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F
316
LIMITED DISTRIBUTION
Sir R. Craigie (Tokyo)
9th May, 1940.3239
Decode.
D.
11.5 a.m.
9th May, 1940.
IC MAX
R. 9.45 p.m. 9th May, 1940.
No. 735
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Judging from tone of the press serious concern is felt in industrial circles over recent further fall in value of the Chinese national currency. In addition to natural economic causes, depreciation is. ascribed to economic guerilla tactics of Chungking and to British American policy of obstrueting Japanese reconstruction in North and Central China!
2.
The "Nichi Nichi" editorial of May 7th says inflationary tendency in China is producing economic chaos in certain areas and the flight of goods from North China to the South. There is now danger that Chinese produce will flow from central China into the interior and will appear in decreasing volume in the area controlled by new government. Thus "rather than as welcome evidence of declining financial strength of Chungking and Chiang supporting powers the depreciation of the currency appear to be to us as a difficulty added to the burden of constructing new East Asia".
3. Ministry of Foreign Affairs published on May 7th restrictions to be enforced from May 20th to limit Japanese travellers to China to persons with legitimate and urgent business. Restrictions will be imposed with dual object of maintaining the value of yen on the Shanghai market and preventing undesirable adventurers from going to China. It is estimated that Japanese travellers have taken one hundred million yen to China a year.
F.O. REGISTRY.
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