CO129-558-11 Mission of Sir F. Leith-Ross to China- proposals for a Hong Kong - China customs... 29-9-1936 - 30-12-1936 — Page 115

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The Chinese Government will, as stated above, resent

any agreement made between us and Japan for distributing

appointments in the Chinese customs service and the

Japanese representatives at Nanking may well present

the proposals in such a form as to foment friction. I

an inclined to think that we and the Japanese should each

approach the Chinese Government separately, with our agreed

requests, but in the first instance, the method of approach

to the Chinese Government should be discussed with the

Japanese Foreign Office at Tokyo.

(4)

Customs Tariff.

unfortunately

The Chinese Customs tariff has been increased in

recent years, particularly as regards textiles, to a

prohibitive point. The Japanese have frequently

protested against these tariff increases;

they have linked their demands on this point up with

the question of smuggling and have urged sweeping

reductions of the tariff so as to make snuggling un-

profitable. This is not a practicable proposal as

the native industries of China need a considerable

measure of protection against Japanese goods. But I

believe that a careful revision of the Chinese tariff

could be undertaken which would give some satisfaction

to the Japanese demands, help our trade and increase the

Customs revenues on which Chinese financial stability

largely depends: and I think that we should continue

to press the Chinese Government to undertake such a

revision.

(5)

Export creàits.

The main opening in China for British exports,

in present conditions, lies in the supply of capital

goods and particularly machinery for power plants and

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