.

THE NEXT MOVE OF SIGNIFICANCE CAME ON 10TH DECEMBER

WHEN THE OFFICIAL IN CHARGE OF COMMUNIST PUBLISHING CIRCLES BRIEFED

HIS SUBORDINATES ON A MASSIVE PROPAGANDA CAMPAIGN WHICH, APPARENTLY, LOCAL COMMUNISTS HAD BEEN INSTRUCTED BY PEKING TO LAUNCH AS A COUNTER

TO THE WESTERN PUBLICITY ABOUT THE CONDITIONS OF GREY'S DETENTION

IN PEKING. THIS CAMPAIGN, WHICH WAS TO CONCENTRATE ON ALLEGED MALTREATMENT OF DETAINEES/PRISONERS IN HONG KONG AND DEMAND THEIR

RELEASE, WAS LAUNCHED ALMOST IMMEDIATELY AND IS STILL CONTINUING.

ITS HIGH-POINT WAS THE PRESS CONFERENCE GIVEN BY FAI YI MAN (PARAGRAPH 8 REFERS). IT IS OF ESPECIAL INTEREST THAT IT WAS EMPHASIZED THAT THE CAMPAIGN SHOULD NOT, IN ANY WAY, RELATE THE RELEASE OF GREY TO THE RELEASE OF DETAINEES/PRISONERS IN HÙNG KONG

INDICATING, PERHAPS, THAT THE C.P.G. DID NOT WISH TO BE PLACED IN A

POSITION WHICH WOULD LEAVE NO ROOM FOR MANOEUVRE.

17.

THE LATEST INFORMATION RECEIVED FROM DELICATE AND SECRET

SOURCES RELATING TO (REY CONCERNS A CONVERSATION ON 23RD DECEMBER BETWEEN FAI YI MAN AND LEUNG WAI LAM, DIRECTOR OF THE HONG KONG

BRANCH OF THE N.C.N.A. IN WHICH FAI ADMITTED GREY'S DETENTION HAD BEEN AN ERROR OF JUDGEMENT; IT HAD BEEN THOUGHT THAT IT WOULD PREVENT THE HONG KONG AUTHORITIES FROM ARRESTING OTHER "COMPATRIOTS"

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/IN

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HONG KONG TELEGRAM NO.6 TO PEKING

-3-

IN HONG KONG. IT WAS APPARENT FROM THE CONVERSATION,

HICH WAS VIRTUALLY A MOROLOGUE BY FA1, THAT FAI DID NOT HAVE

ANY IDEA AS TO CURRENT THINKING AND ACTIONS ÎN PEKING.

AT ONE STAGE HE SAID THAT THE HONG KONG GOVERNMENT WAS TRYING TO CREATE A... ATMOSPHERE FAVOUkaBLE TO GREY'S RELEASE AND

HE WENT ON TO SAY THAT HE THOUGHT NEGOTIATIONS BETWEEN THE

BRITISH AND THE 1.F.A. MUST de TAKING PLACE IN PEKING.

LEUNG DID NOT COMMENT UN THESE OØSERVATIONS WHICH, IT IS

SIGNIFICANT, WERE MADE ON THE SAME DAY AS Fal S INTERVIEW

WITH THE A.F.P. CORRESPONDENT (Sec PakaGRAPH 8).

27. GREY'S DETENTION IN PEKING MUST BE VIEWED AGAINST THE CANVAS OF

OVERALL C.P.G. FOREIGN POLICY SENICOLON THIS WAS MADE VERY CLEAR IN

Trie DIRECTIVE FROM CHOU EN-LAT. IT IS NECESSARY THEREFORE TO EXAMINE

THE PRESENT COMMUNIST THINKING IN REGARD TO HONG KONG SEMICOLON

THIS, BASED ON INTELLIGENCE FROM RELIABLE SOURCES, CAN BE SUMMED

UP AS FOLLOWS :-

(A) LOCAL COMMUNISTS PURSUED BLUNDERING TACTICS IN 1967. THEY MUST

DESIST FROM THESE TACTICS AND CONTINUE THE STRUGGLE BY DIFFERENT

MEANS ENTIRELY.

