Extract
extract from
.The. Temer
35/5/53
31
86
SMUGGLERS BUSY
In a general review of the affairs of the Ministry Mr. Soong refers with pardon-
Imperial and Foreign able pride to the great change in the system
THE CHINESE EXCHEQUER
REDUCED ARMY
EXPENDITURE
From Our Correspondent in China
Mr. T. V. Soong, the Minister of Finance, recently made an important
statement about the finances of the
of tax collection, which formerly was effected by innumerable bureaux and subsidiary offices all working indepen- dently with staffs of their own recruiting. Besides the Customs and Salt Administra- tions there is now only one other collect- ing agency, the Internal Revenue Admini- stration, which accounts for all the in- ternal taxes and is staffed by a new personnel, the members of which have the standing of Civil servants, with regular pay and employment, a reform which ought to do much to reduce corruption, to lessen expenses, and provide greater efficiency.
One of the consequences of the great increase of the import duties is the de- velopment of smuggling on a large scale, principally into Kwangtung from Hong- kong. Two years ago the Hong-kong Government was prepared to enter into an
Government, and as proof that the posi-arrangement with China whereby Chinese tion was much improved published for comparison the balance-sheets of the fiscal years ended in June of 1931 and 1932. In 1931 equilibrium was attained by borrowing, net, $216,000,000. In the following
year, owing to various economies and more income, it was necessary to borrow only $130,000,000, net, in order to square the accounts. During the whole of 1932, however, Mr. Soong says, all the payments usually undertaken by the Government have been met out of revenue and without any resort to borrowing.
The figures show a substantial increase in Customs revenue, not, however, due to any greater volume of trade, but to the rise in the rate of the import duties, the present height of which is widely regarded as excessive and to be contributing to the heavy decline in the collections for 1932. Although the reduction of military ex- penditure is small, Mr. Soong points out that substantial economies have been effected throughout 1932 and that ex- penditure now does not exceed the monthly amount of $18,000,000 fixed by the Disbandment Conference of 1929. The reader is reminded that the period 1931-32 covers the period of the Yangtze floods and the Japanese invasion of Shanghai, so making the year's figures all
the more notable.
duties could be collected in Hong-kong for China, thus rendering smuggling into adjacent Chinese territory more difficult, but unfortunately-for China-the official hierachy at Canton managed to intervene at Nanking, and no agreement was signed. Since then the duties have been further enhanced, and smuggling has grown and become profitable all along the coast, particularly in Chihli, where traffic with Manchuria has become brisk. So far China has had practically no preventive organization, for which a large number of service, but is now busily preparing an
patrol vessels are being constructed.
A PROFITABLE REFORM A much more profitable reform under- taken by the Government last February was the conversion of the numerous domestic short-term loans-mostly for periods of three to seven years, with interest averaging over 8 per cent. per annum into loans repayable during 20 years and bearing interest at only 6 per cent. This operation is estimated as re- ducing the Government's payments by something like $100,000,000 per annum in the next few years, most of which saving, of course, has to be disbursed in future years for the extended amortization
payments.
t
A
The Government prides itself on its new policy of forbearing to take military action to enforce national unity, and for the consequent reduction of military ex- penditure and the resulting absence of necessity to continue borrowing. On the other hand it has to be noted that it needed the Japanese aggression in Manchuria and Shanghai to make the Government realize the danger of its previous policy, which was to spend regardless of conse- quences in order to assert itself in the country, a country, moreover, wherein its conduct and policy were far from univer- sally approved. Militarism in China is seen in its worst form, for it has created huge armies to fight each other, though in emergency they are admittedly useless against external aggression.
Mr. Soong admits that the Government financially is far from out of the wood. He sees that the present degree of stability is conditional on the absence of civil war and the subsidence of foreign aggression, but regards hope- fulness as justifiable in view of the steady progress already made. He con- cludes with a reference to the conference of the Government's creditors in 1930 and regrets that the troubles of the last few years, of which the seizure of the Man- churian revenues is the latest, have pre- vented progress in dealing with this problem, but undertakes to resume nego- tiations whenever the financial and economic situation permits.
Mr. Soong makes a good case for his Ministry and for the Government; but the facts are against any great degree of optimism, and foreigners find them- selves unable to forget that, while Nan- king, very late in the day, is concentrating on the consolidation and the reorganiza- tion of the administration of the few provinces under its control, the rest of the country is going its own way and making progress mostly backward.
Canton is virtually independent: Szechuan is torn by civil war; the North, containing half a million troops, is deeply apprehensive of foreign invasion. Yet the Press and public opinion generally are eager for offensive measures to recover Manchuria, while the Government, though conscious of the inferiority of its armies and the hopelessness of war with Japan, derides any idea of coming to terms and self- | < righteously seeks the protection of the t League of Nations.
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