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 116

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other public utilities. To obtain such contracts with

the public authorities concerned the arrangement of

extended credit facilities is essential.

The Export

Credits Guarantee Department should be in a position to

assist our exporters in this way: but up to the present

it has not been possible to arrange, through the Export

Credits Guarantee Department, terms such as our German

and American competitors are in a position to offer and

the credits arranged have been undertaken by the

British firms concerned on the basis of their own

resources. The extent to which they can do this is

naturally limited and Government assistance would

materially help to secure further orders.

Conditions

in China are substantially different from those

prevailing in more organised countries and it may be

that a special scheme will have to be devised to meet

these conditions. I would recommend that the Export

Credits Guarantee Department should undertake to cover

a proportion, say 40% or preferably 50%, of the risk of

any public utility contract in the Yangtse Provinces,

and perhaps even in other parts of China, at a premium

not exceeding 5% and without priority, provided the

bankers, merchants or manufacturers are willing to

carry the remainder of the risk. I believe that the

risks involved will not prove, in fact, so great as

they appear on paper; and the commercial houses, which

will be responsible for 60% of the risk, can be left to

obtain such security as is available. I the above

proposal is not feasible, the possibility should be

examined of guaranteeing a credit to the Chinese

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