(B) AS A FIRST AIM THEY MUST WIN OVER THE SUPPURI OF 'THE 70%

UNCOMMITTEO PEOPLE' IN HONG KONG BY FLEXIBLE APPLICATION OF THE

TEACHING OF NAO, BY WINNING WHATEVER THEY CAN IN NEGOTIATIONS OVER

MINOK 133ULS, BY REALISTICALLY EXPLOITING SITUATIONS AS THEY ARISE

TO THE FULLEST PRACTICAOLE EXTENT AND, OF COURSE, BY PROPAGANDA

AND EDUCATION.

PEKING SEMICOLON THERE IS NO INTENTION OF TAKING OVER HONG KONG

AT THE PRESENT TIME.

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/(D) EVENTS

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-4-

(D) EVENTS IN HONG KONG HUST NOT BE ALLOWED TO INTERFERE WITH OR

AFFECT PEKING'S FOREIGN POLICY PLANS AND FOREIGN RELATIONS,

INCLUDING RELATIONS WITH BRITAIN. ALL RELATIONS WITH FOREIGN

COUNTRIES WILL BE DIRECTED FROM PEKING AND ALL ACTIONS SUBORDINATED

TO OVERALL POLICY.

(±) NO SUGGESTION MUST BE MADE THAT GREY'S RELEASE IS SPECIFICALLY

LINKED WITH THE RELEASE OF THE DETAINEES, THE NEWS WORKERS OR

ANYTHING ELSE. THE SITUATION MUST BE LEFT FLUID, TO ENABLE PEKING

TO DEAL WITH GREY AS BEST SUITS THEIR FOREIGN POLICY.

FCO PLEASE PASS PEKING.

SIR D.TRENCH

FILES

F.E.D.

P.S. TO LORD SHEPHERD

SIR A.GALSWORTHY

MR. MORETON

H.K.D.

P.U.S.D.

PRIVATE SECRETARY

(PASSED AS REQUESTED]

TOP SECRET

T'O.P

CYPHER/CAT A

ROUTINE HONG KONG

TELNO. 230

TOP SECRET

[Top copy (N°2) W. My hurray

SECRET

COPY NO,

FOREIGN AND COMMONWEALTH OFFICE

17 MARCH 1969

192

ADDRESSED F C O TELNO 230 OF 17 MARCH RFI PEKING

GREY.

IN THE COURSE OF A LONG MEETING WITH HIS IMMEDIATE SUBORDINATES,

HELD ON 7 MARCH TO CONSIDER THE DETAILED IMPLEMENTATION OF

CURRENT COMMUNIST POLICIES IN HONG KONG, THE SENIOR COMMUNIST

IN LOCAL PUBLISHING CIRCLES DWELT AT SOME LENGTH ON THE DETENTION

OF GREY. THIS IS THE FIRST RELIABLE LOCAL INTELLIGENCE WE

HAVE HAD ABOUT GREY SINCE THE DISCUSSION HERE OF A DIRECTIVE

LAST OCTOBER (MY TELEGRAM 2124 OF 28 OCTOBER)

2. SPEAKING OF THE NEED FOR LOCAL ACTIVITY TO BE SEEN IN THE

CONTEXT OF OVERALL CHINESE PEOPLE'S GOVERNMENT POLICY, AND THE

ABSENCE OF ANY PHYSICAL ASSISTANCE FROM CHINA FOR LOCAL COMMUNISTS,

THE OFFICIAL SAID THAT GREY'S DETENTION HAD BEEN A SOURCE OF

TREMENDOUS ENCOURAGEMENT TO THE ''MASSES'', IT HAS SHOWN

THAT FOREIGNERS COULD NOT DO AS THEY LIKED IN CHINA, AND IT HAD

DEMONSTRATED LOCAL COMMUNIST UNITY' (BETWEEN HONG KONG AND

CHINA?). APPARENTLY CLAIMING THAT GREY'S DETENTION WAS AT THE INSTIGATION OF LOCAL COMMUNISTS, HE DECLARED "OUR REQUEST HAD BEEN

