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is in a much more advanced stage of industrialisation than Western China. These two countries can now do a great deal to help China, and this help will redound to the credit of the British Empire as a whole. Not only industrially but in education especially a lot could be done to widen the contacts. I would recommend that this matter be taken up actively through the India and Burma Offices with a view to something being done as soon as possible.
125. So far I have spoken only of governmental contacts, but there is the almost equally important factor of foreign advisers and resident nationals which affects the relationship of China with other countries. As I have already indicated in the political section, there is some controversy internally in China as to the use and position of foreign advisers. Mme. Chiang and the progressive elements are the great protagonists of the foreign adviser idea, as they realise, and are not afraid to state, the deficiencies of Chinese personnel at the present time. The opponents are the supporters of the old régime and methods who know that foreign advisers will be hostile to their outlook, and some of the more extreme Left-wing elements, whose nationalism makes them resent the idea that the Chinese cannot manage their own affairs. Although I sympathise very much with this latter point of view, I am convinced that it is necessary for China to have a strong body of really first-class foreign advisers at the present time. The nationality of these advisers is bound to have an effect upon Chinese foreign policy, even though only indirect.
126. At the present time there are not nearly enough foreign advisers, and not many of them are as competent as they should be. Apart from purely technical advisers, who have no influence upon departmental policy of any kind, there are the financial advisers, of whom Rogers is far the most competent, and Arthur Young (of United States) who is also able. The tea adviser, Wittam (British), regard as an excellent man, and, in fact, his influence goes a good deal wider than the tea trade. Rogers and Wittam are the only two British advisers, the rest being mainly American, at Chungking. Of these two, Rogers is obliged to spend most of his time at Hong Kong, though he pays frequent visits to Chungking, and this makes it difficult for him to appreciate fully the atmosphere of the capital, though he has a very good realisation of the Chinese attitude and requirements. Wittam has spent a good deal of his time in the central interior of China among the tea farmers, and has a first-class knowledge of their outlook. He also visits Chungking and has a good appre- ciation of opinions there. There is a group of American advisers dealing with special aspects of transport, and, of course, aviation experts both American and Russian. Leaving aside military advisers, this sums up the present advisory staff. I strongly recommended that a Ministry of Agriculture should be started, and this is now being done, and that Mr. Dickenson, a Canadian from West Chian University, should be appointed agricultural adviser. This latter proposal had the support of Madame and Donald, but I do not yet know whether it will be accepted.
127 On this subject matter, which I regard as of very great importance, I submitted a memorandum to the Generalissimo, of which I attach a copy.(") This memorandum explains my viewpoint on the subject. Just before leaving, I saw the Generalissimo about it, and he stated that he accepted its conclusions and that he would get it put into operation provided I would accept the position of chairman of the Advisory and Planning Board. I discussed the proposal, confidentially, also with Madame, Donald, the British Ambassador, Rogers, Wittam, Sun Fo and a number of younger Chinese administrators, and they unanimously took the same view and pressed me to take the appointment. Sun Fo added, to my embarrassment, that he thought, if I did this, I might then be able to settle the internal political differences of the Chinese ! I have told the Generalissimo that I will give him a reply shortly after my return to England. I agree with what the Generalissimo and others have stated, that the success of the scheme will largely turn on the personality of the chairman, but I am certain that other suitable persons could be found for the post. The difficulty arises from the fact that the Generalissimo is at present only prepared to adopt the scheme if I accept the chairmanship. I may add that, before I submitted the scheme, he had already twice asked me to remain in China as chief adviser on reconstruction. If any such scheme is carried through, it will be of the greatest
(*) Not printed.
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importance to arrange for a few absolutely first-class men who are sympathetic to China to be released either in England, the dominions or colonies, so that a strong and effective contribution can be made by the British Empire to the Advisory and Planning Committee, which will be an international body, and the constitution of which will be largely in the hands of the chairman. Such a body, wisely and sympathetically conducted, would do much to establish friendly trade relationships for the future between the various nationalities participating and China.
128. The attitude of other nationals besides foreign advisers is also, of course, important in its reflection upon trading relationships in particular. In this respect there is a great deal that might be done if the leading British traders in China would adopt a more understanding attitude to the profound changes that are taking place in China. In Western China, which is now the seat of Government and of industrial activity, there are hardly any influential British traders. The large firms are represented mainly by their juniors, who cannot formulate or even influence their policy. The important persons remain on the east coast in the unreal atmosphere of the Japanese-occupied areas, and often have no conception of what is going on in the interior and real China.
129. It is important that the Foreign Office should realise that advice from Shanghai or Hong Kong, from people who have not been into unoccupied China since the war started or who have only paid fleeting visits, is liable to be completely misleading. I heard from Britishers in China, who have an understanding of the present situation, most bitter criticism of these old-fashioned representatives of British trade. I do not wish in any way to imply that all British traders in China take these views, but, unfortunately, a number of the older men, who have long experience of the east coast conditions and trade, have failed to accommodate their outlook to the new conditions, and if that outlook is perpetuated, or is adopted as a guide to British foreign policy in the Far East, it will be disastrous to our relationships with China.
Other nationalities, particularly the Americans and Russians, have their important contacts in Western China and are alive to the changes that are taking and have taken place. They are, consequently, in a position to influence the Chinese in their own direction, and this factor will become one of great importance in the competition for Chinese reconstruction which will emerge after the war.
130. The same sort of reservation must be made with regard to a few of the personnel in our embassy and consular posts. Fortunately, most of them are fully alive to the new conditions, but there are still some who adopt the typical attitude associated with the word " Taipan " in so many Chinese minds.
131. The Chinese attitude to various foreign Governments and nationals will in my view-and the same view has been expressed to me by prominent Chinese very largely determine the degree of preference that will be given to the industries of the different countries in the reconstruction of China after the war. At this time it is to be hoped the other wars in the world will also be over, in which case there will be the most intense competition for export markets between all the industrialised countries of Europe and America. The heavy industries in particular will be acutely in need of markets owing to the cessation of armament manufacture, and this will apply to the aircraft factories as well. As far as I can see, the only two major markets that will be open to such goods, where the countries are ready for a rapid industrial development, will be China and India with their 800 million inhabitants. The share that British industry can obtain, when this time comes, will depend largely upon the relations resulting from the present policies of the British Government and the behaviour of British nationals. These two markets might well save British industry from a disastrous collapse if conditions were favourable. Apart from all considerations of morality or justice, I think that we should now do all we can to assist China in her defence in order that we may create favourable conditions for future trade with her in a period when we shall be desperately in need of every export market we can find to assuage our domestic difficulties. British policy towards China must, I am convinced, take into account these near-future conditions, and must not be entirely short-sighted and dependent merely upon day-to-day developments in the Far East or upon the eastern seaboard of China. It must be realised that Eastern China is no longer representative of the Chinese people or their national Government, and that it will tend to become less and less so the longer the war lasts. Nothing could be more unreal politically, for instance, than the puppet
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