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the fact that even recently pressure has been brought to
bear on the Commissioner of Customs, through his Japanese
subordinates, to relax his methods of surveillance in
regard to it. No doubt, considerable quantities of such
cargo have found their way into the districts round
Shanghai and up the River. In fact, the Customs have
little or no control over commercial cargo transhipped
here to be conveyed up river, unless the Japanese vessels
or importers declare such cargo to the Customs. Moreover,
wide latitude is probably exercised as regards what con-
stitutes military stores. The Commercial Counsellor has
been told, for instance, of the admission duty-free of
fruit essences imported by a Chinese manufacturer, who
has established a chain of small factories in the Yangtze
area ostensibly to supply the Japanese army with champagne
cider, one of their favourite drinks.
4. Information has also been received to the effect
that a quantity of tinned goods, possibly originally
imported for the army, has been delivered to Chinese
dealers duty-free under permits issued by the Japanese
Naval Landing Party, half of it going to the Hongkew area
North of the Soochow creek, and half of it to the districts
this side of the creek.
5.
Chinese sugar dealers make no complaint of pre-
ferential treatment of Japanese sugar in Shanghai, although
they have at times stated that the price of Japanese sugar
imported into the ports of the Yangtze delta is so low as
to show that the sugar must have been imported duty-free,
making it impossible for the Chinese dealers to compete
when selling Java sugar.
These reports are, however,
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