CO129-499-3 Canton situation- governor's despatches 12-2-1927 - 10-3-1927 — Page 80

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Japan has in China, makes up 60% of all her business at home, and the surtax will be a great blow to her foreign trade.

This rupture between England and Japan, and between Japan and Mukden will at the same time affect the internal work of the Mudkenese. When the alliance between Chang Tso Lin and England is successfully established, Japan will certainly stir up a rebellion among the men of Chang, most of whom are closely allied with Japan. The aid lent by England to Shuan Chun Fong by 40% of the surtax will at the same time lead to a dispute between Chang Chung Chong and Sun. Recently news has reached us that Chang Tso Lin has had Yang Yu Ting arrested. The relations between Yang and Japan are known to everybody, and this is a very grave question, far more important than that in respect of Kwok Chung Ling. The British Imperialists in their intrigue, are supposing that they can help the reactionaries to achieve success, but after all they will fail as before.

At the joint conference of Routine Work Officers of the Central and Provincial Councils held some time ago, a clear explanation was given as to the importance of the career of Japan whose business in China consists of 60% of

all her trade.

Japan entertains a great fear of the Chinese

revolutions on account of two reasons:-

(1) Japanese economic prosperity will be killed on the success of the Chinese revolution. We must try to make her understand that this supposition will not be borne out by facts but that our revolutionary success will on the contrary further the lawful trade between China and Japan. (2) China will help America when she is at war with the

latter.

We must do our utmost to remove all such fears.