There is one aspect of business in China which is probably in all your minds—the risk of political troubles. Inside China, this risk is at present small, The National Government had now established its authority through. out the whole of China, The recent agreement for that purpose with Kwangtung and Kwangsi marks a great step forward, and 1 hope that {it will lead to closer contacts between ongkong and the mainland, 'The Communist of bandit trouble is now confined to a few remote districts and peaceful development, which is the only cure for communism, both in China and elsewhere, Is taking place throughout the vast bulk of'. the country. The internal situation, therefore, is more satisfactory than it has been for many years, The external situation 1s) more clouded. 'On this T can only repeat what was said by the' Foreign Secretary on November 5: were, net 10h gab Relations between Japan and. Chine Panto some eat i am a "ay, that there Plocueding at Nanking. between eek sthaing" between, them ners "or round for" former, 1 think that we must pursue our business on this assumption.
Japan and Great In this connection 1 should ike to say" a few words about Japanese policy in relation to British interests In China, "Doubtless you have been worried "by signs and -portents in North China. Y think that there Is 2 tendency in this country to exaggerate the risks that these Involve, Japan certainly interested. in closer economic relations with China—and particularly with North China—but 1H, M, Government have received most positive assurances that the Japanese Government have no desire to pre-Judice British Interests In China; that they will give no support (o any attempts to. break up' the Chinese Maritime Customs: and that they have io desire to claim special tari privileges in China, There Is room in China for both of goods but there aspects—particularly the supply of capltal—in regard. to which we can do more than Japan, T believe that there is growing recognition in Japan that. the stability and prosperity of Chin; offers the best solution for Japan's own economic difficulties and T hope that In the end we may find It possible to ce-operate together with the Chinese Government in the recon struction and the development of united China.
China's Great conclusion, I am definitely optimistic about China. I believe that. liven a period of peace and food Government, China is going to be one the biggest and best markets for our manufactures; and that we must be prepared to nurse that market even at some cost, pending its development, We have to face keen competition from two skilful and Me Sustrious nations—Germany and Japan—who for various reasons, can undersell us, We can have very little hope of supplying China with fully manufactured "consumption" goods.
Our standards of life and cost of production are too high to enable us Kenerally to supply manufactured. Goods toa low price market. Our job in China—I¢ we are to be successful there—for the next decade or 50 will mainly concerned with equipping, China with.allways, electric light. plants, waterworks, ships perhaps, and the other major mechanisms of modern life which are the foundation or forerunners of a country's Me 'This will all take great skill and striving on the part of our people out thera: and ability and willingness of the United Kingdom to finance this: trade will be necessary, But it calls algo for avery much' broader and bolder outlook on our part towards the rapidly changing pattern of that great area we call the Far East, On taking a still longer view I am con-vineed "also that the people of developed and productive China will offer a far greater market for us than her present poverty-stricken popula tlon'ean ever do, So we can, if we will, play our part frst during the foundation period helping to equip China and second in the later period ey supplying those better manufactures of ours. which always find a sale in a well-to-do market, I hope that the British manufacturers and merchant firms and the banks in China will cooperate closely to that end and the British Government will do what it can {0 assist, T feel that T have already talked too ong. But before T sit down T should Uke to express my thanks not only to the China Association for. their Hospitality (o-night, but to all. the
Text read from the printed page and cleaned; old type leaves the occasional error.