and Chinese Corporation, viz. (a) completion of the Canton-Henkow
Railway; (b) Pukow-Sinyang Railway; and (c) Nanking-Funan Railway.
Now, as regards the Boxer Indemnity the policy of the late
Government was to remit the balance of the Indemnity to China for
railway rehabilitation and building in return for an undertaking
that the funds would be spent in buying British materials.
It
is clear, however, that if our obligations are to be respected, we
could not insist on a monopoly of supply for any of these three
important lines. If therefore the Chinese were to give the
absolute assurance which the late Government had hoped to get,
we would have ourselves to waive it in the case of any of these
three lines being undertaken.
As regards British lines in China already built, and which
are to be 'rehabilitated' out of Indemnity funds, most of the
existing contracts contain a clanse that at equal rates and
qualities preference will be given to British materials for
all purchases of rolling-stook etc. if Chinese materials cannot
be used the clauses vary, but this is their general sense.
Therefore in the case of these existing railways, the assurance,
which we require, is already secured to a considerable extent,
if only we can hold the Chinese to their existing contracts.
This, then, appears to be the best line to take as regards the se
Boxer Indemnity assurances, and draft instructions to His Majesty's
Minister on these lines are at this moment being considered by
the Treasury, Board of Trade, and Colonial Office.
This is a complex matter and care must be taken to avoid such
decisions as we may subsequently have cause to regret. At present,
the following considerations should guide our policy: -
1. That we must uphold the sanctity of existing contracts,
such as the Hukuang Loan Agreement of 1911.
2. That we must respect our obligations to the International
Consortium (1) because we are bound to do so; and (2) because there
is/