After this brie€ survey of Far Enstorn trade conditions, I pass on to the general situation in our prin" cipal field of operations. In the ioni, us in the commercial, sphere it is disappointing that the course of affairs in China during the ast twelve months shows such-small improvement and that there ttle progress to record towards a settlement of her domestic problems or of her foreign relations,—But though poor in result, the year has, been unusually rich in'incident. The arrival of the British Defence Force and the conclusion of the much-debated Hankow Agreement at. the beginning of the year were followed. within 9 few weeks of our last meeting—by the Nanking affair which with its lamentable tale of murder and outrage marked the culminating point of the fierce _unti-foreign movement along the Yang-tre. This led to the evacuation, as 4 measure of nafoty, of British sub-Jicets from all unprotected arean in Nationalist territory, Shanghai Was, meanwhile, experiencing " terroust regime, instituted and. or-(ganized by. Communist agents, which but for the presence of the British troops would almost certainly have ended in the overrunning of the International Settlement with"aerious loss of life and incalculable damage to property.
The advance of the Southern a mies continued during the spring and brought the Nationalists ay fa situation © precarious that as the Mellow River. In May th Japan found it necessary to send troops to protect her nationals in the interior of Shantung. Peking was already threatened when a breach in the Nationalist party paralysed their military movement and put & stop to further progress Since then the tide of war between /North and South has ebbed and flowed, but the Yellow River has remained the highwatermark of the Nationalist thrust northward, The re-emergence of Marshal Feng Yue hsiang in the autumn, supported by the Shansi forces, placed Peking again in danger—this time from the West—and the Northern military allies, though they successfully repulsed the attack, find themselves at. the end of the sear in control of a much reduced territory, At a rough estimate, two-thirds of China now flies the Nationalist flag.
The Nationalist Split The superficial expansion of the Nationalist movement is, however, more than outweighed by the ruinous cleavage in its ranks. The solidarity which marked the initial advance from Canton has been replaced by dissensions which threaten to wreck the party and render
Text read from the printed page and cleaned; old type leaves the occasional error.