23
(2).
China in order that I be in a position to reply to
r
the Foreign Office regions fem by considered observations
on proposed agreement.
As at present advised I incline to the opinion that
Article 5 should be cut out altogether as in view of
declared policy of Chinese Government of reserving inland
water navigation to vessels flying the Chinese flag, even
if British owned, there would be no chance whatever of
their agreeing to it.
On the other hand, I am equally inclined to regret
the Chinese proposal that Article 5 should be modified
so as to apply to Chinese flag vessels only as by agreeing
to it we allow a precedent to be set up which might
seriously weaken our position in regard to coastal and
inland water navigation rights in our commercial treaty
negotiations. We may possibly have to surrender the
whole or part of our present inland water rights in order
to secure a continuation of our coasting and river navi-
gation rights but we hope to be able to make surrender or
restriction of the former a quid pro quo for continued
enjoyment of the latter.
As to Hongkong trying for privileged factory treat- ment referred to in Article 10, I do not myself think that there is the slightest chance of Chinese agreeing
in view of present attitude of the Chinese towards foreign- owned factories in China as revealed in recent corres-
pondence regarding textile and printing companies applica- tions. Moreover I feel that any such privileged treat- ment might be very double-edged and increase the likeli- hood of feeling in China that Hongkong after all
approximates