Correspondence on draft commercial treaty between Britain and China; rumours of splits and unrest among main political groups in China, with party congress about to open; additional sugar tax again demanded in Canton; details of conference held by Marshal Li and Clementi; danger of Kwangsi and Feng groups joining forces against Chiang; report of troop movements in Wuhan; report of fighting at Wusueh and movement of troops out of Nanking; crisis arose out of personal quarrel, which may be settled by Chiang Kai-shek [President, National Government] without Nanking and Kwangsi going to war; political report; negotiations reported at Nanking for peaceful settlement, and party congress opens; report of troop movements from Hankow; detainment of Li Chai-sum in Nanking by Chiang Kai-shek, now at war with Wuhan party, who have been joined by Feng Yu-hsiang; details of interview between General Chan Hing-wan and Clementi about Marshal Li's detention; question of discrimination against Chinese arising from draft commercial treaty; report of considerable military activity in Hankow, and imposition of new tax without reference to Nanking; assumption of command in Hankow by General Pei Chung-hsi; alarm in Foochow over Communist invasion of South Western Fukien from Kiangsi; Lampson advises appeal to Chiang to save Li Chai-sum; grant to Hong Kong University increased to £250,000; Foreign Office deplore any personal intervention to try to save Li Chai-sum, but agree that asylum should be granted if he reached a British ship; Newton asks contact in Peking to make enquiries about Li, and reports that he does not seem in immediate danger; political and military report, following commencement of civil war between Nanking and Kwangsi; military report from Commander-in-Chief, dismissed by Nationalist Government of Generals Li Tsung-jen, Li Chi-shen and Pei Chung-hsi, accusing them of intrigue; report of execution of Li Chai-sum; report on political situation by Lampson in Peking; request by General Chan Ming-shu in Canton for his bodyguard to carry arms; denial in Nanking of rumoured execution of Li Chai-sum; battle expected near Hankow between Nanking and Hupeh forces, and General Chiang Kai-shek arrives at Kiukiang; approach of General Feng Yu-hsiang's troops, but still uncertain which side he will support.