EXPORTS TO CHINA (Hansard, 10 May 1951)

§ Mr. Churchill (Woodford)
I hope the Committee will forgive me if I try to look at this topic in its general setting. I am quite sure that justice cannot be done to it in any other way. In November, 1949, I was in favour of the recognition of Communist China, provided that it was de facto and not de jure, or as it would probably be called among the old school tie brigade of the party opposite, "de iure," and provided that it could be brought about as a joint policy with the United States and the Dominions.
The United States had largely disinterested themselves in the civil war in China, and Chiang Kai-shek, who used to be paraded to me in those bygone days of the war as the champion of the new Asia, was being driven off the mainland. I could see no reason why, if we had diplomatic relations with Communist Russia, Communist Poland and other countries inside the Iron Curtain, we could not have them with China. Recognition does not mean approval. One has to recognise and deal with all sorts of things in this world as they come along. After all, vaccination is undoubtedly a definite recognition of smallpox. Certainly I think that it would be very foolish, in ordinary circumstances, not to keep necessary contacts with countries with whom one is not at war.
However, a little later, the Government recognised Communist China, not only 2158 de facto but de jure, and they recognised it as an isolated act, without agreement with the United States or joint action with the Dominions. The date was oddly chosen. I am told that it was three days before the Colombo Conference of Commonwealth Foreign Secretaries. One would have thought that it was a matter that might have been talked over there. The response of the Chinese Communists was very surly. They took all they could get from our recognition and gave nothing in return. They did not even recognise us. The United States were much offended by our isolated action, and that is how that part of the story ends.
Presently, the situation in the Far East was transformed and everything was sharpened by the Communist aggression in Korea, and was presently brought to a much more serious and intense position by the Chinese intervention. When the United Nations definitely passed the resolution, to which His Majesty's Government assented, branding China as an aggressor, we were left in an uncomfortable and illogical position of having diplomatic relations with a Chinese Government formally censured by the United Nations, and which was engaged in attacking United States soldiers—United Nations soldiers—and also our own small contingent in Korea.
There is no doubt that the maintenance of our relationship with Red China had been and has been totally devoid of advantages to us or to the United Nations, and that it became a reproach against us in wide circles in America. This made a bad foundation between us for discussion with the United States about all the vexing questions of trading with the enemy—as the Chinese Communists had undoubtedly become. Of course, it is the first interest of Britain and of Europe, and also, I believe, of the United States, to make some kind of defence front against the at present overwhelming Soviet power on the European Continent, and all of us on both sides of the House saw good and cogent arguments for our not getting too deeply involved in Korea, still less in China.
We on this side, without taking academic views about the 38th Parallel, were most anxious that the United Nations Forces should not go beyond the waist or narrow part of the peninsula and should keep a broad no-man's-land 2159 between their own front and the Yalu River. It did not seem wise to broaden the front by another 200 or 300 miles by emerging from the narrow part of the Korean Peninsula into this much expanded area. As it was the policy of the United Nations and of the United States not to enter Chinese territory or even to bomb beyond the frontier line, it seemed especially dangerous to advance close up to that frontier line. It is always dangerous in war to march or walk close up to a wall without being allowed to look over the other side and see what is going on there, and act against it if necessary.
Therefore, personally, not having an opportunity of obtaining any technical information, I wanted to stop at the waist and have a no-man's-land. I think that there was pretty general agreement on that in the House. However, General MacArthur's forces became heavily involved on a much wider front far beyond the waist, and a series of heavy Chinese counter-attacks were delivered. War was in fact begun on a considerable scale between the United Nations and China without any formal declaration of war on either side; and that is the position that exists today with ever-intensifying gravity.
There is no doubt that the Chinese Communist Government is waging war at Russian instigation and with powerful Soviet aid in weapons and supplies, against the troops of the United Nations. Our recognition and maintenance of diplomatic relations with China has undoubtedly been a cause of misunderstanding with the United States, and has made more difficult the discussion of our other joint problems with them in the Far East. I cannot believe that a policy of appeasement to Chinese Communist aggression will bring about peace with Red China. On the contrary, any form of weakness or indecision or division among the anti-Communist forces will only prolong the fighting and increase its scale. I have ventured to deal with these rather wider aspects this afternoon in order to place the matter objectively before the Committee.
I now wish to consider the position of the United States. I always watch the hon. Gentlemen below the Gangway opposite, as that is where the weather 2160 comes from. I have an advantage over the Foreign Secretary in being able to keep them directly under my view, whereas if he were to keep his head turned, it might well be thought that he was paying them undue attention. We cannot watch and listen to them without deriving the impression that their sympathies are, on the whole, more with Red China than with the United States. But Red China has been branded as an aggressor by the United Nations with the full assent of the present Socialist Government.

§ Mr. Sydney Silverman (Nelson and Colne)
Not with their full assent.

