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absence of agreement, it is for consideration whether we
should not free ourselves from our Consortium obligations
and frame a proposal for a joint loan on the above basis with.
any other national group interested. The Japanese and
Belgians would, I beliove, be willing to co-operate.
If it appears that market conditions make the
issue of any market loan impossible, it is for serious
consideration whether a guaranteed loan or credit to China,
for the purchase of railway equipment in this country, should
not be made. Apart from the useful orders which our
manufacturers would thus obtain, such a loan would greatly
increase our prestige, would help us to obtain the agree-
ment of the Chinese Government to our requirements (e.g.
in regard to the Customs personnel) and would contribute
to the financial and economic rehabilitation of China, on
which our trade depends. It would be particularly helpful
to Hong Kong if such a loan could be arranged for financing
extensions of the railway system in Kwangtung (including
a loop-line joining the Canton--Kowloon and Canton-Hankow
Railways) and the re-establishment of the authority of the
Central Government over Kwangtung gives a favourable
opportunity of which advantage ought to be taken.
One other factor in commexion with railway orders
should be mentioned. It is important to secure the appoint-
ment of British engineers, wherever possible, on the Chinese
Railway system. The German and American engineers make
every effort to secure orders for their countries and it
would help to secure orders for British manufacturers if
British engineers, of the right type, were in key positions.
The position is different to-day from what it was in 1925.
The foreign staff now in question would not be represent-
atives of the bondholders but would be appointed by the
Chinese Railway administration with a view to increasing
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