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be established in China and, if so, what its relations with the eighteen provinces will be. The time is, therefore, sing- ularly inopportune for taking decisions such as those outlined in Sir Ronald's telegram and my own opinion is that His Majesty'à Government would be wise to retain freedom of action in these matters until the political situation in China is less turbulent and confused.
3.
Subject to this general reservation, I will now examine each of the clauses in Sir Ronald's telegram from the point of view of this Colony and of the Liang Kuang Provinces.
Transit Pass Fees. These are of two kinds, out-
4.
wards and inwarda:-
(a) Outwards. A foreign merchant wishing to buy thinese goods in the interior for export to a foreign country is entitled to take out an Outward Transit Pass, which document will free the goods from all inland taxation whilst they are en route from the place where they were brought to the Treaty Port whence they are to be exported to a foreign country. On arrival at that Treaty Port the goods pay Transit Dues, the amount of which is equal to half the Export uty due on them on exportation.
(b) Inwards. By treaty all foreign imports which have paid Transit Dues and taken out Transit Passes are entitled to be conveyed to any place in the interior of China free of all further taxation. "The interior" means any place except a Treaty Port. Transit Dues amount to half the duty levied on original import- ation. Import duty-free goods pay Transit Dues at the rate of 2 per cent ad valorem. Transit Passes are issued to Chinese as well as to foreigners.
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I attach a table supplied to me by Mr. N.R.M. Shaw, Commission. -er of Chinese Maritime Customa for Kowloon and District, showing the collection of Transit mes at ports in Kuang-tung and Kuang-hai provinces for the years 1921 to 1925. It shows that
the total collection in those five years on outward cargo was
39,433
H
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