§ Mr. Churchill
Even those Ministers who have resigned, were members of the Government at the time that decision was taken.
We now know that the Communists are killing United Nations soldiers and our soldiers. We know that they have established a reign of terror in China, with horrible executions and mob butcheries and a merciless purge characteristic of Communist tyranny wherever it is applied, especially in the transitional stages, all over the world. We ought not, I say, to have any sympathies with Red China, and the more they are expressed and manifested in this House, the more harm is done to our relations with the United States. After all, the United States are doing 19/20ths of the work and suffering losses of 50 and 60 to one compared to us. We must try to understand their position.
We really cannot get through life either as individuals or as a State, without trying to put ourselves in the position of others with whom we come in contact and have to deal. The United States have lost nearly 70,000 men, killed, wounded and missing. We know how we feel about the Gloucesters, and that should enable us to measure the feelings of people in the United States, in many cities, towns and villages there, when the news comes in of some one who has lost a dear one in the fighting overseas. Feelings are tense, very dangerous to distress or to disturb. We can measure these American feelings by our own. They also know that they are bearing virtually the whole weight of the Korean war.
2161 Look also at all the money they have given to Europe. Look at the money they have lent or given to our country during the period of Socialist rule. I doubt whether we should have had the Utopia which we enjoy without their aid. Where should we all be without their assistance in Europe? Free Europe is quite incapable of defending itself, and must remain so for several years whatever we do. These considerations must be kept in our minds when we discuss these matters of trade which I consider minor matters, and the different points of friction between us and the United States. What would be our position in this island if Western Europe were overrun as it would be——

§ Mr. Harold Davies (Leek)
If we went to war with China.

§ Mr. Churchill
The hon. Member really must learn to cultivate a sense of proportion in the matter. It is not a matter of whether there is a war with China or not but whether there is a rift between Britain and the United States or not. That is the thought that haunts me, and I hope and trust that it will be considered everywhere else. What would be our position, I say, if Europe were overrun, as it would be but for the immense American ascendancy in the atomic bomb, and the deterrent effect, not necessarily upon the Russians but upon the Communist Kremlin regime, of this tremendous weapon? The fact that we are bitterly divided and absorbed in party strife, and kept month after month——

§ Mr. Ellis Smith (Stoke-on-Trent, South)
So is America.

§ Mr. Churchill
Quite true, but they have at any rate a fixed date for their elections. To exist month by month in such an electioneering atmosphere as this, may provide many topics to fill the public mind and what is left of the newspapers, but our external dangers do not diminish meanwhile; they grow continually. It is said that we are getting stronger, but to get stronger does not necessarily mean that we are getting safer. It is only when we are strong enough that safety is achieved; and the period of the most acute danger might well arise just before we were strong enough. I hope that may be pondered upon because it is a very potent and relevant factor.
2162 Our great danger now is in pursuing a policy of girding at the United States and giving them the impression that they are left to do all the work, while we pull at their coat tails and read them moral lessons in statecraft and about the love we all ought to have for China. I would plead in the very short time I beg leave to keep the House this afternoon—because our time is very limited—for a sense of proportion—[HON. MEMBERS: "Hear, hear."]—yes, on the grounds of national safety and even of survival.
I say that we must think not only of ourselves; we must think of our friends in Europe; of the Norwegians, the Danes, the Dutch, the Belgians, the French and others who lie still nearer to the Soviet Power with its mighty armies and satellite States. Their plight is even worse than ours. We, at least, have the Channel, although even that as a means of safety would, without air superiority, soon depart; and air superiority cannot be obtained by us without the fullest aid from the United States. Therefore I say that on every ground, national, European and international, we should allow no minor matters—even if we feel keenly about them—to stand in the way of the fullest, closest intimacy, accord and association with the United States.
I felt bound to raise these matters, these broader considerations, because we really cannot discuss the intimate and complicated matters which have brought about this debate without holding foremost in our minds all the time the overwhelming issues. If the Government so conduct our affairs that we become a cause of diminishing American help for Britain and for Europe, and stimulate the sentiment for isolation which has powerful exponents in the United States, they might well become primarily responsible, not only for our ruin, but for that of the whole of the free world. It is on this basis, and only on this basis, that I venture to examine the details, or some of the details, or some of the aspects of the exports to Communist China which are the cause of the debate—[HON. MEMBERS: "Hear, hear."] That is not, I hope, a reproach against me for having placed the matter in its proper setting.
These questions of raw materials and of trading with the enemy were brought prominently before us by the resignation of the three Ministers a fortnight ago. 2163 When the resigning Ministers threw the blame for raw materials shortage in Britain upon the United States, the Americans immediately were greatly stimulated in making their counter-charge that we, while still recognising the enemy and killing them by the thousand in the battles that were taking place, were making profits directly or indirectly out of commerce with them. This tangled question of the supplies of what are called strategic materials to Red China from Great Britain and the Empire and our tropical Colonies is of course only part of the subject, much of which lies in spheres and forms, which are beyond our control. Red China is not the only place and Hong Kong is not the only channel.
Some months ago I complained of the export of high grade war manufacture, and even machines and machine tools, to Russia or its satellites. The Government denied the charge, but took steps to stop it. Whether those steps have been successful I cannot pronounce, nor could we even in a much longer debate reach any definite conclusions here. But even on the direct point of strategic materials being sent by us to China, through Hong Kong or by other routes, it would be difficult this afternoon to reach plain and final conclusions. The statements made by the Minister of Defence, and after him by the Prime Minister, created, I am sure I am right in saying, general astonishment that these Ministers, whose responsibility in the matter is outstanding, were not better informed. It seemed typical of the way in which our affairs are conducted. It was refreshing on Monday to listen to what seemed at first to be a much more precise statement from the new President of the Board of Trade. Here at least there seemed to be evidence of the workings of a clear-cut mind which had been, in the last week or so, turned upon the problem, or upon his brief of the subject.
So far as the regions covered by the figures given by the right hon. and learned Gentleman are concerned the general impression was that the scale of these transactions from the United Kingdom was small, and that there could be no ground for saying that the Chinese have received important assistance from the United Kingdom with the approval of His Majesty's Government. The exports from the United Kingdom are indeed 2164 petty, and the right hon. and learned Gentleman the President of the Board of Trade was right in saying that it is wrong to suppose that they have been a factor of any significance in the Korean campaign.
We were surprised, however, that he confined his lengthy, well-drafted statement to the exports from the United Kingdom and only mentioned, by reference to the previous answer by the Under-Secretary of State for the Colonies, the exports of rubber from Malaya. This is the gravamen of the whole dispute. "Exports of rubber from the Federated States of Malaya and Singapore to China," said the Under-Secretary on 12th April, "amounted in all to 77,000 tons in 1950, and are estimated to amount to 46,000 tons"—I am speaking in round numbers—"in the first quarter of 1951." Up till 9th April therefore the Government have taken no effective action in this matter and the exports in the first quarter of the present year show an immense and significant increase on what took place last year; 46,000 tons a quarter is—and I hope I am right in my arithmetic—184,000 tons a year—[HON. MEMBERS: "That is right."]—Is that right? Thank you very much. That is to say two-and-a-half times the annual rate of 1950. That is a very remarkable, substantial, significant advance at this time when matters are becoming more and more tense, serious and critical.
The right hon. and learned Gentleman—I shall have to ascertain the right hon. Gentleman's wish as to whether I should continue to insert the complimentary and formal token "learned"—it will be just as he likes, but I am doing it for today, anyhow—the right hon. and learned Gentleman ended his statement by saying that the Government had from 9th April announced their intention, and that of the Governments of the Federation of Malaya and Singapore, to control exports of rubber down to the estimated civilian requirements of China, namely, about 2,500 tons a month.
I raised the point of how the Government could be sure that these 2,500 tons a month would be solely devoted to civilian purposes, considering that, in time of war, any Government can commandeer for military purposes all civilian supplies. The right hon. and learned Gentleman admitted that it was "quite difficult"— 2165 that was his expression—to ensure that these limited rubber supplies were not being misapplied. Anyhow, on the Government's own figures, China has already had in the first quarter of this year, imports, approved formally and officially by us, of 45,000 tons; or half as much again as would be the full civilian Chinese ration, as calculated by the Government, for the whole year.