ENTERTAINED BY THE MOTHER COUNTRY... AND EYE FOR AN EYE,

THAT'S WHAT WE WANT''. THE SPEAKER THEN ALLUDED TO GREY'S

DISTRESS AT BEING TOLD BY THE CHARGE D'AFFAIRES THAT THE LAST

RELEASE DATE FOR THE CHINESE (JOURNALISTS?) IMPRISONED

IN HONG KONG WAS IN 1971. GREY, HE CLAIMED, HAD COMPLAINED BITTERLY AND WANTED THEM ALL RELEASED RIGHT NOW''.

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/3. -THE

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SECRET

THE BRITISH HAD THOUGHT (WRONGLY) THAT THE RELEASE OF

A FEW PRISONERS WOULD RESULT IN GREY'S RELEASE (I.E. THOSE

NEWSPAPER WORKERS ARRESTED AT THE TIME OF GREY'S ARREST?). HOWEVER, ALTHOUGH THE CHINESE WERE INDIFFERENT TO GREY'S FEELING? AND NOT UNDULY BOTHERED ABOUT THE SITUATION, IT WAS ''QUITE PROBABLE'' THE SPEAKER CONTINUED, THAT A BRITISH PROPOSAL FOR

A SWAP MIGHT BE 'WORKABLE BUT, BEFORE THEY RELEASED GREY, THE CHINESE WOULD FIRST INSIST THAT ALL LOCALLY DETAINED COMMUNISTS

**WE WILL SWAP ONE OF THEM FOR (JOURNALISTS?) WERE RELEASED.

MANY OF US. THAT WILL BE OUR VICTORY'' HE DECLARED.

''WE

WILL NEVER CONSENT TO THE RELEASE OF GREY FOR ONLY A FEW OF

US HERE.''

OBSERVING THAT BRITAIN WANTED TO IMPROVE

RELATIONS WITH CHINA, PARTICULARLY IN THE COMMERCIAL FIELD,

THE SPEAKER REITERATED THAT THE CHINESE WERE INDIFFERENT SEMICOLON IF THERE WAS AN IMPROVEMENT, ALL WELL AND GOOD. CHINA WAS NOT

SHE WOULD KEEP THE INITIATIVE AND WOULD MAKE

THE ANXIOUS PARTY.

THE BRITISH *KOW TOW'' TO HER.

}

IF OTHER COUNTRIES MADE FRIENDLY

OVERTURES TO CHINA, THEY WOULD BE WELCOMED ON CHINA'S TERMS. BUT, AS FAR AS THE BRITISH WERE CONCERNED, THEY HAD NO STRENGTH AND COULD NOT PRESSURE THE CHINESE AS THEY HAD DONE IN THE PAST. FURTHERMORE, FEARFUL OF AGGRAVATING THE SITUATION, THEY DARED NOT MAKE ANY RASH MOVES IN CONNECTION WITH THE GREY CASE. REFERRING BRIEFLY TO FOREIGN PRESS ATTEMPTS TO CAMPAIGN FOR GREY'S RELF'SE, THE SPEAKER CLAIMED THAT THEY SHOWED THE INABILITY OF THE BRITISH TO MAKE ANY DIRECT ATTEMPT TO PUT PRESSURE ON

/5. HE.

CHINA.

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[

TOP

SECRET

HONG KONG TELEGRAM NO. 230 TO F.C.0.

HE CONCLUDED HIS REFERENCES TO THE GREY CASE BY POINTING

OUT THAT THE CIRCUMSTANCES SURROUNDING THE DETENTION OF GREY

ENABLED CHINA TO FORCE BRITAIN TO APPLY PRESSURE UPON THE HONG

KONG GOVERNMENT TO CHANGE ITS POLICY TOWARDS LOCAL COMMUNISTS.

FCO PLEASE PASS TO PEKING.

SIR D. TRENCH

FILES

FAR EASTERN DEPT.

HONG KONG DEPT.

1.R.D.

