A correspondent—his pseudonym veils long business experience in China and an industrious study of [Chinese affairs—considers that the Tack of confidence to which, the other day, this journal attributed Some of the woes of Shanghai's real estate market, requires more explanation than is derived from the exposed defects of the new mortgage law. In brief he refuses to give the Chinese Government credit for honesty of intention or faction and, realizing that no remedy tean be prescribed for such a state of things, holds that the restoration fof confidence is an impossibility. The point of view is valuable, not because it is necessarily justified, but because it undoubtedly reflects fan opinion which is to be found among Chinese as well as among foreign business men. The foreigner may argue that, if Chinese fake up this atltude, he can hardly' be blamed for following sult, but he is apt to forget that the very conditions which make it difficult for him to trust the Chinese Gov~ ferment must operate to discount Chinese opinion on that particular issue, Nevertheless the lack of confidence must be admitted on the grounds adduced by the frankly essimistc critic, and it may be Useful to subject his views to a friendly analysis. His chief trouble arises from fear of the stability of the Chinese dollar. He is not, pre~ sumably, attaching importance to the quaint performances of speculators during the last. year—performances which have lea in certain cases to the undignified position of "holding the baby." He definitely accuses the Government of obliquity in that, "by a stroke of the pen," its currency reform scheme of November last knocked the dollar down from 1s 6¥2d to 182444. Ho takes no account of the peculiarly dimeuit conditions created from August 190 onwards by America's silver policy. Although it cannot be pretended that that artificial enhancement of the price of sliver was the root cause of China's cur~ rency troubles, it must be agreed That, 0 quote the authoritative opinion of the National City Bank of New York, it "made it vastly more diMieult for China to find some way of adjusting herself to the situation."
Again, he correspondent seems to. Imagine that the decision to stabilize the dollar round about 1s 24d was an arbitrary action inspired by no scientific. direction. Without doing more than making passing note of the fact that at the time of the. introduction of the scheme the dollar had calastrophically fallen far below 1s 6d and Seemed to be on a slippery slope, it'may be prosaically recalled that the rate of stabilization coincided with the average rate of the exchange value" of the dollar for the previous five years. Therein the Chinese Government may claim to have followed precedents provided elsewhere—notably" in India where Sir Basil Biacketts eighteen penny rupee was based on a two-year average.
Tneldentally this disclosure at once refutes the suggestion that uncertdainty regarding the exchange rate is a specially potent source of mistrust at this moment. Since the jeurreney reform scheme came into operation there has been remarkable stability in the dollar. Yet, fas the five-year average, already cited shows, extraordinary' fuctuations have Been familiar to land vesters for many years past. If they were then not deterred from dealings in the real estate market, it'can hardly be. pretended. that their present apprehensions regarding the possibility of a further fal in the rate of exchange are solely or even primarily responsible for the sluggish conditions prevailing. The Chinese Government will recognize that it cannot reassure its critics by parrot-like repetition of a frequently declared belief in its ability fo maintain the dollar at the present rate. iwate that the unfortunate lack of confidence which experience has Britai higher rates of interests on China's borrowings. That is why this Journal welcomes efforts made by the present Government to clear some of its debt obligations and generally to improve its standards of administration for, assuming that that process can be persevere ingly maintained and extended, it will automatically cheapen China's loan services.
Here the Government and the doubting Thomases—such as the esteemed critic who has boldly; stated his unbelicf—are caught in the tolls of that familiar bugbear, the vicious circle. The Gover ment, reflecting national opinion, cannot perpetually stand in a white sheet for foreign edification. Therefore, in endeavouring to institute reform, it has to be temporarily: indulgent to practices and defects which arouse foreign criticism and distrust. On his side the foreigner, accustomed to the benefit of certain privileges which have their origin in recognition of this enforced indulgence, tenaciously resists their elimination or modification although it may be essential to the ultimate success of reform. Business rel founded on sentiment and no at tempt will be made to commend a less jaundiced view of Chinese achievements on any but practical grounds. Broadly, it may be agreed that foreigners cannot expect to do business in China without at least giving Chinese and their Government some credit for honesty of purpose, however much practice may fall short of precept. In other countries economic nationalist has not been entirely respectable in treatment of its obligations towards foreign interests, Looking round the shattered world to-day, it is dificult to single out any nation or government which can sincerely adopt the old pharisaical ery "Thank God, we are not as other men are." it will at once be admitted that the Chinese Government creates difficulties for itself by amazing toleration of bureaucratic folly but it should not be forgotten that it has also to pay heed to an alert national opinion which, not always without cause, is exceedingly critical of certain aspects of foreign enterprise here. If the Government would courageously move in repudiation—nay, correction—ot manifest absurd ities such as the fantastic abuse of the Trade Marks Law, it would be able to rely on a more generous foreign appreciation of its achievements. For achievements there are.
And in seeking to find grounds for cautious yet ungrudging approach to confidence in the Government, the foreign eritic—and the Chinese who thinks with him—might do worse than study the events of the past year. A far-reaching currency reform is working by no means badly, outstanding obligations have been settled—not perhaps on over~ attractive terms but in clear evidence of a desire to justify confidence—and measures of economic and monetary importance have been taken in hand. Much—terribly much—remains to be done. It may be long before rates of interest will mark the attainment of Chinese credit to what may be called normal standards, but so Jong as the foreigner and his Chinese colleague seck their livelihood in China it is surely desirable to exercise patience, to recognize the virtue of fair comparisons in the light of conditions elsewhere and to} refuse to encrust an otherwise sane judgment in the ithpenetrable coat ing of perverse prejudice and suspicion.
Text read from the printed page and cleaned; old type leaves the occasional error.