§ Mr. Blackburn (Birmingham, Northfield)
Would the right hon. Gentleman forgive me for one moment?

§ Mr. Churchill
I thought we were on the same side of the line.

§ Mr. Blackburn
The position is a little worse than that, because these figures, as I have been informed by the Colonial Office this morning, are exclusive of exports to Hong Kong, which in effect go to China, and therefore, the figure may be approximately double.

§ Mr. Churchill
That is a new and very valuable fact of which I was not aware and I trust that it will be dealt with by the right hon. and learned Gentleman when he speaks in this debate.

§ Mr. Churchill
No—

§ Mr. Ellis Smith
He is not on the right hon. Gentleman's side.

§ Mr. Churchill
The hon. Member for Leek (Mr. Harold Davies) will have a chance later.
If that is so, that will have altered my argument, because we were, in fact, no doubt unwittingly, misled by the President of the Board of Trade the other day. At any rate, my argument may be doubled in strength by the figures, if they are right, but it is not in any way vitiated by the figures I have quoted which show that the Chinese have already had half as much again of what the Government consider is their full civilian ration for the whole year.
The question we have to consider today in this sphere, is whether it is worth while to go on nagging, and haggling, and higgling with the United States over a lot of details, and extremely complex details, and making little progress and creating ill-will out of all proportion to any advantages gained by us. The United States have a valid complaint on the 2166 admitted fact that rubber is an indisputable strategic material. We ought not to be exporting any rubber to China at all, and we on this side of the Committee suggest to the Government, to the Foreign Secretary, who has a direct responsibility in this matter, that as far as they have it in their power, they should stop at once and completely all further export of rubber to China. If there is smuggling, we should do our best to prevent it, and we ought not ourselves to be in the position of agreeing that any rubber should be sent at the present time to Red China.
Surely this would be a simple and straightforward course? It is not so much for the actual fact that I am concerned, but for the consequences. To stop it abruptly and firmly and decisively would clear the air and it would make possible, and perhaps fruitful, the far more complicated discussions about the further steps that are necessary to control any trade which we and the Americans may have with China. It would be a step that everybody could understand, and it might well be the prelude to a whole-hearted agreement with the United States in this sphere, which causes offence and anger far beyond its actual military importance.
I hope we are not going to have another back-biting controversy with the United States about whether any goods are going from Japan into China with their consent.

Hon. Members
Oh.

§ Mr. Churchill
Perhaps I am going to use the very argument of which the hon. Gentleman is thinking. Anyhow, it is my show at the moment. It might be a very good debating point, if there were really no division between the two sides of the Committee on the matter, here this afternoon, or on some other occasion—a very good debating point—and it is a point which might well be used between Governments if we were bearing an equal burden with the United States—[HON. MEMBERS: "Oh."]—an equal burden in the war. But, in the present circumstances, is it really sensible——

§ Mr. Poole (Birmingham, Perry Barr)
Do not write down your own country all the time.

