FO371-23516 — Page 229

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Chinese Government may require for delivery under barter

agreements or as security for loans), should by agreement

between the Commission and the Pekin Syndicate be exported

through the latter as sole agents. Ore which is produced in

Kwangsi has now also in theory come under the terms of this

agreement. Ores produced in Yunnan are exported through the

Fu Tien Bank. In actual fact, however, some one hundred tons

of ore are smuggled every month out of these areas, (which

are still under Chinese control), and find their way to Hongkong

where they are sold in the open market at prices much below

those fixed by the Commission. Permission to smuggle this ore

out from the producing areas is reported to be obtainable on

payment to the local authorities of a sum of under Ch.N.950.00

per picul.

The position with regard to tea is unascertainable beyond

the fact that an unknown but large proportion of the crop (as

in 1938) has been allocated to the Russians under a barter

agreement. During the past year both the Foreign Trade Commis-

sion of the Ministry of Finance and the China National Tea

Corporation (which is under the Ministry of Economics) have

claimed that they are in sole control of the export of tea.

The position at the moment, which has been obscured (though it

may prove to have been simplified) by the transfer of the head

of the Corporation to the post of head of the Commission,

appears to be that the Commission will only be concerned with

such teas as are allocated under the barter agreement while the

Corporation in conjunction with the Central Trust will control

the sale and export of all other tea together with the production,

purchase and transport of all tea in the interior; the Commission

however, assert that they are in sole charge of the transport to

the coast and sale in Hongkong of all tea while the activities

of the Corporation are confined to the production and purchase

of tea in the interior. In April 1939 the position was further

/ complicated

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