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Then & now: Plane speaking

The legal obligation to hand assets to the new Communist government occasionally clashed with cold-war realities, writes Jason Wordie

 

Under international law, when a new government is recognised diplomatically, the assets of the former regime are passed across to its successor. And so it was in Hong Kong after the British government recognised the People's Republic of China in January 1950 - the first major Western power to do so. Assets formerly held by the Nationalists went to the new regime, both in Britain and in British colonial territories such as Hong Kong and Singapore, and mostly without fuss.

The old Bank of China Building is the most obvious local example. Construction on it started in 1947, just as the civil war situation on the mainland became critical. Bleak local humour had it that the building would be finished just in time for the Communists to take over the city. The wags were wide of the mark regarding Communist intentions for Hong Kong but they were right about the building.

Chinese government-owned department stores were also handed across. The old China Emporium in Central was opened in the 1930s by the Nanking government but it became a much greater commercial success after 1950. Like other "China products" stores across Hong Kong and elsewhere, including Singapore, these shops provided an excellent display window for the country's best manufacturers - and much-needed hard currency at a time when China was desperately isolated economically by a United Nations embargo.

One significant national asset that should have been transferred at this time but was not involved commercial aircraft. Mostly forgotten now, this failure soured relations between Britain and China at a time when diplomatic recognition had briefly made a new, friendlier era seem possible. Some 70 planes were flown to Hong Kong just before the Communists assumed power in 1949 and remained here while the question of their ownership was resolved.

The China National Aviation Corporation and Central Air Transport Corporation both had substantial American investment, as well as cross-interests with Pan American Airways. Some of the top-level management were also American. Serious concern existed in Washington that planes owned by these corporations would fall into Communist hands and, consequently, considerable American political influence was brought to bear to prevent this. As was often the case, a fundamentally local situation became a proxy for wider international concerns. Hong Kong's own best interests were, inevitably, sidelined.

In his memoir Via Ports, then-governor Sir Alexander Grantham recalled that his advice to senior airline management was to remove the planes forthwith to Formosa (Taiwan). Discussions about diplomatic recognition were already ongoing in London and he knew that, when it came, Hong Kong would be legally obliged to hand over the aircraft.

Grantham described an amusing situation where General William Donovan, the former wartime director of the United States Office of Strategic Services, came to see him. "Wild Bill", as Donovan was appropriately nicknamed, entered the room and "thumping the table, metaphorically if not physically" - insisted that the planes be handed over or "he would make it hot for me with the authorities in London". Neither "impressed nor offended" by this "bullying attitude", Grantham saw him out, and later noted that Donovan "used the same tactics with the Attorney-General, with equal lack of success".

But - eventually - cold-war realities prevailed. Despite recognition of the Communist regime, instructions were received from London and the Hong Kong government handed over the planes to the Americans, who immediately took them to Formosa.

 

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