§ Mr. Churchill
Will the hon. Member yell it out again?

§ Mr. Poole
I suggested that the right hon. Gentleman should not so continuously write down his own country.

§ Mr. Churchill
There is no better way of writing down your own country than to make boastful and untruthful statements about facts which are known to all. There is no doubt or question of the proportions of the troops who are involved or of the losses which are being suffered in the Korean War. The hon. Member should not put out his hand like that; does he accept what I say? Really, the idea that we can uphold the prestige and standard of our country by adopting positions which are entirely divorced from actual and well-known facts is one of those which I think hon. Members above the Gangway opposite should endeavour to rise above.
I say it would be a great pity to get drawn into this discussion with the United States in detail at the present time and in the present atmosphere, irritating them about minor things, making ineffective repartees. That is not what we should do now when our life and future depend upon their aiding the Atlantic Powers in Europe. Neither let us be baffled by the local difficulties about Hong Kong. I have no doubt they can be solved by measures agreed upon with the United States. Together we have the command of the sea and of the air.
As to a direct attack by the Chinese upon Hong Kong, it must, of course, be resisted by force of arms. We have every sympathy with our fellow-subjects in Hong Kong, but the greatest disservice that we could do them would be to allow a rift to open between us and the United States as a result of our bowing to Communist threats and blackmail.
Let me make this passing observation. Of course, it is always very dangerous, and never more so that at the present time, to predict anything that may happen in the future. But in my view, a Soviet attack will not arise because of an incident. An incident may be a pretext, but the moment will be fixed by the result of long, cold calculations, or miscalculations, and among the factors which will play a potent part the season of the year, including harvest time, will be extremely important. I do not, therefore, consider that the question of our doing our duty by Hong Kong should be overclouded by all the 2168 statements that may be made that this will bring on a general war. Nobody knows what will bring on a general war except those who have the supreme power in the Kremlin.
Our advice to the Government is to stop rubber entirely now and to reach an agreement with the United States on the general question of trade with China in a spirit which will make the United States feel that their cause is our cause, and that we mean at all costs to be good friends and allies. I read with emotion the testimony of General Marshall before the Senate Committee—[Interruption.] The right hon. Gentleman had better take a back seat; well, he has done so.

§ Mr. Churchill
It is quite right that the right hon. Gentleman should take a back seat. He made a statement the other day about no appeasement and so on. I was glad to read it, but he had spoiled it all beforehand by the remark he made at a most disturbing moment in the United States, that now, perhaps, things will go better in Korea, once General MacArthur had been dismissed. If anything——

Hon. Members
Withdraw.

§ Mr. Churchill
Hon. Members will not frighten me by their yelling. If anything could at that time have got about 50 million Americans furious with him, and with the Government for whom he spoke, it would have been to use language like that. I am very glad that he tried to undo the harm he did by making his speech against appeasement.

§ Mr. Shinwell
The right hon. Gentleman has just asserted that I declared that the dismissal of General MacArthur should be brought about because it would be of advantage to us. [HON. MEMBERS: "No."] Let me tell the right hon. Gentleman that the statement which he has just made, in which he alleges that I made that statement about General MacArthur, is utterly false, and I challenge the right hon. Gentleman to produce the written evidence or withdraw. I challenge him in this House to produce the written evidence that I made a statement similar to what he has just said.

§ Mr. Churchill
I understood, from what was reported in the Press——

§ Mr. Shinwell
Which Press?

§ Mr. Churchill
—that the right hon. Gentleman said that perhaps things will now go better in Korea since General MacArthur had been removed.

§ Mr. Shinwell
Let me tell the right hon. Gentleman that I never made any such statement. I challenge him to produce that statement.

Hon. Members
Withdraw.

§ Mr. Churchill
No, I would not think of withdrawing. I will produce the newspaper report on which I base myself. I have not got it in my notes at the moment, but I will get it. I thought it a most unfortunate statement.

§ Mr. Shinwell
I never made that statement.

§ Mr. Churchill
We shall be very glad to hear what was the statement which the right hon. Gentleman actually made. It is always part of the tactics to throw the blame on to the Press, and so on. However, I will produce the Press reports which I read on the subject, and I think they were pretty widely noted. Of course, nobody wishes to accuse the Minister of Defence of crimes which he has not committed.

Hon. Members
Sit down.

§ Mr. Shinwell
I shall not sit down. May I tell the right hon. Gentleman that he has made a most false statement about me in this House, and that he has no right to make such statements about Ministers?

§ Mr. Churchill
Do not be so nervous about it.

§ Mr. Shinwell
I am not nervous about it. [Laughter.] You should be ashamed of yourself. The right hon. Gentleman has done more harm to this country than anyone.

