AnnualReport-1929 — Page 5

I-General.

At the close of the year 1928 the accounts of the Colony showed a surplus balance of $8,091,634, and the balance at the end of 1929 was, subject to the final examination of the Crown Agents Accounts estimated to be $9,577,038. Thus, in spite of continued trade depression, the general position of the Colony remains sound, but increasing expenditure on normal recurrent charges and demands for new public works are more than overtaking the normal growth of revenue so that fresh sources will have to be explored in search of increased income.

On January 2nd, Marshal Li Chai Sum left Canton for Nanking to take part in the Disarmament Conference. He returned a month later and spent the month of February in an endeavour to reorganize the military establishments of Kwangtung and Kwangsi in conformity with the decisions reached. On March 5th he again left to attend the assembly of the National Party at Nanking. General Chan Ming Shü, Chairman of the Kwangtung Provincial Government, was following him a few days later, but while in Hong Kong, he sustained serious injuries in escaping from the fire which destroyed the King Edward Hotel, necessitating his removal to hospital.

Meanwhile, the friction which had been growing between the Central Government and the Kwangsi group since the expulsion of Lo Tik Ping from Hunan in February developed into open warfare, and Marshal Li Chai Sum was arrested and detained in Nanking on March 20th on a charge of complicity in the rebellion. His followers in Canton at once prepared to take the field, but on March 30th they were expelled, and Canton took the side of the Central Government under the leadership of Generals Chang Ming Shü and Chan Tsai Tong and Admiral Chan Chak.

Hostilities then broke out between Kwangtung and Kwangsi. A mutiny of the Cantonese Navy and an attempt to seize Canton by a coup de main on May 7th were frustrated by the use of aeroplanes, and subsequently, after severe fighting which continued from May 10th to May 19th, a determined attack by the Kwangsi forces was completely defeated. By the end of June, with the help of reinforcements from Nanking, the province of Kwangsi was brought under the control of the Central Government. The rebellion of Cheung Fat Fui in September was the signal for a renewed rising in Kwangsi, which culminated in a combined attack on Canton in the months of November and December. By December 18th, the Cantonese armies had succeeded once more in routing their adversaries, and the end of the year saw them in occupation of Wuchow, preparing again for the invasion of Kwangsi.

Mr. Chu Chao Hsin resigned his post as Commissioner of Foreign Affairs at the end of May and was succeeded by Mr. Yee Shing L.C. Tao, who held this office until the end of the year.