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to peace-time production. I feel that there is a strong danger that this considera- tion may be overlooked with the most unfortunate consequences to our domestic situation in a time of great difficulty. The best solution would be to give direct help to China in their struggle against Japanese aggression, but if this cannot be done, for fear of the consequences so far as Japan is concerned, then every possible means of indirect assistance should be utilised.
102. I have not burdened this section with any detailed accounts of the industries set up in Western China, but I attach a map() which gives the character and location of most of the new factories erected by the Government, a list of those that I personally visited and a typical account of the origin and development of one of these factories. If any further information is of use on these topics I have it available in the form of my detailed notes.
Agriculture.
103. The basic industry of China is, of course, agriculture, and by far the greatest proportion of her population is either directly, or indirectly, engaged in this industry. The Chinese are excellent farmers, being most industrious and economical. There is practically no mechanised farming, and the methods as a whole are the traditional ones that have been developed and carried on for many centuries. In the majority of districts, except where new crops have been intro- duced, the methods must be very much the same as they were a thousand years ago. The crops are very varied, depending upon the widely different climatic and soil conditions that prevail in the different parts of the country. Practically every kind of
crop can be grown in some part of China, with the exception of those that require a tropical climate, such as rubber. A great deal of attention is now being paid to the development and improvement of agricultural crops.
104.
I visited the Agricultural Institute at Chengtu, which is run by the Provincial Government, as are most of the similar institutions in other parts of the country. I was greatly struck by the thoroughness and efficiency of the whole organisation, which is entirely staffed by Chinese. A great deal of work is being done on plant-breeding and seed selection, especially for rice. Plant diseases are also being studied and remedies devised, and a good deal has been done on compost manures which are already used in the district. Animal diseases are being studied, particularly those of cattle and pigs, and last year over 4 million cubic centimeters of serums of various kinds were distributed to the farmers. Very little, however, is being done as regards animal breeding or other branches of animal husbandry, with the exception of a section which deals with Chinchilla rabbits. There is not as yet any full exchange of information with foreign experimental stations. All this work in Western China is of very recent origin, but already a number of such stations have been set up in the different provinces, most of them doing general work, but some specialising in such matters as sugar cultivation and forestry. This latter subject needs a great deal more attention than it has yet had, since much forest has been cut and denudation has already resulted in some areas. The main need to-day is probably in the field of animal husbandry, as many of the local breeds are poor and could be much improved. There is practically no dairying industry in Western China, except around Chengtu, where a beginning has been made through the efforts of the West China University Experimental Farm which runs a Fresian herd belonging to Mme. Chiang. A considerable improvement has been made in the local cattle by crossing with this herd, and the crossed stock now fetches large prices in the district. Good work has been done as well in the improvement of chicken breeds, the average egg-laying capacity of the local breeds being doubled on a first cross with Rhode Island Reds. Very little has been done with sheep or goats, while the pigs are of such excellent quality, especially in Szechuan, that they hardly need improving. Although they have not yet done much in this direction, the Chinese are very anxious to improve their breeds, and for this purpose would very much welcome any assistance that can be given in the importation of bulls, billy- goats, rams and cockerels. This would seem to be a matter in which Great Britain could give some very practical assistance, either directly or through India or possibly New Zealand or Australia. A closer connexion between the Chinese,
() Not reproduced.
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Burmese and Indian research stations would also be of great advantage to all of them. Many of the questions now being dealt with at the Indian and Burmese stations are similar to those which the Chinese have to deal with. I believe that the Chinese would also be very ready to use the services of some good British agricultural advisers, especially in the matter of animal husbandry. If this could be arranged, and in addition a full exchange of material and personnel could be made between the Chinese and British Empire research stations, Great Britain could come to hold an influential position of assistance in the basic industry of China.
105. The main exports of China are to-day agricultural, and this will no doubt remain the case for a long time to come. Tea and tung oil constitute the most important items of export. Plans are on foot to extend the area of both these crops in the west--tea is to be grown in the Yunnan hills and tung oil is to be developed further north. The area of wheat in Kansu and the northern provinces is being extended by the suppression of opium, and the land so made available is to be used for wheat. Fruit growing is also being extended, but there is no immediate prospect of this becoming an export crop owing to transport difficulties and the fact that as yet there is not sufficient grown for Chinese needs. The position as regards rice in the west is that, at present, no export is allowed owing to the internal shortage, but normally Yunnan has a surplus which is available for North Burma or other export markets. A great deal of work is being done on the selection of rice varieties, and it is hoped that this will result in an increase of yield, in which case an export surplus will be available. So far as internal supplies are concerned it must be remembered that at the moment there are millions of refugees from the east in Western China, and that when peace is made there will be a tendency for many of these to return to their homes. This diminution of population will temporarily mean a surplus of commodities in the west, some of which may be available for export.
106. The incidence of land tenure and the splitting up of the land into very small holdings as well as the physical condition of such a province as Szechuan, which, with the exception of such areas as the large plain of Chengtu, is hilly throughout. militate against any idea of large scale farming in China. Consequently the agricultural methods of the west or America are not really applicable; there is on the other hand great scope for the development of better hand- and bullock-operated implements and some work is being done on this subject by the research institutes. I have suggested and I think that the suggestion will be carried out-that the C.I.C. should take up the manufacture of such improved implements through widely distributed village co-operatives. Apart from this, however, there is great scope for the manufacture of such implements on a large scale in China.
107. The Chinese farmer is, like all farmers, apt to be very conservative in his ideas, but the moment that it can be proved to him that he will do better out of his land by the introduction of new methods or new breeds of animals or plants he is only too ready to adopt these improvements. I was told at the research institutes that they had found the farmers most responsive, and that they were the determined supporters of the work, in many cases pressing the provincial Governments to spend more money upon these institutes.
108. A good deal has been done through agricultural co-operatives. organised by the Government, to assist in the financing of the small farmer and to get him out of the clutches of the moneylender. Owing to corruption in the administration of this service, due to the appointment of unsuitable local officials, a great deal of money has been lost, amounting to nearly 20 per cent. of the investment. The losses due to farmers not repaying the loans are almost negligible, as they are extremely honest in this respect. Efforts are now being made to clean up the local administration, but this is not always easy, especially where the local magistrates are themselves involved in the dishonesty. But the result, so far as the farmer is concerned, in districts where the co-operatives are functioning properly, has been good. Rates of interest have fallen from as much as 30 per cent. per annum to 8 per cent. per annum, which is the charge made by the co-operatives. Even where the fall in the rate of interest has not been so great there has been a definite tendency for moneylenders' rates to fall thus easing the burden on the producer. Some efforts are also being made in certain areas through the agricultural co-operatives to collectivise the purchase of seeds and other requirements, but this aspect of the question has not as yet received very
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