§ Mr. Churchill
Very helpful, but it is not the right hon. Gentleman who would have any right to teach me my conduct. However, I am sorry to see him so infuriated. The French have a saying that it is only the truth that wounds. I hope that is not the case, because no one 2170 would be more pleased than I to find him not guilty on this occasion.
May I now return to the few words I have still to say to the House. Our advice to the Government is to stop the export of rubber to China entirely now, and to reach a general agreement in the favourable atmosphere which this step would create in the United States. I read with emotion the testimony of General Marshall before the Senate Committee. This great world statesman has proved himself to be one of the leading figures in our life since the Great War. He has spoken with the utmost consideration for our point of view. In him, in General Omar Bradley, and in General Eisenhower here in Europe are men in whose judgment on the world scene we may safely repose the fullest confidence. They are the members or instruments——

An Hon. Member
What about the Admiral?

§ Mr. Paton (Norwich, North)
What about Admiral Fechteler?

§ Mr. Churchill
I try to give consideration to interruptions however irrelevant, and, sometimes, however foolish, but I really cannot be asked such a question as that. I have a great respect for Admiral Fechteler, but I do not think he was put in the right place, and it may be that my view on that, will eventually prevail.
These men are the members or instruments of President Truman's administration who have enabled him to take the valiant stand he has against the Communist menace, and to lead the great Republic to the rescue of the free world from mortal peril. It is the duty of His Majesty's Government so to act as to prove, beyond all doubt or question, that we are good and faithful comrades of the American democracy, and will stand with them, whatever may happen, as brothers in arms.

§ The President of the Board of Trade (Sir Hartley Shawcross)
We are very glad that this matter has been raised in debate, since it will provide a full opportunity of clearing up some of the genuine, if natural, misunderstandings which have arisen about this matter, and will enable us to make our policy abundantly clear. I join with the right hon. Gentleman, if 2171 I may, in hoping that our discussions here will not become an acrimonious debate, which is the very last thing they should become on Anglo-American relations, but will, on the contrary, serve a useful purpose in cementing still more the close and friendly relationship and understanding which exists between this country and the great democracy of America, which is so vital to the future of the whole world.
Before I plunge into the full detail of this matter, I would like to make an apology and say a word or two by way of caveat and explanation. For myself, I must crave indulgence if at times I do not manifestly possess the familiarity with these matters which might have been expected from a Minister who was actually responsible during the time to which our debate relates. I shall do my best, but the Board of Trade is rather like a very big forest, and one sometimes fails to see the wood for the trees. Then I must apologise for the absence of my right hon. Friend the Secretary of State for the Colonies. As I think was indicated by the right hon. Gentleman, this is a matter which is really very largely the concern of the Colonial Office rather than of the Board of Trade. My right hon. Friend would have wished to be here to deal with it, but he had to start off on an important visit to the Colonial Territories, and since the matter was obviously one which had to be dealt with in a comprehensive way as far as possible by one Minister, the lot has fallen to me to do it.
Secondly—and I hope this is not impertinence—I would like to suggest a note of warning, or to enter, as I should have said in my old capacity, a kind of caveat against the trap into which I myself have fallen in this matter, the trap of oversimplification. At first sight, this question of trading with China while she is participating in an illegal aggression in Korea, while she is defying the United Nations and fighting against ourselves and the other members of the United Nations who are seeking to restore and to maintain the rule of law, seems clear enough. At first blush, it certainly appeared so to me, and so, I dare say, it must still appear to our friends in the United States of America, whose soldiers are suffering such very grievous casualties, but whose Government, on the other hand, have not got the 2172 same involvements and difficulties which we have.
The simple way of looking at the matter is, of course, that these men are our men and the soldiers of our friends. They are fighting together under the banner of the United Nations, and they are being killed by the arms and the armies of China. The idea of maintaining trade relations with China in those circumstances may well, at first sight, seem something which is utterly repugnant—[Interruption.]—but I venture to hope that our debate will not degenerate into a discussion of the accuracy of particular newspaper reports, at any rate not at this moment.
I was saying that at first sight this did seem a very simple and clear problem, but when matters are looked at against the general background of our responsibilities——

Hon. Members
Order.

§ Mr. Richard Adams (Wandsworth, Central)
On a point of order. Is it in order, Major Milner, for the right hon. Gentleman the Member for Woodford (Mr. Churchill) to induce other right hon. Members to break the rules of order by reading a newspaper in the Committee?

§ The Chairman
The circumstances are a little exceptional, but perhaps if any further reference is to be made to the matter, it might wait until the right hon. and learned Gentleman the President of the Board of Trade has completed his speech.

§ Mr. Churchill
I am very sorry for the interruption in the President's speech, but there was a considerable interruption in mine. Is it not the rule that it is incorrect for Members to read a newspaper in the Chamber for amusement, but not for necessary quotations that may be required in the course of debate? I should be very glad to have that newspaper back.

§ The Chairman
In reply to the right hon. Gentleman I would say that may be so, but it may be equally out of order to hand newspapers across the Table.

§ Mr. Clement Davies (Montgomery)
The statement of the right hon. and learned Gentleman the President of the Board of Trade is one of the gravest statements to which I have listened in the House of Commons and we are very anxious to hear it.

