Sino-Malay distrust runs like a thread through the nation's recent history. Racial incidents of various types have been catalogued. The pattern that emerges indicates that the major incidents normally took place in Chinese-dominated areas with strong secret society organisations and most of these incidents inevitably began with a secret society/Malay hoodlums clash.
When the United Kingdom Government decided to bestow City status on Penang, an atmosphere of uncertainty and mistrust between the Chinese and the Malays was already prevailing. The British Government decision had a mixed reception. The Penang UMNO decided, for political reasons, not to participate in the centenary and City-status celebrations. As a result, rumours were rife in Georgetown that the Malays would intercept and attempt to disperse the procession.
The procession started at 10.30 on the morning of 2nd January, 1957, without Malay participants. A rumour went down along the line of the procession that there would be trouble. Shortly afterwards the police vehicle leading the procession was called away to investigate a report elsewhere. It doubled back along the procession, and this was misinterpreted by the Chinese participating in the procession as evidence of a Malay attack further down the line. Many of
the participants promptly furled their flags and proceeded to break up a decorated float using the wood as weapons while others entered houses along the procession route and armed themselves with meat cleavers, hatchets and other weapons.
The Police on duty then began to disperse the procession, as the situation was very tense. However, a group of about 50 Chinese while dispersing, chased some Malays into an adjacent house. A Chinese Inspector on duty who intervened to protect the Malays received head injuries from an axe and was forced to open fire, killing one of the Chinese and wounding another. The crowd eventually dispersed when the Officer-in-Charge of the Police District (OCPD) arrived at the scene with a Police party.
Following the above, isolated incidents of assault and minor clashes were reported. Between 2nd and 8th January, 1957 four persons were killed and 48 injured.