CONSULAR DEPT.

P.U.S.D.

SIR J. JOHNSTON

MR. MORETON

REPEATED AS REQUESTED/

NNNNN

TOP SECRET

า

•

TOR

TOP CO

145

FAT SCCRET

11 DECEMBER 1968

TO FOREIGN AND COMISUUSALTH OFFISS

RECFIVED IN AR LIVES No.31

1 11 DEC 1968

Fascii

Jos for you!

200 TELEGRAM 10. 22K OF 11TY LECEMBER PEPEATED PÅ SINAK

ALD PAYING.

119

ALEGRAM ND, 2146 : LEY.

CATER NET CONTACT AGAIN ON 10 DESANREF, COHTACT SAID THAT THE REPARKS

APOUT SREY MADE BY THE CHINESE PISSION IN LONDON CYOUR TELEGRAM

*2, 917 TO PEKING) VERE NOT AUTHOPIZED BY PEYING, THAT THE 13

AUTENGKETS HAD BEEN MENTIONED IN THAT VAY MADE MATTERS HORS

DIFFICULT FAR PƏKİES.

1. CONTACT ALSO SAID THAT THE PEKING GOYEPHMENT WIPE WORRIED BY THE

WILD-VIDE POLICITY AT THE TREATMENT OF CREY, BUT THE PUGLICITY

VAL MOT PAZING IT ENTIER FOR THEM TO RELEAGE HIM. THEY WERE STILL

CE SUPLATE. NJS RELEASE BUT BECAUSE OF THE PRESENT PUBLICITY IT

GLD TAKE SOME TIME, CONTACT SUCCESTED THAT THEY HIGHT PROSZED

NY STACKS. FOR EXAMPLE, THEY MIGHT IN THE NEXT TWO OR THREE

DORKS ALLOŲ SKEY TO KOVE MORE FREELY ROUND HIS HOUSE, THEN INTO THE

CORT, THEY IN PERIO SUSJERT TO QURFEV AND THEN ALLOW YIN TO

LEAVE FOR WHO HANG. ALL THAT WOULD TAKE TWO OR THREE MONTHS.

3. TUESE REMARKS BY CONTACT, WHICH HAVE A CERTAIN PLAUSIBILITY,

PIŁY THAT THE DUKEN GOVERNUTHT IS NOT NOW INTERESTED IN TEYING

TO BA PAIN OVEN OPEN, PROBABLY FEALIZING THAT THEY ARE UNLIKELY TO

FAT ANY CONVINCING METUSI.

A. THIC

TOR

SECRET

-2

A. THIS INTERPRETATION OF THE CHINESE GOVERNMENT'S PRESENT POSITIO

ID CONFIMED LY OTHER TOP SECRET INFORMATION ABOUT A BRIEFING

GIVEN ON 10 DECEMBER TO A COMMUNIST CROUP HERE. THEY WERE TOLD THAT

THE PUBLICITY OVER ORGY, YHICH WAS A DIVERSIONARY MANOEUVTE

BY UN TO DISTRACT ATTENTION FROM THE UNJUST PPRISONMENT AND

FRUTAL TACATMINT OF PATEJOTIC WORKERS IN HONG KONG GAOLS, WAS

A CURE FOR CANCER, THEY WERE OFFERED TO MOUNT A VICOROUS GAYPALON

AGAINST US II THE NEXT FEU PAYS DEMANDING THE PELEASE OF ALL

CONFRONTATIO!! PRISONS AND DETAINEES. IT WAS STRESSED THAT NO

REFERENCE SHOULD DE MADE TO CONDITIONS FOR SECURING GREY'S RELEASE,

OR 19DEFU A VY INFERENCE THAT THE RELEASE OF PRISONERS/DETAINEES IN

*** KOMG VAS IN ANY WAY RELATED TO Grey,

FCO PLEASE PASS IHMEDIATE PSKING,

CJA D. TRE "CH

Í RAFE VDED AS REQUESTED)

ADVANCE COPIES SENT

VILKA

CAR ENTRARUI DEBT 2.5. 70 1OKE SIETHEAÐ

IR A. GAS ORTHY

YR, LORETON

HONG KONG JOFT *.1.7.0.

