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despatch No. 234 of the 20th May, 1919, should be consulted. Referring to an earlier despatch on the same subject he says:-
"My general view was that, though the Japanese had undoubtedly made great progress in many respects, yet Great Britain held her own. Such was From that opinion I see no my opinion in the year in which war broke out. reason, after four years of war, to deviate. Those four years have been years of unexampled opportunity for Japan, and she has sought to make the most of them. But Great Britain still leads the van, and our prestige stands, or until the last few days stood (i.e., in view of the Shantung decision), second to none. It is from unfair Japanese business methods that British trade has to fear rather than from genuine commercial competition. In one field British products reign supreme: namely, machinery.* As regards shipping the British com- panies still have a substantial lead, but the methods of the Japanese lines are leading to steady progress, which we cannot begrudge them. As regards the hold which Japan has secured upon the iron deposits of the Yang-tsze valley, this is hut natural, for to Japan the supply of iron is a national necessity, The Japanese have whereas to Great Britain it is of secondary importance.
no interest in railways in the Yang-tsze valley other than the insignificant and I feel satisfied in asserting extremely inefficient Kiukiang-Nanchang line...
that so far as the Yang-tsze valley is concerned, and in so far as the recent decision at Paris justifies the use of the term 'prestige' at all, when applied to any Allied Power in China but Japan, at the moment at which I write, British prestige has held its own during the war and our interests have been well maintained in spite of the obvious disadvantages to which they have been subjected."
Sir J. Jordan encloses in his despatch a statement by His Majesty's consul- general at Hankow. Mr. Wilton says:-
"To sum up the general prospects of British and Japanese trade in China to-day, the British may be said to possess all the advantages of a greater commercial and industrial experience. Given equal opportunities, they are much better able to set in motion large commercial organisations or industrial undertakings than the Japanese. On the other hand, they are handicapped by the fact that China occupies a much smaller place in the vision of Great Britain than of Japan. The latter, too, has more reasons than the former for building The question of the up and expanding her share in the trade of China. financing of British trade in China is one which depends on the decision of His Majesty's Government, and this decision will greatly influence the future international trade position in China. It cannot be doubted that there are in the Yang-tsze valley openings for a combination of British industry and British finance, which could be handled in a manner not possible to the Japanese with their smaller resources and inferior experience and skill. Should these openings be used to the fullest extent, and British capital and industrial experience be devoted to China in larger measure than formerly, the Japanese may find it difficult to maintain the still rather precarious hold on China's resources which they have managed to acquire of recent years in this region.' Prospects for British Trade in China.
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The recent Department of Overseas Trade Trade Report on China," confirms this optimistic view, and notes the satisfactory recovery of British trade since the armistice, especially in piece-goods. British trade is limited more by diminished output at home and by uncertainty of delivery than by any falling off of demand in China. A perusal of part I of this memorandum shows how firmly rooted are British interests in China and how wide and vigorous are their ramifications. British commercial interests in China are founded on our exceptionally strong position in shipping, finance and trade, due to the fact that our merchants were first in the field and have won and retained an exceptionally high reputation for the quality of their goods and the fairness of their dealings. The value of our trade and of our industrial interests have increased year by year, even during the war.
⚫ Yet in a recent address at Manchester is Majesty's commercial counsellor, Mr. II. II. Fox, stated that is machinery Japan and America were now getting nearly five times as much trade as Britain, the figures of 1919 (whole of China) being: Great Britain. £642,840; United States of America, £1,182,667; Japan, £1,793,241. In electrical material and datings British exports to China lay even further behind.
But at the same time, a glance at Appendix XI shows that the British Empire no longer overshadows the trade of China as it did twenty-five years ago. Then, we monopolised 70 per cent. of the total trade; now, we can only claim 38 per cent. This does not indicate any kind of failure upon our part. It only shows that others have followed where we showed the way. Competition has arisen where formerly there was hardly any. So far from such competition necessarily damaging British trade, it ought to stimulate our people to further efforts. The percentage of our trade in the China market may decline, but its volume should increase.
To quote the Department of Overseas Trade, Trade Report on China "'
:-
"When one considers that, with a population numbering at a modest estimate 350.000.000, China's total imports of foreign goods in 1919 amounted to only 647,000,000 taels, being an average of 1-85 taels (say 12s. 6d.) per head, it is obvious that there is room here for great expansion, and there is no reason to believe that British goods will not share in the increased demand that must come with the rise in the purchasing power of the people when the country's resources are more fully developed and her exports to foreign countries are correspondingly increased."
In railways, for instance, China possesses only 6,000 miles as compared with 35.000 miles in India and 250,000 miles in the United States of America; 40,000 miles of railway in China are an urgent necessity.
Development of British Trade: Requisites,
Railway construction is the first requisite for the further development of our China trade. Then more unity of effort is wanted on the part of our merchants and business men. During the war, British chambers of commerce were started at sixteen of the treaty ports, and the war has greatly strengthened the corporate spirit among our communities in China. Study of Chinese languages and customs are of the greatest assistance in promoting trade relations and British propaganda. But what British trade most requires is peace, industrial peace at home, and political peace in China. Anything which retards peace is hurtful to British trade.
British Trade and the Anglo-Japanese Alliance.
If the Anglo-Japanese alliance, by strengthening Japan's hand, has contributed to confusion in China, then the alliance has been hurtful to British trade. If the renewal of the alliance can check Japanese aggression and promote unity in China, then the renewal of the alliance will be beneficial to British trade. The Japanese point of view is made perfectly clear by Viscount Kato's statement in private con- versation, reported by Mr. Alston in his despatch No. 269 of the 20th June, 1919 :—
"As to the rehabilitation of China and the gradual restitution of territories, &c., he (Viscount Kato) admitted that Japan wanted a weak China, and expressed himself very sceptical about a disposition on the part of Great Britain to make any surrender of acquired rights."
Japan's present policy in China is further elucidated in Mr. Lampson's private and secret telegram to Lord Hardinge of the 30th March, 1920 :-
Mr. Obata (Japanese Minister at Peking) let slip that Japanese official opinion was now strongly in favour of direct intervention by Powers in China. Pressed further, he admitted that that was the chief reason why he now favoured conclusion of consortium. It would mean amongst other things disbandment of troops; that, again, to be effective must be backed by armed force, and that spelt full intervention by Powers in China."
It was urged that public opinion in Europe would never hear of such proceeding; his Excellency immediately added that he was already taking steps to educate such opinion, beginning with England. Armed interven- tion means Japanese intervention, Japanese intervention means Japanese occupa- tion, and Japanese occupation means exclusion of others. If this is to be the end of the fourth Anglo-Japanese alliance, if China or even North China is to follow the course of history in Korea and Manchuria, then the alliance had better never be renewed. But if, as a result of renewal, Shantung in toto could be restored to China, if the principles of railway nationalisation and of loyalty to the letter and spirit of
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