Directory_and_Chronicle_1938 — Page 413

CHINA

A15

reason to hope that this upward trend may be sustained.

trend may be sustained. In retrospect the year 936 will be recalled as the first full year in which the reformed currency system has been on trial, and the absence of fluctuation in exchange, coupled with a general rise in prices, would appear to provide ample proof of the success of the new financial. measures adopted. The year also bore witness to the attainment by China of the greatest measure of unification since the establishment of the Republic. In the fields of agriculture and industry, progress was evident in several directions. The rural credit system for the assistance of farmers, the improved planting of cotton, rice, and wheat, and the steps taken to improve the cultivation of tea, silk, etc., all point to technical advance in the realms of agriculture, while in the industrial sphere, the establishment of machine works, chemical distilleries, sugar and oil refineries, etc., provides evidence of the growth of industrial development. In the matter of coin- munications great advance has been made in railway and highway construction and in aerial development. From a study of available statistics it is apparent that China is becoming less dependent on imports from abroad, especially in the spheres of foodstuffs and consumers' goods in general, and that imports in future are more likely to be restricted to capital goods, such as machinery, certain metals and ores, vehicles, oils, and the like, either unavailble in China or of which the production is not yet sufficiently advanced. Indications point, furthermore, that as world recovery pro- gresses the demand for China's staple commodities of export will increase rather than the reverse. Admitting certain unstable factors in the international position, there is reason to believe that, with some measure of accord, China is set fair on a course which should result in considerable co-operative advance and achievement.

CONDITIONS IN 1936

In connexion with the internal situation of the country, the nost notable achieve- ment of the Central Government during the year, was the attainment of greater unity and the extension of central authority. The liquidation of the Kwangtung and Kwangsi incidents without the actual use of force did inuch to enhance the pre- stige of the Central Government. The advance of Kwangtung and Kwangsi troops into Southern Hunan during the middle of the year, in defiance of the order of the Central Authorities, for a time threatened civil conflict. Through the tactful but firm handling of the situation by Generalissimo Chiang Kai-shek, the danger of a civil war was at last averted. In July General Chen Chi-tang was relieved of his post as Commander-in-Chief of Kwangtung Forces and Pacification Commissioner of Kwangtung, and his army was put under the cominand of General Yu Han mou. At the same time, the South-west Political Council and the South-west Executive Committee were abolished. In September General Li Tsung-jen and Mr. Huang Hsu-chu accepted the appointments respectively as Pacification Commissioner and Chairman of the Provincial Government of Kwangsi, and their assumption of these new posts indicated the return of Kwangsi to the fold of the Central Authorities.

Events in North Chiua, however, remained unsettled and obscure. Under the aegis of the Japanese Kwangtnng army, the activity of the so-called "autonomous regime in Eastern Hopeh" remained uncurtailed. Much public attention was drawn to the proposed scheme of Sino-Japanese co-operation in the economic development of North China; the year ended, however, without any concrete accomplishment. An orgy of smuggling, to which further reference will be made later, accompanied events in North China, seriously affecting China's Customs revenue and at times threatening the integrity of the Maritime Customs system. The interference of Japanese military with the Customs Preventive Service drew repeated protests from the Government as well as representations from interested Powers, thereby attracting world-wide attention and comment. With a view to a general readjustment of Sino- Japanese relations, preliminary parleys took place in March between General Chang Chun, Foreign Minister, and Mr. H. Arita, Japanese Ambassador to China, but further negotiations were postponed upon Mr. Arita's recall to take up the post of Foreign Minister in Japan. Upon the arrival of the new Japanese Ambassador, Mr. S. Kawagoe, diplomatic negotiations were continued.

China experienced one of the best crops for several years, the value of the year's crops being estimated to be $3,000 million more than in 1935. Some alarm was felt in the spring at the rapid rise in the Yangtsze River, but no floods were experienced either in this or in the Yellow River. On the contrary, the Yangtsze River in the autumn reached the lowest levels recorded for many years, causing some inconvenier ce