PRIVATE SMCHETARY

TOP SECRET

CYPHER/CAT A

TOP CO:

TOP SECRET

papos

176/

119

| | RECEIVED IN

ARCHIVES No.31

TO FOREIGN AND COMMONWEALTH OFF ICM

PRI

HONG KONG

TELEGRAM NO. 2246

TOP SECRET

9 DECEMBER 1968

90EC 1968

FECBell.

I'm 10/12

ADDRESSED FCO AS MY TELEGRAM NO. 2246 DATED 9TH DECEMBER,

2246 DATED 9TH DECEMBER, REPEATED

FOR INFORMATION TO PEKING AND P.A. SINGAPORE.

MY TELEGRAM NO. 2180.

SINCE THE MEETING ON 13TH NOVEMBER, CATER HAS HAD THREE FAIRLY

SHORT MEETINGS WITH CONTACT ON 22ND AND 26TH NOVEMBER AND 3RD

DECEMBER, MAINLY TO INFORM HIM ABOUT THE RELEASE OF INDIVIDUAL

DETAINEES AND TO DISCUSS MINOR LOCAL ISSUES.

2. CONTACT HAS HAD NO REPLY OF ANY SUBSTANCE TO MAKE ON THE QUESTIONS

OUTSTANDING. HE HAS, HOWEVER. REPORTED ONE STORY THAT MAY BE OF

INTEREST. HE CLAIMS TO HAVE SEEN A REPORT TO PEKING PREPARED BY THE

LOCAL N.C.N.A. IN WHICH IT IS CONFIDENTLY ARGUED THAT IT WOULD NOT

BE DIFFICULT TO PRESS THE HONG KONG GOVERNMENT INTO HAK ING

CONCESSIONS ESPECIALLY OVER GREY. THIS OPINION IS ALLEGEDLY BASED

UPON THE N.C.N.A.'S DISCUSSIONS WITH THE POLITICAL ADVISER ABOUT

PRISON VISITS.

3. ON 3RD DECEMBER CONTACT SAID THAT PEKING WAS NOW APPLYING

CONSIDERABLE PRESSURE ON THE LOCAL N.C.N.A. EITHER TO SUBSTANTIATE

THAT CLAIM OR, IF THEY COULD NOT, TO LEAVE MATTERS TO PEKING. CATER

ASSURED CONTACT THAT WE WERE, OF COURSE, VERY CAUTIOUS IN OUR

DEALINGS WITH N.C.N.A. BUT CONTACT WARNED THAT WE SHOULD NOT BE TOO

INFLEXIBLE SINCE THEY WOULD HAVE TO SAVE FACE. HEF SAID THAT ANY GOOD

NEWS THAT CAME, FOR EXAMPLE ABOUT THE RELEASE OF GREY, WOULD CONE

THROUGH N.C.N.A.

14. THE ONLY

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- 2 -

4. THE ONLY CONTACT WITH N.C.N.A. SINCE THE PRISON VISITS WAS THE TELEPHONE MESSAGE RECEIVED ON 30TH NOVEMBER COMPLAINING ABOUT CONDITIONS INSIDE PRISONS (COPY OF TEXT ALREADY SENT DY BAG).

A BRIEF BUT UNSYMPATHETIC REPLY WILL BE PASSED BY TELEPHONE IN THE NEXT FEW DAYS. IF THE N.C.N.A. SEEK A MEETING WE SHALL FOLLOW OUR USUAL PRACTICE OF NOT AGREEING UNTIL THEY HAVE STATED THE SUBJECT

FOR DISCUSSION.

5. THESE REMARKS PROVIDE SOME SLIGHT CONFIRMATION THAT THE LOCAL N.C.N.A. IS EXERTING WHAT INFLUENCE IT CAN TO STIFFEN PEKING AGAINST

RELEASING GREY.

FCO PLEASE PAŠS PRIORITY PEKING.

SIR D. TRENCH

[REPEATED AS REQUESTED).

