CO129-501-8 General policy in China 30-11-1926 - 30-11-1926 — Page 55

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Enclo. No. 2.

on refined as against raw will be a great blow to Hong Kong

Refineries, if (as is to be expected) the refining industry

develops in China". Mr. Bernard did not deal with the

larger question as to whether trade could bear these taxes.

His letter of the 11th July was endorsed on the 14th July

by a joint meeting of the China Association and of the

General Committees of the Chamber of Commerce, who felt

that there was nothing that could usefully be added to it.

This joint meeting was, however, informed that in South

China the operation of the proposed scheme would be post-

poned until the 1st November next.

5.

Colonel Hayley Bell answered my question

much more fully in the interesting memorandum, dated the

15th July, of which I enclose a copy, and which he requests

may be regarded as confidential. He makes two points: (a)

that the new import tariff should not in itself make trade

impossible; for, if likin and internal transit dues are

effectively abolished, trade could stand considerably

higher import duties at entry: and (b) that the corollary

to a large increase in the import tariff will, in view of

the present complete absence of a preventive system, be the

smuggling of cargo on a large scale by junks.

6.

Considering the matter purely as a trade

problem, much will obviously depend on whether the promised

abolition of likin and of the harassing internal transit

dues, enumerated in paragraph 2 above, can be made really

effective. On this point Colonel Hayley Bell thinks that

probably Kuang-tung will throw off the likin system more

readily than any other part of China, because that system

has never been quite so vicious here as elsewhere.

I am

not