§ Sir H. Shawcross
I am one of those who enjoy very much the occasions when a little fun can be had by all of us, but this is a serious occasion. We are discussing matters of considerable gravity and I shall not be making a very flippant speech about them. It seems to me that the first and the natural approach to a problem of this kind would perhaps be one that tended to over-simplification, and it might well seem repugnant to have trading relations with a country engaged in fighting and killing our soldiers and the soldiers of our friends. But when matters are looked at against the general background of our responsibilities—and our commitments—in the Far East, and looked at realistically, the matter really is not quite so simple as that.
Let me, first of all, make this quite clear, because the right hon. Gentleman the Member for Woodford (Mr. Churchill) referred to it and that is my only excuse for following him with regard to the matter. For over two years past we have been controlling the export—in many cases totally prohibiting the export—of things that might be of strategic value to Communist countries. We have completely prohibited the export of arms and armaments and of goods and commodities having an immediate strategic importance to a number of destinations which cover the whole of the Soviet bloc and the whole of China. There is a very long list of things having direct military importance, or which might have direct military importance, the export of which to those countries is totally prohibited and has for a long time been totally prohibited.
In addition to that, there is another long and complicated list of things the export of which is watched and restricted to quantities which it is considered would be absorbed in the normal peace-time economy of the countries to which they are exported. Since China began to participate in the aggression in Korea a much more stringent and restrictive policy was, of course, put into operation against her. But up to that time our policy as regards China was the same as our policy in relation to the rest of the Communist States. It was one which was designed to prevent anything being exported from us or our Colonies which would build up their military potential.

§ Mr. Blackburn
Would the right hon. and learned Gentleman——

Hon. Members
Sit down.

§ Sir H. Shawcross
The right hon. Gentleman the Member for Woodford referred to the question of recognition of the Communist Government of China. That is something which is somewhat outside the purview of my Department. I would like to say that before we decided to recognise the Communist Government of China we had full consultation with all the Commonwealth Governments and with a number of others. Indian recognition, as a matter of fact, preceded our own. We recognised because we thought recognition was a plain acknowledgment of the facts as they existed, and those facts as they existed entitled the Communist Government, as a matter of international law, to recognition.
I am not going to engage in controversy or argument on that point. This happened some time ago, and it has happened. It is a matter perhaps, on which one may speculate. One perhaps might wonder whether, if other Governments had followed the lead we had taken in recognising the Communist Government as the legal Government—or indeed the de facto Government of China as the right hon. Gentleman the Member for Woodford thought should have been done—the present situation would have been as serious as it is.
At all events—we thought rightly, the right hon. Gentleman the Member for Woodford may think not altogether rightly—we did recognise the Communist Government of China as the Government of China. Having done that, we did not shut our eyes as to what kind of Government it was and we have sought—and these measures have been intensified, of course, since China came into the conflict in Korea—on the one hand to prevent the export of things which would in any significant way increase the war potential of the country concerned—of China. At the same time, and here again our policy was the same as towards the other Soviet countries, we have tried to maintain a trade from which our country obtains important and necessary supplies, taking the Communist States as a whole, particularly of timber, grain and certain foodstuffs. When our policy in regard to trade relations with Communist countries is considered some of our critics perhaps do not always remember that this country is not entirely self-supporting, or that the 2175 granaries of Europe are in large part on the Eastern side of the Iron Curtain.
Nor was our traditional trade with China something we could entirely ignore. It was something of considerable economic importance to us and to other Commonwealth and colonial areas. We have thought—and I am speaking on the position generally, as the right hon. Gentleman the Member for Woodford did, before the actual participation of China in this military aggression—that it was to the advantage of the free world that both we and other countries in Western Europe should continue to draw from Eastern Europe goods which cannot readily be obtained elsewhere. But we can only obtain those goods if we send exports to those countries in return for them. Moreover, it has never been the policy of His Majesty's Government to embark upon an economic war with other countries in the world or to start an economic blockade of the Communist countries.
Until China's intervention in the conflict in Korea altered the position, as of course it did so far as China was concerned, the basic justification of our trading policy in relation to the Communist countries has been that on an objective assessment it confers as many advantages on us as it confers in return upon the Communist countries. It is very understandable that in other countries which are less dependent on imports to live and less dependent on exports to pay their way in the world, a stricter line should be taken, but, as a matter of fact, it is to be observed that our policy in this matter has been more restrictive than that of any other country, apart from the United States of America themselves.
Here let me say that in drawing up our control lists we have exchanged with friendly countries, and particularly with the United States of America, our views about these matters. I do not mean by that—and I want this to be quite clear—that we have asked for or obtained the approval of other countries to our prohibitive or our quantitative lists. The responsibility for making and operating these lists was clearly the responsibility of His Majesty's Government, and we stand by the decisions that we have taken in regard to them; but in order to assure the Committee that we have not been 2176 exporting goods of significant strategic importance, I propose very shortly to publish a statement or list of the kind of goods the export of which we have only permitted to Allied and friendly Powers.
So much for the general position before the intervention of China in the aggression in Korea. When that intervention took place it plainly became necessary to operate the controls and the restrictions with increasing severity. In pursuing that policy we were guided by four main considerations. We desired to do nothing to jeopardise the friendship and the understanding between ourselves and the United States of America and the rest of the United Nations, or to jeopardise the common purpose in which we are all engaged in this matter. That is something that we recognise to be very vital.
We desired, on the other hand, to do nothing which jeopardised the possibility of confining this conflict and localising it to Korea itself. We desired to do nothing which would jeopardise the military and the political security of our Colonial Territories in the Far East or be inimical to the interests of other Commonwealth countries. Finally, we were determined to do nothing which would jeopardise the lives or safety of our own soldiers or of the other soldiers in association with whom our soldiers were fighting, and that, obviously, is the dominant matter to which we have to have regard in determining the nature of our policy.
In the light of those considerations, and particularly of the last one, we have consistently limited exports to China to things not in themselves of direct military value or in quantities which were not of military signficance. Apart from the case of rubber—and I am going to deal with the case of rubber—our trade with China, whether from here direct or from Colonial Territories, can have had no significant or material effect on the military potential of China in Korea. Let me concede at once that in pursuing our policy we were not able to go the whole of the way with the United States of America who imposed a complete embargo upon all trade with China in December of last year. Nor were the rest of the United Nations able to go the whole of the way with the United States in this matter. The reason for not being able to go the whole of the way with the United States has been made perfectly clear.
2177 We have sought to make it clear beyond any possibility of doubt by anybody that we wished to avoid any extension of the Korean conflict. We have sought to make it clear that if China were to seek to negotiate a settlement of the situation in Korea she would certainly find us not ready for appeasement, but ready to give reasonable consideration to any proposal she put forward which would have the effect of restoring and maintaining the rule of law in international affairs. We considered that it would reduce the chances of confining the conflict to Korea and reaching, at the end of the day, a reasonable settlement of that kind if we were to stop all trade with her. It has not hitherto been the policy of the United Nations to impose a complete economic embargo, so we in this country did not impose a complete economic embargo.
Moreover, in applying the restrictions which we have—and I repeat that those restrictions were more stringent than those of any other country, apart from the United States of America—we have been throughout in close consultation with the United States Government. Again, I do not mean by that that the United States Administration has not asked us to extend our controls and our restrictions. Naturally, they would have liked us to be able to go further along the way with them in the direction in which they themselves have gone.
But, given the difference in our points of view about imposing economic sanctions on China, and given the very special circumstances which exist and which are created by our responsibilities for Malaya, Singapore, and Hong Kong—responsibilities which give rise to problems for us which are very difficult and which are not shared at all by the Government of the United States of America—we hope—and I think it is fair to say this—that the United States Government have at least been aware of the special nature of our problems and of the importance of the steps that we have taken, in spite of those problems, to cut down our trading relationship with China.
Indeed, the proposal which the United States Government have now made themselves to the Additional Measures Committee of the United Nations, and to which we shall 2178 give our support in that Committee, is not even now a proposal which calls for a total cessation of trade with China or which is intended to impose a complete blockade.

