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4. Another factor in Japan's foreign trade should be noted. Her most important economic interests lie in two regions, the United States and Asia. The former takes about 43 per cent. of Japan's total exports, and the latter 42 per cent., leaving about 15 per cent. of her exports for distribution to all parts of the world.
5. China, on the other hand, a sub-continent of immense area, is industrialised in but few industries-and in these only partially— which are situated mostly in or near centres of foreign influence, such as Shanghai.
Chinese territory that is, China proper, Mongolia, Chinese Turkestan, and Tibet-covers an area of 4,376,000 square miles, and is thus larger than either Europe including Russia in Europe -or the United States. Modern industrialisation and foreign trade are operative on the fringe only of this vast area.
China's means of internal communication by rail and road are quite inadequate, and, where existing, are in an extremely poor condition. The railways of China-including Manchuria-have a total length of some 8,750 miles only, and, with the excep- tion of those in Manchuria, and the short Hongkong-Canton line, cannot cater for any but a very small portion of the needs of the country. Large areas of China are served by magnificent waterways, but these must be supplemented by a modern system of rail and road communication if the economic unity of the country is to be promoted and China is to be enabled to increase her purchasing power. At present, generally speaking, the Chinese population can afford to purchase only the lowest and cheapest qualities of goods from abroad.
China's peasant population amounts to 80 per cent. of the total, and lives in scattered villages, supplying very largely its own needs. Trade to or from these millions is difficult and restricted under existing conditions of transportation, and this fact and the absence of peace and security are the main causes of the very small relative volume of China's foreign trade. It is true that, in recent years, notable progress has been made in trade by great organisa- tions such as the Imperial Chemical Industries, Ltd., the British- American Tobacco Co., Ltd., and the Asiatic Petroleum Co., Ltd., etc. But it must be pointed out that the success achieved in the sale of their goods is not only due to the excellent selling methods employed, but also to the standard form which makes the goods suitable for sale throughout China.
6. Great Britain's problem as a producer and exporter of goods to the Far East, while not easy, is by no means incapable of solu- tion, as regards China at any rate. Our disadvantages in the Chinese market are distance from Great Britain, high costs of our production, unintelligent and inadequate methods of distribution
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(with a few notable exceptions), and, possibly, a lack of co-opera- tion between finance on the one hand and production and distribu- tion on the other. It is clear that many British products are beyond the capacity of China to buy in spite of her needs, and they are also often unsuitable and unattractive in themselves. The cure for this state of affairs lies in Great Britain. If we want the China market we must offer what China can afford and wishes to pur- chase. That market is unlikely to be smaller than it is to-day. Seventy per cent. of the entire population of China is under the poverty line, because of years of internal difficulties, and any improvement in conditions will almost certainly bring about an enlarged volume of trade. There must first be a period in which China's huge and industrious population will have to be equipped with the means of transport and production, a period in which peace in China and financial aid from outside must coincide. The question is whether or not Great Britain is to take a proper share in supplying China with equipment, material, and goods required during this period, which must precede a permanently enlarged market.
Economies in, and reorganisation of, distribution will help to reduce the price of British goods, but the main contribution to this essential reduction of price must be made by British industry at home, and this is as true of all sections of British industry as it is of cotton goods. As regards the question of suitability and attractiveness of goods, British manufacturers must be less rigid, and be prepared to adjust their processes to the needs and fashions of markets which change with far greater rapidity to-day than they did in the past.
7. Japan as a market for our goods is entirely different from China. We, in common with other sources of supply, shall do well if we maintain our present proportion of imports into that market, for Japan has proved herself to be most capable in carry- ing out a policy which provides more and more for her own needs in manufactured goods. In contrast with China, there is in Japan little or no market remaining undeveloped.
8. British export trade to China and Japan to-day, compared with the immediate pre-War years, presents a depressing picture. It is quite true that the War played havoc with the whole of British trade, but to-day, a full 12 years after the end of the War, we find our competitors beating us in supplying the needs of China and Japan in manufactured goods.
Great Britain's exports to Japan at £13.4 million in 1929 were, in spite of the increase of prices, less in value than her exports in 1913 by just over £1 million. Exports from Germany to Japan, at £12 million, were, in 1929, double the value of exports from the same source in 1913. Exports from the United States to
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