FILES:

HONG KONG DEPT

P.3. TO LORD SHEPHERD

SIH A. GALSWORTHY

KR. MORETON

FAR EASTERN DEPT F.U.S.D.

PRIVATE SECRETARY

TOP SECRET

YPHER/CAT A

TOP SECRET

COPY NO.

RECEIVED IN

TE HỒNG KONG

COMMONWEALTH OFFICE HARCHIVES No.31

TELNO 2091

16 OCTOBER 1968

CRET

Japa

ADDRESSED TO COMMONWEALTH OFFICE TELEGRAM NO. 2091 OF 16

OCTOBER,

REPEATED FOR INFORMATION TO PEKING AND POLAD SINGAPORE.

+33067-1968

FECI/1.

F=13/3

293)

MY TELEGRAM NO. 2031: GREY.

CATER'S MEETING MENTIONED IN PARAGRAPH 2 OF MY TELEGRAM

IN FACT TOOK PLACE ON 28 SEPTEMBER. HE EMPHASIZED THAT HSUEH

PING'S PROBABLE DATE OF RELEASE WAS 18 NOVEMBER AND NOT DURING

OCTOBER. CATER ALSO EMPHASIZED THE BAD IMPRESSION OF CHINA'S

POLICY WHICH GREY'S CONTINUED DETENTION WAS PRODUCING THROUGHOUT

THE WORLD.

CATER'S NEXT MEETING WITH CONTACT TOOK PLACE ON 14 OCTOBER.

HE AGAIN MADE THE POINT ABOUT KSUEH PING AND 18 NOVEMBER. CONTACT SAID HE HAD PASSED ON THAT MESSAGE AND UNDERTOOK TO REPEAT IT IN THE NEAR FUTURE.

3. CONTACT SAID THAT HE HAD HAD A REPLY FROM CHOU EN LAI'S SECRETARY NAMED PANG TO THE MESSAGE WHICH HE HAD UNDERTAKEN TO SEX ON 21 SEPTEMBER (MY TELEGRAM NO. 2007). BUT IT HAD BEEN EXPRESSED IN VERY GENERAL TERMS AND HAD NOT MENTIONED GREY BY NAME. PANG HAD EXPRESSED THE HOPE THAT SOON ALL OUTSTANDING PROBLEMS WOULD BE RESOLVED AND HAD SAID IT WAS NOT PEKING'S INTENTION TO PUT CONTACT IN THE POSITION OF HAVING TO ASK THE IMPOSSIBLE FROM THE HONG KONG GOVERNMENT.

FOREIGN OFFICE PLEASE PASS ROUTINE PEKING.

SIR D. TRENCH

[REPEATED AS REQUESTED/

/COPIES SENT TO SIR B. TREND, CABINET OFFICE, AND

TO SECRETARY, J.1.C./

FILES

C.O.

F.0.

DINUNN

HONG KONG DEPT.

P.A.DEPT.

P.S. TO LORD SHEPHERD

MR. MASON

MR. ROB

F.E.D.

SIR D. ALLEN

P.U.S.D.

PRIVATE SECRETARY

DIS MOD

ADVANCE COPIES SENT

TOP SECRET

14 Oct

CYPHER/CAT A

TOP SECRET

IMMEDIATE HONG KONG TO COMMONWEALTH OFFICE

TELNO 2085

14 OCTOBER, 1968

Copy M. 13

RECEIVED IN ARCHIVES N631 230CT 1968

TOP SECRET

Jaspas

hampio

MIO FE2134/1

KOLFESSED CO IZLEGPA" NO. 2015 OF 14TH OCTOBER LITEATUO PA SIIKASOLL

AND WASHEKITCH.

FO COYO UPALTH OFFICE AS OM HET CEM.

