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I discussed the question of the construction of this railway with the British Ambassador in Tokyo, and, after I had explained the situation to him, he said that he would not offer any objection to the construction of the railway, though no doubt the Japanese would object, but that he thought that their objection would before long be forgotten.
73. I understand from the Minister of Communications at Chungking that the agreement has been signed with the French for the new railway from Yunnan to Indo-China, and that the French would be prepared to allow British partici- pation in this line, if the British would give them participation in the Burma- Yunnan line. This arrangement could not, of course, be carried through unless the latter line were to be built right through to Lashio. From this point of view also I think that it is important that the work should be undertaken, as it is not desirable to have a French monopoly of railway transport in Yunnan.
74. Of all the single acts that could be done, at this time, to improve Sino-British relations, a decision to go forward with the construction of the railway in Burma would, I believe, be the most effective, and would be repaid a hundredfold in the subsequent development of Sino-British trade. From the Chinese point of view we hold it in our power to grant or withhold this absolutely vital facility, and if we withhold it they will think that we are not interested in the rightness of their cause or in the maintenance of their independence, and in the future they will have no particular regard for British interests.
(3) Water.
75. The main arteries of trade in China have always been the rivers, particularly the Yangtze, which is still largely used for traffic from the east up to Chungking and beyond. Regular steamer services are still in operation, when there is sufficient water in the river, from Ichang to Chungking, and a great deal of material comes through by this route from the eastern provinces, particularly raw cotton, though precisely how it gets through to Ichang it is difficult to say. There is also a great deal of local transport upon the upper sections of the Yangtze and other rivers, such as the Yellow River, by junks and sampans. A good deal of coal, sugar, molasses and similar goods are so transported, but the areas in Western China which can be served by such transport are limited, and in the most westerly and northerly regions water transport is of no account.
(4) Motor Trucks.
76. These have perforce become the substitute for railway transport in the west, and this fact creates great difficulty in gasoline supplies. The distances are so great and the roads so mountainous in many areas that a truck will use up a considerable portion of its capacity in transporting enough gasoline for its own use. For instance, on the north-west highway from the Russian rail- head to Lanchow and back a motor truck will use more than its own load of gasoline, and consequently such through traffic is a practical impossibility as a regular feature. Appendix 15 deals with this matter to some extent.
77. The two main highways are the Yunnan-Burma and the north-west, a portion of which is in Sinkiang, and this section is dealt with in the Sinkiang section of this report. In addition there is a highway from Kunming to Chung- king, and from the latter town to Chengtu and on to Lanchow through Paoki, with auxiliary roads to Sian and Ningsia. The road to Indo-China has now been cut by the Japanese at Nanning and so is no longer available beyond that point, but a new road, avoiding Nanning and Pinyang, is being put through and will be completed about the beginning of May. I attach a map(") which is the most up-to-date I could get of the road system.
78. An immense volume of traffic is carried over these highways, of which at present the Burma-Yunnan is the most important, as it provides the only effective source of external supplies for South-West China apart from the Indo- China Railway. On this highway, owing to steep gradients and high altitudes, the average load of a truck is between 1 and 2 tons. Transhipment is necessary in almost every case at a point about 30 miles within the Chinese border, since neither the Burmese nor Chinese lorries run through over the whole route. This leads to a good deal of unnecessary handling of goods and a certain amount of irritation and delay. Negotiations have been proceeding between the Chinese (5) Not reproduced.
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and Burmese Governments with regard to the granting of reciprocal permis- sion for the lorries of the two nationalities to run over each other's roads. I do not know whether these have yet been concluded, but the difficulty that stood in the way was created by the firms who had sold lorries to the Burmese on hire- purchase terms and were afraid that they might not see their money back unless a monopoly of transport on the Burmese side was granted to their customers. This difficulty certainly ought to be overcome as it is creating quite unnecessarily a handicap for the Chinese. The other road inside Burma which might be of considerable use to the Chinese is that which runs from Bhamo, past Lowing, joining the Burma-Yunnan highway at the 105th mile-post east of Lashio. Bhamo is the head of the main Irrawaddy navigation, and transport by river from Rangoon to Bhamo is very much cheaper than by railway to Lashio. At the present time the Lowing factory obtains its material and supplies, including gasoline, by river to Bhamo and thence by road. This road is about 70 miles long and the present junction with the Burma-Yunnan highway is about 40 miles from Lowing. The latter section, over which we drove to Lowing, has good bridges, but in parts is not in good condition for heavy traffic, while the former section is narrow and contains many sharp bends, which make it difficult for heavy traffic, though a considerable amount has, in fact, been passed over it. It is stated that this road is kept in a bad condition so as to force the traffic over the railway to Lashio, which is more remunerative for the Burmese Govern- ment. Whether this is so or not, it would seem most desirable to improve this road so that the alternative route from Rangoon by river to Bhamo is available to the Chinese Government. A new road is now under construction from Lowing direct to the Burma-Yunnan highway, entirely inside Chinese territory, and if the Bhamo road were improved to Lowing this would enable the traffic to pass along that route and direct on into China. The river at Lowing is not bridged except temporarily in dry weather, but there is an adequate ferry service, and, if necessary, an international bridge could be constructed at this point. I deal with the problem of gasoline supply at the end of this section.
(5) Hand Trucks.
79. This is a recent development so far as large-scale transport is con- cerned. No trucks are allowed on the main Central Government highways unless they have pneumatic tyres, though this does not apply to the portion of the north-west road that is in Sinkiang. As a result a number of trucks have been built with old motor-wheels which are capable of carrying up to a ton or slightly more, and are drawn by man-power. This is a slow form of transport but has the great advantage of not requiring gasoline supplies. I attach a copy of a note() on this subject which I submitted to the Generalissimo dealing with the possibilities of this form of transport. The Government are already constructing in Kunming steel-frame trucks with pneumatic tyres for utilisation on the Burma road. It would be of great assistance if facilities could be given at Lashio or some other point in Burma for the construction of such trucks, and if arrange- ments could be made for sending second-hand or cheap new axles, motor-wheels and tyres to Rangoon for use on these trucks. If the system suggested in my note could be organised and developed a great saving could be effected in gasoline, and if truck construction were to be started in Burma it would establish a useful industry which would be likely to continue for a long time. This form of trans- port, once it is regularly established, is likely to persist for many years to come in Western China, since, compared with carriage by individual coolies, it effects a considerable economy in man-power and enables large and heavy packages to be transported in a much more convenient way. It would, at best, be a very long time before it could be substituted by motor transport methods, especially in the more remote districts.
(6), (7), (8). Pony and Bullock-Drawn Carts, Pack Trains and Camel Caracans,
Coolie Carriers.
80. These are the traditional methods of transport in China. In Yunnan practically only coolie transport is in evidence, though there are occasional pack trains of ponies or bullocks in the west. In Szechuan there are more ponies, but
(*) Not printed.
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