For this reason, one of the ques ions' with which'T occupied myself fu China was the possibility of raising her credit. "Happily the loans secured on the Customs have always been fully honoured and, except in the event of a general ' cataclysm, there Is Mo Treason to doubt that they will continue to be fully honoured. This gives a basis on which to build. Unfortunately, "the unsecured loans, and particularly most of the Rallway Loans, fell into default during the period of civil wars and it seem= fed at first almost a hopeless. task to tackle. But I urged the Chinese Government to do their best to arrive at settlements of these defaults fon sir and reasonable terms, and 1 think that they deserve to be congratulated on the efforts which they have been making to. meet their obligations.
No doubt, any settlement means sacrifices on the part of the creditors; when oong have been in default for ten or fifteen years, it Is {lusory to suppose that arrears of interest can be recovered in full. The Salancad Budge, The, Chinese Goy- Seite course ernment have not been able wile of what balance their Yevenue and expendi irrecoverable and to get the service of the debt resumed in the ture during the recent years of depression. in November 1935 future, they "The British creditors, under the announced that steps would be taken. to balance the Budget within eigh-wise guidance of Lord Alness, have faken'a broad view of the situation teen months but so far os can be Jand Tam glad to see that settlements ascertained no very substantial pro-shove been reached, or are in pros-ress can yet be recorded.
'The net deficit Is not large by' pect, of practically all the existing European standards, but is very con~ foreign loans. I hope that, this may siderable in comparison with the fiscal open the way to fresh borrowing. both here and elsewhere for sound resources of China.
The budget can schemes of development. only be balanced by decreasing expenditure or by increasing revenues.
Festina Lente The bulk of the expenditure is for!
Meanwhile, 1 would urge the Public debt_and military expenses; Chinese Government not to be too and in present circumstances much in a hurry and to defer all dim cult {9 curtail the charges under but the most necessary schemes of either of these heads. In these clrdevelopment until resources can be cumstances. the Ministry of Finance obtained to finance them on reason-trying to increase revenues; but it] able terms. "T know how anxious the there are great difficulties in Introdue-'Chinese Government are to proceed ing new taxes, and especially dire! with a hundred schemes required to taxes, In Chi promote the welfare of the country; British traders clearly cannot be Dut it fs better to go slow and restore expected to accept, burdens from the credit of China frst than to over-which their competitors are free; and strain their resources. before there is likely to be any general In this connexion, T should Uke to acceptance on the srt of the foreign refer to another problem, the imcommunities in China of direct taxa-provement of the public administra-on, the administration must be such Yon. The National Government are fo ensure confidence In its falrdoing their utmost to promote. this ness and competence. I can assure and I would like to pay a. special you HIM. Government are fully tribute to the efforts which the Alive to these points wilh take Minister of Railways, Mr. Chang. them into account in riy. discussions Kor-ngan is making to put the raile with the Chinese authorities. ways on a business footing. Nothing But they hope that British traders, could be more important for the and foreign traders generally, will not future credit of China; But it will content themselves with." seeking take time. merely to perpetuate indefinitely the While T met many individuals in immunities' which they enjoy," but China, with a high sense of public will consider China's fiscal needs in duty, there is not the same tradition constructive spirit. It is no use fof public service in China as ther criticizing the Chinese Government In this country. In fact, there is for not balancing ile budget and at not the basis for such a tradition as the same time refusing to accept the the officials are not paid adequately {axation necessary for that purpose. ner have they any security of tenure. The prosperity of our trade. and of T hope that the Chinese Government our traders in China depends ulllwill pay attention to this question mately on the solvency and prosperity and take steps to otgonize a Civil of China itself. This question will, Service system under which the Gov-however, take time to settle, and in ernment officials can be assured pith the meanwhile, China must rely main-fof security and of adequate pay.
indirect taxation.
Use of Foreign Officials Some Signs of Promise Inthe meanwhile, 1 think the this side there are some pro-'Chinese Government should use 0 signs. The improvem the full the services of foreign officials busings throughout the who. are willing to come out and should. Tead to an. aistom: work for China. The Customs and of the yield of existing taxes, Salt administration have been built without regard to new taxes. The up by foreign, and particularly by Customs revenues already show dis-British administrators: and China has finer signs of such improvement had no mere devoted servants than During the earlier months of this they have been. year, the yield was disappointing, no Tam sorry to hear that proposals Gcubt partly due to the " general are under consideration which would depression and partly due to the redvee the foreign personnel in the it] extensive smuggling in North Chit Salt Administration, and T hope that That smuggling as now been suf Chinese Government will not give stantially reduced, owing to the met-effect to them. I am sure that It sures taken by the Chinese Gover Will not profit China to do so. In-ment to prevent the smuggled goods deed, T think that the Chinese Gov-from penetrating into Central China, ernment would be wise to engage and cad month since July, the Cus: the services of more foreign experts, toms revenues have shown a steady other branches of the administra and strong recovery which I have nO 'For example, the foreign com-Fesson to think will not be maine munities in China' would be more tained Tikely to accept additional taxation if This recovery would be stilt fur-the assessment and collection of such ther assisted if the Chinese Govern taxes were entrusted to foreign of-ment were to revise the present cials and fair treatment was thereby tariffs carefully so as to reduce ex-astired. Some of our Inland Recessive duties. T suggested this in the Xenue officials might be spared for Statement ited last June, and 13m purpose, and the Chinese Gov-glad to hear that the Chinese Gov-went could be assured of their ernment are now engaged in a revi-of their tariff on these lines, connection, 1 would add a Need of Cheap Money word also about the tendency the position of the Customs re-China to advocate the adoption of venues is of great importance as the Jmenopolies and other devices beloved budgetary problem would be eased if by economic planners. I do not be-the Chinese Government could. bor~ row on cheaper terms. They are prevent engaged on a large programme of internal development anid inthe absence of foreign lending, they have been forced to raise ternal loans lo an excessive extent and at correspondingly high rates of interest. If it were possible for the Chinese Government to finance part of this development programme. by hhieans of foreign loans, not only would they be able to raise the funds Heve that these devices will be hel ful fo China. 1 doubt: whether, Gor: ernment intervention in ordinary trade is very desirable in any. country; but Tam sure that it will_net work well in China. "Let the Goveroment maintain stable conditions for trade and leave trade to look after self.
Text read from the printed page and cleaned; old type leaves the occasional error.