CO129-517-2 Correspondence on proposed Chinese and Hong Kong agreements over Customs 13-11-1929 - 28-12-1929 — Page 89

N.B

Vide marginal note on copy of letter to Lampson.

(Itd.) J.W.S.

103

foreign coasting vessels will be transferred to the

Chinese flag, and, this being so, foreign shipping interests in Hongkong (the majority of which are con-

trolled by Companies now engaged in the Chinese Coastal

trade) would probably be prepared to adopt a similar

policy in order to secure the unquestionable advantages

connected with direct Inland trade. In fact, once

Coastal-trade privileges are withdrawn from foreign-

flag vessels, direct inland trade to non-open places

will be permissible only to Chinese-flag vessels; but

it should be clearly understood that without some such

Agreement as the one now under discussion, even Chinese-

flag vessels, coming from Hongkong, would be debarred

from such privileged trade. Seeing that the Chinese

Coastal-trade is in necessaries of life and industry,

it follows that any impediment would be serious. And

while no reasonable person can properly question China's

right to protect and encourage her own shipping, it

must be admitted that for years to come the supply of

purely Chinese-owned vessels will not equal the demand,

and for this reason a transfer of flag on the part of

the foreign Companies seems to me to be inevitable.

And if such a course would be likely to prove profi-

table in China, it would doubtless be equally advan-

tageous to foreign interests in Hongkong. Further-

more, in regard to Chinese produce from a Chinese

Treaty-port transhipped in Hongkong en route to another

Treaty-port, I am now in a position to extend this

provisional concession to the extent of permitting

such goods to be transhipped in Hongkong into junks

or railway trains without forfeiture of status. This

would prove a very considerable stimulus to junk

traffic....