March 1st, 1929.j
CHINA OVERLAND TRADE REPORT.
tion to world stocks thus amounts to about 323 million standard ounces, against 305 million in the previous year.
China's Demand for Silver.
On the consumption side, China handled no less than 141 million ounces as compared with 98 million in 1927 and this constitutes a re- cord. India absorbed some 110 million ounces net. The aggregate up-take of the two great silver con- suming countries can thus be placed at near 250 million, an in- crease of about 45 million over the preceding year.
If the output of the mines had not been amply augmented from the special sources of supply which I have already mentioned, China's unusually large requirements could hardly have been met without a substantial advance in price.
Looking forward, the Chinese de- mand for silver, as likely to be the dominating factor in price, invites particular interest. The bulk of the silver taken by that country last year was minted into dollars and it remains to be seen whether the hoped-for recovery of trade re- sulting from more peaceful condi- tions will mean a sustained de- mand for these coins, the circula- tion of which among China's vast population has an enormous poten- tial scope.
Money Market of the World. The money markets of the world are dealt with so fully from time to time in the various financial papers that a reference to them here seems unnecessary, but it may be of interest to enumerate certain outstanding events of
the year affecting the London Market, which holds its pride of place as the world's chief financial centre.
(1) The stabilization of the French Exchange at 124.21 in June last, a prelude to which was the large accumulation of foreign balances by the Bank of France and the importation of gold from America.
(2) Heavy borrowings of foreign capital by Germany and conse- quent importation of gold into that country.
(3) The high rates for call money in New York and advance in the New York Federal Reserve Bank rate from 3.1/2 per cent. in Janu- ary to 5 per cent. in July.
com-
(4) The final transfer of the cur- rency note issue to the Bank of England. This operation pleted our transitional steps from the war currency non-gold basis to the Gold Bullion Standard.
It is satisfactory to note that the endeavours towards the stabiliza- tion of world prices are being con- tinued and that the central banks of Europe maintain their policy to this end. Gold has
now been universally adopted in Europe as the monetary standard, while in Japan, though the Government re- mains non-committal, public opini- on appears to be favourable to its early adoption.
Trade Conditions in China.
I will now briefly pass in review conditions of trade and finance throughout the Far East, begin- ning with China.
ing lack of improvement in such essentials as taxation, transport and public security, not to men- tion the disturbing effects of a radical alteration of the Customs tariff. Taking the picture as a whole, nevertheless, the year mark- ed a welcome return towards nor- mal. The consumption of British cotton piece goods has compared well with previous years and hopes are fixed on the co-operative schemes of the Lancashire manufac- turers.
The trade in woollens appears to have felt the beneficial effect of the growing use of foreign-style cloth- ing. For engineering products, Manchuria alone has afforded a fair demand and even there British
goods have cut but a small figure in the market; good promise of re- covery in this important branch of trade attaches, however, to the many schemes of railway improve- ment, not to mention the present rapid extension of roads for motor traffic and the projects of air transport.
Hong Kong.
Turning to the trade of this Colony, I need only say that the year's experience justifies the re- strained optimism of my predeces- sor's remarks. There has been im- provement but on a very restricted scale, showing that the damage of many years of civil war and chaos had sunk too deep to be quickly repaired on the return of peace. Excessive taxation in China fur- ther impedes recovery, so much so at Swatow that it has practically closed the port as a distributing
centre.
Hong Kong itself is suffering from the diversion of the rice trade to
The direct channels. Canton sales of silk have been fairly satisfactory with low prices but a good demand, while the ex- port of wood-oil has reacted some- what from the artificial stimulus which it derived in the previous year from the stoppage of Yangtsze shipping.
The Yangtsze.
was
On the Yangtsze itself the ex- port trade, which in 1927 brought almost to a standstill by war, banditry and taxation, made a partial recovery in the absence of civil fighting but continues to struggle with heavy odds. While river navigation-thanks partly to naval guards-has been less inter- fered with by piracy, the move- ment of goods has been increasing- ly hampered by means of local taxation, fresh imposts being con- tinually applied by the various re- gional authorities without method or warning, to the great disloca- tion of trade.
Trade on the Upper River has been fitful and somewhat pre- carious owing to cases of local in- terference and to the disturbed political condition of the province of Szechuen, which still virtually maintains its traditional indepen- dence of the rest of China.
In the North.
In the North, business has had further obstacles to contend with, firstly the dearth of railway trans- port, due to the wholesale removal of rolling stock by the Manchurian The cessation of civil war authorities, and, secondly, the brought, I need not say, great re- crippling charges imposed on rail- lief to the trading community in way traffic by the military authori- the country. This was largely dis- ties controlling the lines. Since counted, however, by a disappoint-the middle of the year, through
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traffic has been suspended both on the Tientsin-Pukow and Tientsin- Mukden lines, on the former by reason of the blowing-up of the Yellow River bridge and subse- quent misunderstandings between the Chinese and Japanese authori- ties; on the latter on account of the failure of Mukden and Nan- king to come to a working arrange- ment., The port of Tientsin has also been cruelly handicapped by the silting up of its waterway-a state of affairs which is, I trust, being seriously taken in hand.
Manchuria has given proof of slow but steady development, com- mercial and economic, and seems to be coming nearer to rectifying the disordered state of her cur- rency which has been for several years past the chief bar to pros- perity.
The 1928 returns of the Chinese Maritime Customs show a total of Haikwan Taels 82,332,000-a rise of 13. million over the previous year. Though the increase is satisfactory, the figures have little real value as a criterion of progress since the excess is almost entirely referable to the last few months when goods were being hurried into the coun- try in anticipation of the Customs rates which force on the 1st of this month.
India.
came
new
into
In India the record of 1928 was not unlike that of the previous year, a good monsoon coinciding with rather disappointing trade results. Imports were dull, especi- ally Manchester piece goods which continue to suffer from the popu- larity of Japanese manufactures. There was a large and good cotton crop, but the price of raw cotton fluctuated unduly owing to specu- lation, while a strike of mill opera- tives
for lasting
six months seriously affected the situation. The jute crop was smaller but sold at a better price, and gunny ship- ments were well up to the 1927 figure. Exchange followed a nor- mal course and a favourable trade balance at the end of the year en- courages a hopeful outlook.
Japan's Adverse Trade Balance. Japan, on the contrary, has had to face an accentuated adverse trade balance, exports having de- clined by 20 million yen against an increase of 15 million yen in imports. This result must be at- tributed mainly to two causes, fluctuations in the exchange value of the yen, and the boycott of Japanese goods in China and in other markets controlled by Chinese traders. Trade development hampered also by an unduly high retail price level, the index figure being no less than 20 points above that ruling in the United King- dom and the United States of America. Fortunately the country as a whole enjoyed an excellent rice crop and a sustained market for its output of raw silk.
is
The financial crisis of 1927 has been repaired to the point where only seven of the thirty banks in- volved now remain closed and we pros- inay fairly look for more perous developments if the coun- try is freed from the retarding effects of the boycott by Chinese on the one hand and, on the other, of the uncertainty caused by the lack of a fixed policy in dealing with the foreign exchange problem.
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