CO129-470 - Public Offices - 1921 — Page 372

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

370

CHINESE LOANS AND CONCESSIONS.

CONFIDENTIAL.

[F 333/333/10]

No. 1.

Mr. Clive to Earl Curzon.—(Received January 28, 1921.)

[January 28.]

SECTION 4.

(No. 775.)

Peking, December 1, 1920. My Lord,

IN my despatch No. 506 of the 14th July I had the honour to report that the bank groups concerned in the Hukuang Railway Loan had conveyed to their repre- sentatives in China their decision to refuse consideration of fresh pecuniary advances so long as the then prevailing conditions remained the same.

The negotiations thus temporarily brought to a standstill were revived after the July revolution, owing chiefly to the appointment of a new Minister of Communications, who evinced a keen interest in the scheme, and instructed the director-general of the railway to submit proposals for a course of action and to resume discussion with the banks at an early date.

A meeting between the director-general and the bank representatives was actually held on the 1st October, and following upou this an exchange of correspondence took place between the two parties. I have the honour to enclose herein the relevant extracts from this correspondence (which dealt also with the question of enemy-held bonds, regarding which I am reporting in a separate despatch). The bank's letter of the 28th April last, to which the director-general refers in his letter of the 5th October, was forwarded in copy in Sir Beilby Alston's despatch No. 335 of the 10th May.

As your Lordship will observe, there is now unanimity regarding the priority to be given to the completion of the unfinished section of the Hankow-Canton line, though the Chinese Government are inclined to maintain that the 1913 Loan Agreement does not affect construction within the province of Kwangtung. There is also still a lack of agreement in regard to the question of separate security for a new loan.

(Copy to Hong Kong.)

I have, &c.

R. H. CLIVE.

Enclosure 1 in No. 1.

Extract from the Director-General of Han Yueh Chuan Railways' Letter, dated October 5, 1920.

WITH regard to the plans for the construction of the Canton-Hankow and Szechuan-Hankow railways, Mr. Huang, the late director-general, in his reply to the group banks, made the following proposals, viz. :-

(a.) To proceed simultaneously with the construction of the Canton-Hankow railway line from Chu-chou to Hsing-Ssu-Ling on the border of the Hunan province, and with the Szechuan-Hankow railway branch line from Hankow to Lao-Ho-K'ou, or failing this,

(b) To leave in abeyance the construction work on the Canton-Hankow railway, and to proceed in the first place with the Szechuan-Hankow branch line from Hankow to Lao-Ho-K'ou.

I do not approve, however, of the second proposal. No matter what difficulties are in the way, it is absolutely necessary to raise funds in order to finish the construction of the Canton-Hatkow line from Chu-chow to Hsing-Seu-Ling, or at least to proceed with the construction work on part of this line. If funds permit, the plans for the At the branch line of the Szechuan-Hankow railway may then be carried into effect. same time I shall request the Ministry of Communications to consult with the Kuang- tung Provincial Railway Company, and to take action at the earliest possible date, otherwise the Ministry shall have to devise some other method for proceeding with the

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