Our Special
Trade Number

The present issue of this journal is devoted to a survey of China's Overseas Trade as announced in our April number, an effort being made to present the situation as it really is in as interesting a way as possible. Recourse has been made to many reliable sources of information and experts consulted in order to present as accurate a picture as possible. Although a flood of literature on economic subjects in connection with China is now pouring from the press it is surprizing how little the general public knows of this country's resources, industry and commerce, if the numerous enquiries addressed to the Editor of The China Journal may be taken as a criterion. Such nquiries have been born in mind in the writing and compilation of the articles and notes that make up this number of the journal, and it is hoped that they will prove of value to those connected with China's trade, and of interest to the general reader.

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The World

To what end events are shaping themselves on the horizon of world politics is by no means a matter of easy conjecture, yet the indications seem to point to an armaments Marathon between the leading nations that can only end in another world war. The situation in both Europe and Asia appears to grow graver week by week, almost day by day. Great Britain's decision to increase her armaments, as indicated by the passing by Parliament of Sir Nevil Chamberlain's Budget, is more than significant, as are the recent public pronouncements of Mr. Stanley Baldwin, the Premier, and Mr. Anthony Eden, the Foreign Secretary. Great Britain, placing her faith in the League of Nations and the system of Collective Security, has lagged far behind in this important matter, only to be rudely awakened to a sense of her own insecurity by the actions of certain Powers and the lack of action in regard to those actions on the part of the League. She now has a serious task before her to catch up, especially in aerial armaments, with other nations, all of which are increasing their military or convertable civil aircraft at an alarming rate.

Lord Lytton's passionate demand of the League of Nations for the immediate further application of sanctions against Italy on the part of nations solemnly pledged so to act, if granted, will inevitably further increase the strain of an already tense situation, and will bring war appreciably nearer.

All this looks very much like preparing for another "war to end war," yet what other course is open, even to those countries which most earnestly desire peace, than to use force against such nations as deliberately break their pledges and embark upon military aggression against other nations?

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What to do in connection with Italy's defeat and annexation of Abyssinia appears to be a problem beyond the League's capacity to solve, and so it is doing what all incompetent bodies have always done in similar circumstances, namely, shelved it, at least temporarily. Rather than face the issue the League representatives of various countries, presumably on instructions received from their Governments, have postponed even a discussion of the situation till June. In the meanwhile various smaller nations have become distinctly restive, and talk of withdrawing from the League has become general. Prompt and decisive action on the part of the representatives of the leading countries belonging to the League might have saved the day, but, as things now stand, it would appear that there is only one thing to do with the League of Nations, presented to the world by a country whose own constitution prevents her joining it, and that is to bury it. Without the United States of America as a member it never was and never could be any use, its utter futility having first been demonstrated when Japan walked into Manchuria.

Italy now possesses Abyssinia, and, as far as it is possible to look into the future, Italy will keep Abyssinia. It is practically certain that the League will do nothing about it. All that can be done now is to hope that Italy will make a success of administering her new territories, introducing good government in the place of what she described as flagrant misrule, and, above all, abolishing the slavery and other abominations, about which she has said so much in justification of her action against Ethiopia.

In the meanwhile Haile Selassie, whose hopes in the League of Nations have been shattered, as have those of every country that has put any faith in it, has become a wanderer on the face of the earth, like so many other dispossessed rulers before him.

What the United States Government's object is in thus accumulating such vast quantities of gold and silver it is difficult to see, for its effect on other countries is bound to be unfavourable and so in the long run it must react unfavourably on America's export trade.

In China we are already feeling the ill effects of this policy on the part of the United States Government in a general stagnation in business, a depreciation in the value of stocks and shares, and a falling off in land and real estate values. Shortage of silver is forcing the interest rate up, and, consequently, the value of shares, bonds and debentures down. This is reducing China's buying power. Presumably similar conditions prevail, or will shortly prevail, in other countries for similar reasons: then, it may be asked, how is the holding of such vast stocks of gold and silver going to benefit America? She will be in the position of the poker player who has won all the chips only to find that none of the other players have the wherewithall to redeem them, and so tell him to go and play with his chips by himself if he can get any satisfaction out of it.

