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been suggested that the Chai Tang Mines, which are being investi- gated by the National Construction Commission, and are situated quite near the ironworks, may produce suitable coal.
161. There is a movement at present to start up and extend these mines and works if finance can be arranged. The scheme involves an initial expenditure of one million and ultimately eight million dollars. It has also been suggested that Chingwangtao would be a suitable site for an iron-works. The Kailan coal is handy and there is also iron ore in the neighbourhood. This ore is, however, of poor quality, and it might be preferable to bring Yangtse ore by sea, or to use Hsuan Hua ore, distant 200 miles by rail.
An expenditure of four million dollars to restart the Hangyang works is also contemplated. In these schemes foreign co-operation is anticipated. The Government's suggestion is to form :-
(1) A financial syndicate to float a loan followed by, (2) A construction corporation and,
(3) An operating agency with ultimate Chinese control. In considering proposals for shipping Yangtse ore to N. China, it must be remembered that this can be sent quite as cheaply to Japan, and it is even stated that Japanese buyers have already entered into contracts for all the ore that the district contains. Even at the present rate of mining, the deposits will only last 50-80 years.
162. Even with all conceivable iron works development, it seems certain that China can never base a large engineering industry on home-produced iron.
The iron industry of S. Manchuria has not overcome the low quality of the ore as well as was hoped, though the output has reached 300,000 tons. Any future developments are likely to be under Japanese control for many years to come, and the iron pro- duced will almost certainly go to Japan.
The restoration of the many mines which are at present almost at a standstill and the modernisation of those which are being run on antiquated lines are both subjects which are being closely in- vestigated by the Chinese Ministry of Industry. If the Chinese Government invite foreign co-operation and can arrange suitable and equitable finance, a considerable machinery business will develop both in connection with coal and iron mining and in the subsequent production of iron and steel in China. If we are to have our share in this development, we must clearly be prepared to take our place in this co-operation.
163. Besides coal and iron, however, China has important de- posits of other metals, particularly in the south where there are lead and zinc mines of some importance. This part of China also supplies about 70 per cent. of the world's antimony and tungsten. In gold Manchuria has always done a fair output, largely from
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placers. The output has been as high as 200,000 ounces in a year, but it certainly is not at present anywhere near this figure. Harbin, however, is full of schemes for gold mining concessions along the Sungarei Valley, but the obscure definition of mining rights and the difficulty of doing reasonable prospecting is preventing the fruition of the schemes. Should these difficulties be got over, it is obvious that there will be a market for suitable gold mining plant. Outside Manchuria the National Construction Commission are investigating a gold dredging proposition near Chefoo.
(e) Industrial Applications of Machinery.
164. The old cottage and workshop industries are still responsible for the great mass of miscellaneous production in China, but even in them some of the more arduous work is being undertaken by machinery. For any large use of machinery capital is required and, where it has been scientifically provided, remarkable develop- ment has taken place, a standard example being the extensive application of Japanese capital in the exploitation of South Man- churia. In fact, the bulk of the development of the modern in- dustry in China has taken place under foreign example in those places where foreign influence has been strong. There has been no native move towards wholesale industrialisation on the same lines as in Japan, but the Japanese example is making a strong appeal to the Chinese Government who include in their recon- struction plans much industrial development and encouragement of native manufacture on modern lines.
165. The provision of capital for this development is an out- standing problem. When a prosperous manufacturing company extends its plant or puts down a new branch, the matter is simple and the credit terms are generally such as are acceptable, often taking the form of a certain amount as bargain money, a further payment on arrival, and a further amount on putting into opera- tion. Cases where there has been repudiation or haggling over the final payment have occurred but, on the whole, experience has been satisfactory. In the case of new concerns, however, a stipulation of payment out of profits is often made, and naturally this is by no means popular with the suppliers. German firms, however, seem quite prepared to take this risk and by their readi- ness to do so have secured considerable business. Whether they are wise to take the risk is open to question. Most British and American houses are very chary of doing so. British trade has suffered from severe competition often against lower quality articles of Japanese manufacture. This has had a disheartening effect upon our agents and a vigorous price campaign from home is called for to recover lost ground in this very hopeful market.
The field of industrial applications in China is a wide one, but in some directions only a start has been made while in others development is of considerable importance.
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