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bound to have effects in other concessions, and that the ultimate channel for negotiating these reforms with the Chinese Government must be the Diplomatic Body. If, there- fore, negotiations for these purposes are in progress while the commission is sitting, or if they have been broken off by the Chinese pending the result of the commission's labours, the British representative should consider whether it would help or retard their resumption or their successful issue if the commission were to investigate matters affecting the constitution and administration of foreign settlements and concessious generally. In making up his mind on this point he should be guided by the advice of Itis Majesty's Minister. Speaking broadly, it will probably be best to resist any Chinese pressure for the investigation of such matters by the commission unless to do so would postpone those changes at Shanghai on which there is already a measure of agreement in principle. If, on the other hand, it seems likely that an enquiry by the commission would help to get that agreement translated into practice, then any objection of principle to the commission's investigating such matters would be pro tanto removed.
16. The commission will doubtless direct their attention to what is not the least of the evils arising from the exclusion of Chinese sovereignty from the international settlements and concessions-namely, that they become alsatias for political and other refugees. This might possibly be remedied by making Chinese writs run in the settlements and concessions with either no, or only the simplest, form of extraditive proceedings
17. If the deliberations of the commission take the channel indicated above, a question which affects His Majesty's (overnment almost exclusively may be expectedl to arise, namely, whether the time has not come for the less important foreign concessions to be returned to China. Subject to the bearing of such an act on the general political situation at the moment (as to which the advice of His Majesty's Minister should be sought), His Majesty's Government, so far as they are concerned, would not be averse from returning such a concession as that at Chinkiang, which does little or nothing to promote or assist. British trade, and is always liable to operate as a stimulus to auti-British agitation. An alternative to the surrender of such concessions to China might be that the Chinese Government should be invited to undertake their policing in future. If this course were adopted at Chinking, Kiukiang and Amoy, it would assimilate them to the general foreign settlement at Wuhu, which has adequately fulfilled the purpose underlying the grant of settlement and concessions without making any real encroachment on Chinese sovereign rights. With regard to the concessions at the larger ports, Tien-tsin, Hankow and Cantou, the best line of advance would appear to be to aim at merging these areas into larger municipalities controlled by Sino-foreign councils. At Tien-tsin and Hankow progress on these lines may be expected in the not distant future, but it is feared that nothing can be done at Canton so long as that city remains in the hands of the Bolsheviks.
18. A caution is necessary in the event of this question being considered. It must be borne in mind that His Majesty's Government have incurred certain liabilities under the leases which they have granted at these concessions, so that any arrangement for retrocession would have to include provision to meet those liabilities.
19. Finally, there are various points of detail which, on the principle of "shortening the front," it might be well that the commission should consider, with a view to suggesting either remedies for abuses or solutions of difficulties. These are :-
(1) The irregular registration of Chinese as foreign subjects; (2.) The registration of Chinese-owned land in foreign consulates
(3) Company law and Chinese;
(4.) Chinese ships flying foreign flags; and
(5.) Missionaries in the interior,
(1.) The Irregular Registration of Chinese as Foreign Subjects.
20. The difficulty here will be to frame any recommendations which, while not affecting the legitimate exercise of foreign jurisdiction over Chinese possessing double nationality, will point to a remedy for the evil, which His Majesty's Government are most anxious to see abolished, of the fraudulent extension of foreign protection to Chinese not possessing any foreign nationality. If the commission can get over this difficulty, well and good. But the British commissioner will appreciate the importance of concurring in no recommendations of which the effect might be to weaken the claims of His Majesty's Government to the protection of any of the various categories of British subjects of Chinese race.
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(2.) Registration of Chinese-owned Land in Foreign Consulates.
21. This is an abuse which exists at most ports in China, and has grown to large proportions in Shanghai. As it may therefore be brought to the notice of the 160 commission, the following considerations are set out for the guidance of the British commissioner :-
Land owned by a foreigner and registered in a foreign consulate is to a large extent withdrawn from Chinese jurisdiction. It is immune from expropriation for public purposes by Chinese authorities, and on transfer to another foreigner is immune from Chinese land transfer fees, which vary from 6 to 9 per cent. ad valorem. No question is here involved of land in British concessions which is held under Crown lease granted by the British Government. It concerns only land within the area of a treaty port, either within or without any settlement which may exist at such port, which has been leased in perpetuity from the original Chinese owner under a title deed validated by the Chinese authorities.
The time will certainly come, or may possibly have already come, when even the bond fide foreign land-owner should surrender the privileged position in respect of immunity from taxation, &c., which he has hitherto enjoyed. A fortiori, it would seem that the protection of extra-territoriality should no longer be extended to Chinese beneficial owners of foreign registered land. Possibly the best way of remedying what is undoubtedly a real grievance would be to prohibit any foreigner from acting as trustee for a Chinese in respect of the beneficial ownership of land. Chinese possessing dual nationality would have to be considered in this connection, The position of but should not present great difficulties, as such Chinese could obtain foreign registration of their land without having recourse to a trustee. tion which the commission may make under this head, care should be taken to In any recommenda- safeguard the large vested interests at Shanghai and elsewhere.
(3.) Company Law and Chinese.
22. It is possible that there may be brought to the notice of the commission a number of abuses which owe their existence to the operation of foreign (especially British) company law. Chinese, by forming themselves into a British company, aro able to withdraw their business, and to some extent the persons of their managers and employees, from the jurisdiction of their own authorities, and the friction to which this gives rise tends to jeopardise the position of bond fide foreign companies. Nevertheless, it is of vital importance to British commercial interests that the advantages and conveniences which legitimate business enterprises enjoy through the operation of company law should not be curtailed in any way. In view, however, of the many complicated questions which are involved in the application of foreign company law in China it will be better, before the commission makes any recommenda- tions in regard to it, that the British representative should refer (through His Majesty's Minister) to His Majesty's Government for further instructions, so that the whole question may be fully considered by the various departments interested.
(4.) Chinese Ships flying Foreign Flags.
23.
A large amount of British capital is invested in vessels engaged in the coastal and river trade in China, and anything which brings foreign flags into disrepute might eventually lead to a demand by the Chinese Government for the withdrawal of foreign vessels from this trade. His Majesty's Government are therefore especially anxious to find some remedy for the abuse of Chinese vessels flying foreign flags, in respect of which both the Chinese authorities and the bond fide British shipowners bave grave cause for complaint. It is possible that the commission may be able to recommend a remedy satisfactory both to the Chinese Government and to the large British interests involved. But should it prove impossible to consider this question without raising the issue of the application of foreign company law, the instruction at the end of section 22 should be followed.
(5.) Missionaries in the Interior.
24. There has recently grown up a feeling among missionaries that their labours in the interior of China for the benefit of the Chinese people should no longer be carried on under the protection of treaties, which the Chinese regard as having been
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