* * *

in North
and South

What can only be described as the most amazing situation in regard to the age-old occupation of smuggling that has ever occurred, at least in modern times, has arisen in North China, and to an almost equal extent in South-east China. Smugglers, mainly Japanese and Korean in the north and Japanese and Formosan in the south, are openly bringing in all classes of goods duty free in such quantities as seriously to effect legitimate imports and to have reduced customs revenue in those areas by about fifty per cent. In the north the Chinese Government is powerless to deal with the smugglers because of the autonomous government and neutral zone which have been established between Hopei and the Manchurian border, and in which neither military nor naval units are permitted to operate and the customs officers are not allowed to carry arms. In the south the irregularity of the Fukien coastline and the innumerable bays and inlets guarded by a host of hilly islands make it extremely difficult for the customs authorities to prevent smugglers from slipping across the narrow stretch of water between China and Formosa and landing goods which are immediately transported into the interior for distribution. Near places like Pei-tai Ho, a famous North China seaside resort not far from the Manchurian border, as many as thirty steamers at a time have been seen unloading goods on to the beaches, and reports state that stations along the section of the Peiping Mukden Railway between Luan-chou and Shan-hai Kuan are choked with merchandise upon which no duty has been paid.

It would seem that the Chinese Government is practically helpless in the matter, since drastic action, which alone can cope with the situation, would almost inevitably lead to clashes with Japanese subjects and resultant "incidents," the far reaching effects of which can be imagined.

Japan alone is master of the situation, and it may be suggested - that the Japanese Government, in order to prove its friendliness with China, might cooperate wholeheartedly with the Chinese authorities by controlling the Japanese, Korean and Formosan smugglers. This whole nefarious business could easily be stopped at its source.

On the other hand, it may be pointed out that high tariffs always provide an incentive to smugglers, and can only be imposed effectively by a country with effective means of preventing smuggling.

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A Plea for

A plea may be made to other countries to give China a chance. She is at present faced with many great problems and almost insurmountable difficulties While the Communists have long since been dislodged from their strong-holds in Kiangsi and Hunan in Central China, there are still comparatively strong bands of these malcontents in several parts of the country. In extensive areas in Szechuan famine is rampant as a result of the depredations of the bandit hordes that call themselves Communists, while recently West Shansi has been ravaged by them. The effects of last year's terrible floods are still being felt most severely in Shantung, Anhuei and Northern Kiangsu, as well as in places in the Yangtze Valley. The buying power of large sections of the populace has been seriously reduced by these catastrophes, and China's trade is being adversely affected. Her borders are being threatened by allegedly friendly Powers. Never was a country so beset with adversity, and yet, in spite of everything, she is making heroic efforts to set her house in order by developing her resources and industries, extending her foreign trade, educating her people and generally raising their standard of living. Surely it would be the part of true friendship for her neighbours to show her consideration and to put out a helping hand rather than to make things more difficult for her?

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Fair and

In the meanwhile it is to be hoped that the fullest support of all industrial and commercial interests in Shanghai will be accorded the International Fair and Exhibition that is to be held here in July and August. Already a hundred and fifty different concerns have booked space in the commodious grounds set aside for the enterprize, and stalls and booths in many styles of architecture and in various materials are springing up. Amusements of every description will be provided for the public, as well as places for refreshment. The Exhibition grounds should become the chief rendezvous during the summer months, its position on the banks of the Whangpoo, where cool breezes from the sea can be felt, offering a special attraction on hot nights.

Something of this sort is what Shanghai needs at the moment to help the community out of the doldrums into which it has drifted as a result of the past year's depression. Already there are indications that business is picking up, and a show of the kind the Fair gives signs of being should offer just the necessary fillip to help it "over the top."

A. DE C S.