CO129-519-6 Development of railways proposed by Chinese Government 7-9-1929 - 17-1-1930 — Page 46

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which he submitted to Sir C. Clementi. The main item

in these projects is of course the completion of the Canton-

Hankow line. Lord Passfield is aware of the extent to

which the completion of this line is subject to already

existing agreements, and it is still doubtful whether the

utilisation of Indemnity funds for this purpose, which is

admittedly the objective uppermost in the minds of the

Chinese Government at present, can be reconciled with the

obvious desirability of obtaining the maximum amount of

orders for railway material etc. to be placed in Great

Britain. An attempt to find a way out of these difficulties

has resulted in the plan outlined in the draft telegram

to Peking referred to in paragraph 1 above; and it is

only in so far as Mr. Choy's schemes can be reconciled

with this project that they present an acceptable basis

for agreement at the present time.

4.

As regards Sir C. Clementi's own recommendations,

it is clear that proposals for rehabilitation of existing

lines may find a place under the new scheme. The

building of the Canton Loop Line is, however, a more

doubtful project, since it involves new construction, and,

in view of the 'psychological' reasons referred to by

Mr. Choy, Mr. Henderson would be reluctant to press

this project upon the Chinese in connexion with the

Indemnity. In these circumstances the question of the

building of the Loop Line must be left entirely to the

decision/