FO371-23514 — Page 229

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COPY

No. 9

Copies to:-

Trade Commissioner,

Hongkong No. 15.

Governor Hongkong No.44 B.E.Shanghai No. 53

(& 3 copies)

British Consulate-General,

CANTON

10th March, 1939.

68

Sir,

With reference to Mr. Hutchison's semi-

official letter to you No. 16 (2/c.43/39) of 28th February

last, I have the honour to report that, while I am not

aware of the identity of the "very reliable source"

quoted by Mr. Hutchison in paragraph 2, I consider that

the report quoted by Mr. Hutchison is liable to give a

very exaggerated impression of the extent to which

cargo is being imported into Canton without paying duty.

The report states "inter-alia" that "the city is being

flooded with Japanese goods of every description" and con-

cludes with the words "Canton is now a free port for

Japanese and Chinese interests". To the extent stated

below the latter statement is correct regarding Japanese

goods; as regards Chinese, it seems to me wholly untrue.

All such Chinese or foreign goods are smuggled into Canton

not only vis-a-vis the Customs, but vis-a-vis, I think,

the responsible Japane se authorities.

2.

It is true that some Japanese manufactured

goods are being sold in a number of shops at very low

prices, but the amount of business being done by such

shops, except possibly with Japanese customers, is almost

certainly very small, if only for the reasons that the

number of Chinese in Canton of the class which would

purchase such goods is so small as to be almost negligible,

and that, owing to the fact that the Japanese are in

occupation of a very small area outside Canton, the normal

hinterland on which Canton depended as a market has

Commercial Counsellor,

British Embassy,

SHANGHAI

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