CO129-588-23 China- British extra-territorial rights- negotiations with China 28-3-1942 - 27-11-1942 — Page 23

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I gather the point at issue is Whether we can safely use the argument that the Chinese ought not to prohibit British shipping from engaging in Inland navigation and the coastal trade of China, because in the United Kingdom and British Colonies, Chinese shipping is permitted to engage in these trades, and the suggestions have been made:-

(1) That in fact this may not be a safe argument to use, owing to difficulties having arisen on this point in the past in Colonies and

(2) That the point is one for consideration by Economic Department.

I am afraid that I find it very difficult to advise on this point, because I am practically certain that no such difficulty has arisen in the period since the outbreak a war, and before that time shipping questions were not the concern of Economic Department but of General Department. Before, therefore, I could express any useful opinion on the subject, I should have to have undertaken an exhaustive search of General or Geographical Departmental records.

I personally doubt very much, however, whether, whatever difficulties there may have been in the past, it is worth while undertaking any such exhaustive search. In the first place, to take an opposite view from that proposed in the draft note i.e., to maintain that the Chinese Government had not the right to engage in coastal shipping in parts of the British Empire would be contrary to the whole trends of Anglo-American economic policy with its emphasis on equal rights for Zeconomic all nations (other than those with aggressive designs), and in the second place it is surely clear that the Empire as a whole stands to lose infinitely more by being debarred from the coastal trade of China than

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