§ Mr. Churchill
I did not say that.

§ Sir H. Shawcross
There are some who think that we should cut off all trading relationships with a country whose troops are fighting against our troops. To me it appears——

§ Mr. Churchill
I never attempted to use that argument. I have tried to argue that we should endeavour to reach a friendly agreement with the United States for our joint practice.

§ Sir H. Shawcross
I am very much obliged to the right hon. Gentleman who represents, perhaps, in this matter a more moderate view than is held in some other quarters—possibly some outside this country. We have every hope of reaching a friendly agreement about this matter, and that is why I said just now that in the Additional Measures Committee of the United Nations we shall discuss and support the proposal which the United States Government is putting forward.
Now I want to deal with the matter in a little more detail with regard to particular exports. So far as those from the United Kingdom to China are concerned, I gave a list of those in some detail last Tuesday and, in view of what the right hon. Gentleman was good enough to say, I do not propose to enlarge upon it now. I merely repeat what I said then—that it is complete nonsense to suggest, as has been suggested—not at all by the right hon. Gentleman—that we were flooding Hong Kong with exports from this country, or sending them direct to China, which had the effect of increasing China's war potential. That is quite untrue; there is not the slightest foundation for it.
As China has become more involved in the conflict in Korea, so we have progressively imposed new controls and restrictions and strengthened existing controls and restrictions upon our trade with her. That is a continuing process and I can assure the Committee, both in regard to direct trade from here and also trade from the Colonies to China, that we shall exercise a very vigilant watch over what is going on in the light of the circumstances as they exist at the time.
2179 It is the exports from the Colonial Territories to China which have presented by far the greatest problem. Much has been said—and very naturally said—about the rubber situation. We published the facts about it a month ago, and I must say that we noticed their significance and took action to deal with the matter before we had published the facts, and, indeed, long before the House showed their very proper anxiety about this matter. Here, I should like to pick up the point which was put to me by the right hon. Gentleman as a result of an intervention by somebody else—a point about the figures.

§ Mr. Churchill
An hon. Member for a Birmingham division?

§ Sir H. Shawcross
For one of the Birmingham divisions, I believe.

§ Mr. Churchill
There are several of them.

§ Sir H. Shawcross
All these names change so quickly that I can never keep pace with them. I gave the figures in an answer, I think, on 15th April, Those figures, as I am assured quite definitely by the Colonial Office—and I have here the statistics given me—included the rubber which was exported through Hong Kong. Rubber is exported from Malaya or Singapore. Some of it goes direct and some of it goes via Hong Kong, and the total figures were the larger figures—and they included the lesser imports through Hong Kong. Rubber is not produced in Hong Kong, as the right hon. Gentleman knows, but it goes through Hong Kong in the course of transit.

§ Mr. Churchill
A statement of considerable importance was made by the hon. Member for Northfield (Mr. Blackburn). We want to know whether that is true or not. I gather from what the right hon. Gentleman has said that he denies it entirely.

