Hard bargains

PUBLISHED : Sunday, 01 January, 2012, 12:00am
UPDATED : Sunday, 01 January, 2012, 12:00am


Unexpected glimpses into history's 'paths not taken' can be highly illuminating. Probably Hong Kong's least-known turning point - and perhaps the most shocking one to many contemporary Chinese 'patriots' - was the offer made by the Chinese government to Britain in 1938 for the outright purchase of the New Territories. Extensively researched by David Macri, a former doctoral student at the University of Hong Kong, details of these negotiations were recently published in an obscure local academic journal.

After years of steadily deteriorating relations, the all-out Japanese invasion of China began in July 1937. Following initial rapid advances, hostilities stalemated after the capital at Nanking (modern Nanjing) and other significant coastal port cities from Tsingtao south to Canton were captured. In the process, China's supply lines with the outside world were critically compromised.

Hong Kong under British rule was the major supplier of war materiel to the mainland until its own capture by the Japanese, in December 1941. The only other major route in was via Burma; supplies were taken overland into southwest China. Britain closed the Burma Road in 1940, in response to Japanese diplomatic pressure, and, following the fall of Hong Kong, all vital supplies, for the rest of the war, entered the main- land from India by air.

In the late 1930s, in an attempt to strengthen Britain's commitment to the Chinese war effort, the Nationalist government initiated negotiations to sell the New Territories for GBP20 million. The money thus raised would finance war materiel purchases on the international market. And, of course, outright cession of the New Territories would have negated - at least on paper - any require- ment for negotiations over the expiration of its lease in 1997.

These days, the popular view inclines towards 'unstinting heroic Chinese resistance to the hated invaders'. But for long periods, the Nationalist government actu- ally favoured a negotiated peace settlement with Japan. Broader internal political considerations were at stake. By removing the Japanese, the Nationalists could concentrate their efforts against the Communists. Nationalist leader Chiang Kai-shek's famous remark - 'the Japanese are an irritation of the skin; the Communists are a disease of the spirit' - demonstrated where his strategic priorities lay.

Details surrounding the initial negotiations remain shadowy but the picture that emerges illustrates Hong Kong's neutral role on the margins of Chinese politics. Madam Chiang Kai-shek and siblings Madam Kung (wife of Nationalist finance minister H.H. Kung) and T.V. Soong (the Nationalist foreign minister) had gathered in Hong Kong following a failed coup attempt in Canton, and quiet negotiations for peace with Japan were initiated from here.

The principal go-betweens in these discussions were community leaders Sir Shouson Chow and Sir Robert Kotewall. Three years later - in a remarkable display of Hong Kong-style 'pragmatism' - both figures led the Japanese victory parade in Hong Kong.

Negotiations over the New Territories purchase scheme in 1938 were, at all times, initiated by the Chinese. The unstated assumption was that Hong Kong Island and Kowloon were de jure British, and that the sale of the New Territories would simply enlarge the existing colony.

Hong Kong government officials and the Colonial Office in London were receptive to the idea, but it was comprehensively rejected at an interdepartmental meeting in London, in August 1938, and finally abandoned in 1939. The British need to conserve military and financial resources against the looming European threat from Nazi Germany and a desire not to further provoke the already very aggressive Japanese were the main deciding factors. In its place, a loan of GBP10 million was made to China (which remains un-repaid), and an opportunity to influence the colony's future status - and change the course of history - was lost.

Access to Indian Ocean port facilities was crucial 70 years ago, which helps explain the enormous Chinese investment in Myanmar's ports and infrastructure today