MY INEDIATELY PRECEDNIK TOLEGPAY PEFER,

AT Į METIM ON ETH OCTOFET, ATTENDED LY SENICH COPNUNIST FILS PERSONALITIFC, A SENICE K.C.NA. CFFICIAL DESOFRECE A DIRECTIVE IN

LECAD CUTLIKTS WHICH, IT STATED HAD KKEN PASSED BY PEEPISH

CHOU EN LAI TO A PONG KONG LELECATION PECENTLY VISITING PERING. APTER CUCU BAD RECEIVED A REPORT ON THE SITUATION IN HONG KONG FFCK THC ECLEGATION KE TEFFITED TO THE DETENTION OF ANTHONY GFEY AND FEPAFYED THAT IF HOS VETE RELEASED IT UÇUED IN NO WAY AFFECT THE BONG KONG "STRUCGLE'. WHILST URGING LOCAL COMUNISTE TO CONTINUE WITH THE 'STFUSCLE' THE PIEFJER STATED THAT THE PRESENT SITUATION WAS MOFE, FAVOURALLE FOR SINO-BRITISH EGOTIATIONS AND THAT *NOTHING SPOULD STAND IN THE WAY' OF THIS, HE STIPULATED THAT WHETE CONCESS- IONS HAD ALREADY BEEN HADE BY THE BRITISH, LOCAL COMMUNISTS SHOULD

AVOID PROVOCATIVE ACTION, PE HOPED TIS DA TICH COLD DE PETSUADED

TO MAFE FURTHER CONCESSIONS CHIEST OTHER CUNDITCIFIED) HATTEFS

WERE RESOLVED IN PREPAKING THE GROUND FOR FURTHER NEGOTIATIONS.

IN COMMENTING ON COMMUNIST TACTICS IN HONG KONG AS TO THE PROPAGATION

OF MAC THOUGHT THE PREMIER SAID IT WAS ESSENTIAL THAT LOCAL CONVI7-

-1CNS DE CORSIDERED AND STREESED THAT 'FLEXIBILITY' WAS THE KEY

SEHICOLOR PE POINTEL CUT THAT THE YEARSU OF STŒEY APE APPLICATION OF

PAO THOUGHT IN HONG KOIK KUST DIFFER FROM THAT IN CHINA, THE

/SPEAKER

TOP SECRET

-2-

เ TH.

THE DUOMBEI ATTACKED CONT HUE

VILLA OYLE DE LAZZO IN,hehu Pons, THE LIVES 17% 15. 160mk

15:

MINCIAL TASK OF FULHUETS PTRICTIR ERSATION' IN THE COLONY

SZK)COLOV FOREVER, HE STATED, CHOU WENTO THE DELEGATION THAT IT

À TO ANTE EXCELSINT GRAND

· ·

The NC.SA, CITÍCIA. STATS" TEMAT TIT ESST}/!.

PGIRTS ('LY OF THE WIRECTIVE WOULD BE DISSENILATED TO LOCAL

COALAIST FANK AND FILE BIFOLE 20TH OCTOBER.

2. FROM THE STATEMENTS PUTPCITING TO HAVE BEEN MADE BY THE CHRZSE PREMIER IT SCULE APPEAR TOẠT THE C.P.C. 15 CŒPIB IK

RELEASING ČETY, THE FEFEFCICE TO AN EXPUPCATED EFIEFING DYING GIVEN

TO THE COMMUNIST BANK AND FILE BY 203H CCTCEEF COULD NYFER THAT

IT IS INTENOLU TO MAKE THE RELEASE ON OF SHOTTLY AFTER THAT LATE

OVE KIRCH, TIFFC IS EVIDENCE TO SUGGEST, 19 MISTAKENLY FELIEVED 11.

*CHE COMPUNIST CIFCLES AS TIT DAY FOLLOWING THE SCHEDULED FELEAS!"

