CO129-588-23 China- British extra-territorial rights- negotiations with China 28-3-1942 - 27-11-1942 — Page 78

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If the Chinese Government are willing to give

us national treatment in the matter of taxation (see Article 5 of the American draft treaty) the Foreign

office have no objection to making rights and titles

to land subject to "the laws and regulations of the

Republic of China concerning taxation, national

defence, and the right of eminent domain."

The Foreign Office, however, see considerable

objection to the proposed clause prohibiting the

alienation of such rights and titles "to the Gover-

ment or national (incluing corporations or associations

of any third country without the express omsent of

the Government of the Republic of China." This means

that our nationals could not, without permission, sell

their land to others than their own compatriots or

Chinese. This would limit their market and reduce

the value of their property. This restriction would be

contrary to the principles of equality and reciprocity,

at least so far as this country is concerned, and H.M.G

are of the opinion that it should be strongly resisted.

In negotiating this treaty they are willing to abandon

all inequalities suffered by the Chinese, but not to

substitute other inequalities to their own detriment.

4. The omission of the words "and to the

carrying on of commerce" from Article 5 (Article 6 of the British draft) will deprive our respective nationala

of the treaty right to trade in China, except in so far

in /2" soteric of fertile to

as this is given in those portions of the old treaties

which are not regarded as inconsistent with this one.

old treaties Generally speaking, the/restricted the carrying on

of trade by foreigners to the treaty orte, but the

Chinese now wish by an exchange of notes to abolish

the "treaty port system", (see paragraph II of the

Department...