CO129-352 - Public Offices - 1908 — Page 112

[This Document is the Property of His Britannic Majesty's Government.]

109

CHINA TRADE.

CONFIDENTIAL.

[19835]

(No. 203.) Sir,

No. 1.

C

((

25780

[June

16 HUL 08

SECTION 5.

Sir J. Jordan to Sir Edward Grey.—(Received June 9.)

Peking, May 6, 1908. I HAVE the honour to acknowledge the receipt of your despatches Nos. 91 and 132 of the 18th February and the 9th March last, forwarding copies of correspondence with the India Office and the Board of Trade on the subject of the taxation of opium.

In the first-named despatch you instruct me, when the discussion about raising the import duty on foreign opium is resumed by the Chinese Government, to invite that Government to define and limit, as part of any arrangement that may be concluded, the powers of the provincial Governments as regards the levy of licence or cousumption taxes under clause 5 of the additional Article to the Chefoo Convention, so as to secure the provisions of that Agreement from infringement.

In the second despatch you direct my attention to the continued levy of certain taxes imposed on prepared opium by the Kwangtung authorities in 1906, and you leave it to my discretion to take such action as I may think practicable with a view to settling the matter.

I have carefully considered both these despatches in consultation with the Commercial Attaché, and have come to the conclusion that it is inadvisable to take any action at present.

The tax on boiled opium at Canton, it is true, is a relatively heavy one, as it amounts to about half the consolidated tax on the raw import, and although it seems to have been tacitly acquiesced in since 1906, I should be inclined to contest it if the question could be treated separately on its merits apart from other considerations. But His Majesty's Government having already intimated to the Chinese Government their willingness to discuss on certain conditions the proposal for increasing the duty on foreign opium, any attempt to combat the tax at Canton is likely to be met by a revival of the demand for an increased duty which the Chinese Government have left in abeyance for the present.

It seems to me, therefore, better to wait until the Chinese Government, of their own motion, revert to the proposal, and then to place before them the various con- siderations enumerated in your despatches as factors which should determine the limit of the increase, if any, which should be placed upon the duty on foreign opium.

I am the more inclined to adopt this course in view of the fact that, except in the province of Szechuan, whose system of taxation was described in my despatch No. 394 of the 19th August last, the taxation of native opium is, as Sir Alexander Hosie attests, undoubtedly higher than that of the foreign drug.

I have, &c. (Signed)

J. N. JORDAN.

[1815 i-5]

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