FROM PRISON CF HSLER PING, HE LOCAL N.C..N.A. KIPORTOK,

HE IS OF COURSE NOT LUE FOR RELEASE UNTIL NIL-NOVEMBER, CIQU'S

APPARENT APKISSICH THAT THE C.P.G. 13 PREPARED TO NAVE CONCESS10:3 18 AN EFFORT TO EASE SIR-FITISH TELUSIONS 14: THE NCPE OF TECHDECAL GESTURES, IS THE FOST SIGNIFICANT NEW POINT TO FIERGE. THE PEPANDER OF CKQU'S DISSEFTATIM TO A LATGE EXTENT CONTITYS FECENT FEPORT3 THAT THE COPPLISTS INTEND TO ALLOW OPEN CONFECNTATION WITH THE COVERKJENT TO FADE AWAY SEMICOLON PC-EVER, THE IS NOT TO SAY THAT THEY WILL NECESSA ILY ALLOW A COMPLETE TETUN TO THE STATE OF

AFTNES PORTAJNING BEFORE COLFFOUTALIGN. AFISHI FROM THIS LATEST DIRECTIVE THE COPNUNISTS ARE LIKELY TO LAY EVEN OFEATED ENTHASIS

ON TUNITED FICHT' VOEK IN THE COMING MONTES,

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/F.0. PLEASE

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HONG KONG TELNO 2085 TO 0.0.

-3-

F.O. PLEASE PASS WASHINGTON

SIR D TRENCH

[REPEATED AS REQUESTED AND COPY SENT TO CABINET OFFICE]

PILES

C.O. H.K.D. P.A.D.

F.E.P.D.

GUIDANCE DEPT

I.R.D.

SIR A. GALSWORTHY

LIR, MABON

P.S. TO LORD SHEPHERD

F.0. F.E.D.

O.P.A.

O.L.A.

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ADVANCE COPIES SENT

CYPHER/CAT A

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SECRET

HONG KONG

·TO

COMMONWEALTH OFFICE

TELNO 2053

3 OCTOBER 1968

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Вра

COPY NO.

REC ́IVED IN

{ARCHIVES No.31 230CT 1968

Fe13/2

293

mio

ADDRESSED TO COMMONWEALTH OFFICE AS MY TELEGRAM NO. 2053

OF 3 OCTOBER,

REPEATED FOR INFORMATION TO PEKING.

MY TELEGRAM NO. 20311 GREY

I UNDERSTAND CONTACT IS LEAVING FOR AMERICA WITHIN A DAY OR TWO (IN AN ENDEAVOUR TO RETRIEVE AN ERRANT CONCUBINE) BUT THAT HE CAN BE EXPECTED BACK AFTER ABOUT ONE WEEK. PRESUMABLY WE CAN EXPECT NO PROGRESS IN THE MEANTIME.

COMMONWEALTH OFFICE PLEASE PASS ROUTINE TO PEKING.

SIR D. TRENCH

/REPEATED AS REQUESTED/

/COPIES SENT TO CABINET OFFICE (FOR SIR B. TREND).

AND SECRETARY JIC/

FILES

C.0. HD. OF H.K. DEPT.

F.0.

P.A.D.

P.S. TO LORD SHEPHERD

MR. MASON

MR. ROB

F.E.D.

SIR D. ALLEN

P.U.S.D.

PRIVATE SECRETARY

DIS MOD

NNNNN

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Cypher/Cat A

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PEKING TO FOREIGN AND COMMONTALTH OFFICE

Tel lio.965

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19 October 1968

Addressed to Foreign Office and Commonwealth Office telegram No.965 of 19 October, repeated for information to Hoa Long Hood

Hong Kong telegram No.2085.

REUNIVED ARC V

21 OCT 1968

FEC13C/1

This is a very encouraging report. I agree reasonable inference from Chou's remarks is that he is preparing Hong Kong Communists for release of Orey.

2. It is also encouraging on broader issue of Sino-British relations, though I hope conclusion is not drawn that Chinese will now make concessions and nothing further is required from us,

Chou's remarks indicate value of concessions already made by us and importance of further gestures. If detente. is to proceed both sides will have to contribute,

FCO pass Priority Hong Kong.

Hr. Cradock

[Repeated as requested).

PILE 3:

Far Eastern Dept

Hong Kong Dept

P.U.S.D.

Guidance Dept

Information Research Dept

Sir A. Galsworthy

Sir J. Johnston

P.S. to Lord Shepherd

Overseas Police Adviser

Overseas Labour Adviser

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