124
(11) British Position in Shanghai.
Shanghai is not China, anu some of the characteristics
of Shanghai are not altogether creuitable to the Britısl
merchant comunity there. All the same, Shanghai is a
remarkable monument to British enterprise in the development
of China and it remains the centre of British interests in
that country. The position of the Settlement should be
maintained as fully as possible. Provided that the
administration gives uue consideration to the reasonable
uemanus of Japanese residents in the Settlement, our preãomi-
nant position there is not likely to be challenged by Japan:
and the difficulties between China and Japan elsewhere have
for the time being made the Chinese less anxious to press
for a radical change in the position of the Settlement whose
existence is helpful to them in any respects. The ad-
ministration shoula however be improved end the Settlement
authorities should be ready to examine complaints, both from
the Japanese (e.g. on provision of schools) ena from the
Chinese (e.g. on tax privileges) and to meet reasonable
requests.
one.
(12) Position of Hong Kong.
The present position of Hong Kong is not a happy
Economically, a part of China, the colony is faced
by an ever-growing tariff wall and is feeling more uña more
the competition of ports like Shanghai which are inside that
wall. The difficulty was accentuated by the currency
policy followed by Hong Kong in 1935 and 1936: and some
improvement has taken place since the curency change maue
last December. But the permanent future of the colony
aepenas on the possibility of traue with China and the
Question should be considered whether it would be possible
-15-