Hongkong 2/4d., Shanghai 1/7.7/8d., is another serious
handicap to trade,
14
My object, however, in writing you is to
emphasize what Pelham has said on pages 14 and 15 of his
report in regard te Great Britain securing her share of the
Machinery and Capital goods required to carry out China':
industrial programme.
There is far too much risk attaching
to the granting of the necessary credit required to secure
orders from the Bureau of Reconstruction in Canton for the
ordinary merchant to take, but I believe with Pelham that
where credit has been granted by big people like Flatts, the
instalments will be met and that the business is at any rate
The as safe as the granting of credit to say Russia.
Germans, Americans and other foreigners are gradually increas
ing their share of the machinery for the Industrial Plants
that are being erected, mainly because they are giving credit
facilities. That the Germans are assisted by Government
subsidies and/or Government credits, is undoubted.
Government prefer to take nome risk in this way rather than
have a large increase in unemployment in Germany and if
Great Britain is to retain her footing in the trade of South
China, she will have to give similar assistance to her manu-
facturers and merchants,
Wheir
In my judgement it is very shortsighted to
take the view that we don't want to sell Machinery to China
because she will use it against us later. Her industrial
programae shows every prospect of going through, if not with
British Machinery, then with that of competitive nations, and
if it all goes to the latter, surely our prospects of future
trade must be seriously endangered. I admit that Industriali-
zation must harm our trade to some extent, but eventually it
cannot but raise the standard of life, increase the purchasing
power and lead to trade in other classes of roods than those
we have hitherto been accustomed to deal in.
/I take
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