§ Sir H. Shawcross
Entirely.

§ Mr. Churchill
That being so, I earnestly hope that the hon. Member for Northfield will have a chance either of withdrawing it or confirming it.

§ Sir H. Shawcross
I do not think it really matters very much. I dare say that the Colonial Office and the Rubber 2180 Study Group, who publish a rubber statistical bulletin, which I am told is the bible of the rubber trade, know a little more about these matters than the hon. Member for Northfield. I think it is clear that the figures I gave are the total exports and that the Hong Kong figures come within that global total.
I do not think I need reiterate all the difficulties which have surrounded this question of the rubber trade, nor need I remind the House that, whilst the economy of Malaya and Singapore depends largely on the rubber trade, and whilst other sources of supply are obviously open to China, this is not a matter with which it is very easy to deal. Nor need I discuss the obvious complications to our interests out there which arise from the breaking of forward contracts and matters of that kind. We considered that the quantities of rubber which were being exported to China were certainly in excess of her civilian requirements and, although none of the other rubber producing countries has so far taken the same action as we decided to take, we cut down the exports to what we thought was a reasonable figure, and we did that notwithstanding the difficulties and the embarrassments it would cause in the two Colonial Territories concerned.
I should perhaps say that, although we have been in constant communication with the United States of America on this question, our decision to cut down the imports to the figure of 2,500 tons a month was taken without prior discussion with them and on our own responsibility. I am sure that American public opinion appreciated the action we have taken, but there was no question of their agreeing to it; this was our decision and we took it. Since taking it, a little over a month ago, we have been further examining the matter between ourselves and the Colonial Governments concerned and we have now decided, in view of the abnormally high imports of rubber into China in the first quarter of this year, that her civilian needs can be regarded as fully satisfied for the current year.
What, therefore, we have decided to do, in view of these abnormally high imports into China in the first quarter of this year, is to request the Governments concerned in Malaya and Borneo to take steps to ensure that there will be no further exports this year of rubber to China from Malaya and from the other British territories 2181 involved, and we are asking the Colonial Governments to act as quickly as they can in the matter.

§ Mr. Eden (Warwick and Leamington)
One question arises from that important statement, and it concerns the position of Indonesia.

§ Sir H. Shawcross
As the right hon. Gentleman appreciates, that is one of the great difficulties in this situation. It is very easy to say, "Cut off all your rubber exports to China." What happens? Other rubber-producing countries come in and fill the deficiency and, at the end of the day, we have not produced any practical improvement in the situation. Some may think that we had merely cut off our noses to spite our faces.

§ Mr. Reid
I was trying to ask the same question as the right hon. Member for Warwick and Leamington (Mr. Eden). Is it not a fact that big shipments of rubber are going to China from Indonesia, India and Ceylon?

§ Sir H. Shawcross
I do not think that that is correct at present. But there are obvious alternative sources of supply. In asking our own Colonial Governments to stop these supplies of rubber, what we are doing is to express the hope, as I now do, that other rubber-producing countries will refrain from providing alternative sources of supply which might help to build up China's war potential. We express that hope now, and at the earliest opportunity, when this matter comes before the Additional Measures Committee of the United Nations, we shall propose action by the United Nations with a view to securing co-operation in this matter by all concerned, so that our interests will not have been sacrificed and so that action by ourselves alone, however meritorious it may be, would not be rendered ineffective by supplies going into China from other countries.

§ Mr. Eden
This is very important. Is it not a fact that this rubber, and particularly Indonesian rubber, goes through Singapore—or, at least, the bulk of it does? Is it not also a fact that some of it goes in British ships? Pending the agreement with the United Nations, would it not be right for us to refuse to allow this rubber either to go through Singapore 2182 or to go in British ships, because if we do not do that, we are merely handicapping our own people in the interests, of Indonesia.

§ Sir H. Shawcross
The question of transhipment and of transit cargoes is one of very great complication and legal difficulty and it is one with which it is proposed to deal before the Additional Measures Committee. Quite obviously, it is a matter which must be investigated and we shall do our best to find some practical solution. It is a matter which concerns not only this country or its Colonies, but which concerns every country which provides port facilities or transport facilities on the shipping lanes of the world. We hope we shall be able to find some solution to it—and that, I think, is all I can usefully say about the subject at the moment.
On the subject of rubber, I merely say this, in conclusion: we hope that other countries will follow this lead, but we have taken the lead—

§ Mr. Blackburn
How dare the right hon. and learned Gentleman say that?

§ Mr. Churchill
The right hon. and learned Gentleman should not use the weapon of grimace.

§ Sir H. Shawcross
I will refrain from using the weapon of grimace or noticing vulgarity when it occurs; it is always best.
I should add this about the rubber position. To mitigate the hardship which these decisions may create in Malaya and the other countries concerned, His Majesty's Government are prepared to buy the rubber for which forward contracts had been made in good faith before the imposition of these restrictions, and these purchases will be in addition to those which we should have made in any event, so that we hope no financial loss will be caused directly in consequence of what we have done.
Now I turn to the very special problem of Hong Kong—China trade. In relation to any attempt to restrict trade with China the position of Hong Kong is manifestly more difficult than that of any other territory in the world. I wish that some of those who have criticised the policy which the Government of Hong Kong have been pursuing had familiarised themselves——