Our balance sheet and statement of account show that in spite of all dimeulties we have managed to hold Jour own, and the measured optimism Jot last year's Chairman has proved to be justified. But all of us who have Jo solid stake in business and trade out here are aware how precarious Jand changeable the financial and! economic outlook must inevitably be s0 long as the two great neighbouring Eastern countries remain antagonistic. [The present conflict has also led to Jan unsatisfactory situation in regard! to the maintenance of the "Open Door" and British rights and interests in China.
There are some who blame our Home Government for not taking stronger line of action both here. well as in Europe. "I do not, however, [Propose to criticise British policy. times of international crisis freedom Jor speech and freedom of the press have their drawbacks, and much harm has in my opinion been done in recent times by careless criticisms, rumours Jand the publication of unauthenticated ews items. I believe that recently there has been more controversy at home than is wise and desirable about Jquestions of foreign relations. At any, ate, it is abundantly clear that His Majesty's Government are steadily strengthening the nation, while at the same time they are freeing their hands and thus becoming more prepared to face future events without Jembarrassing entanglements. More-lover, the Powers most interested in {the Far East have made their stand clear: that the position of their nationals is governed by the strict obsery-Jance of international obligations such fas the Washington Treaties and other international agreements, the aligration of which by unilateral action will not be considered.
From the Japanese side there have the rate has kept reasonably steady Jand there have. been comparatively only slight fluctuations Jcaused by military or political dove lopments or local rumours. At the Jend of the year not only had fight. from the currency ceased. but there had been a fair amount of repatrl "You can read between the lines how Jdimeuit and tense a time exchange bankers had throughout the first nine months of the year. Even now there is an ever-present fear of what 1 may' Jcall "external influences." The Tien-sin and North China exchange market has particularly suffered from these external influences" and the outlook there remains under this cloud, Government Finances War-time conditions govern the finances of the Chinese Government, Dut the latter have been assisted. by Jfood crops in the Western provinces Jond by the fact that remittances of money from Chinese residents abroad have been remarkably well maintain~ Jed. Perhaps 1 =an sum up the cur-Feney and financial situation in China saying that, partly through good fortune, but more through. skilful management, it hax been kept well in hand.
We have wateried with anxiety the! developments taking place in regard to the Chinese Maritime Customs Administration. Although the so-called Anglo-Japanese Customs agreement of last May has not yet been endorsed by the Chinese Government,
serve a valuable put pose in aiding the ae sated that it did in fact Administration to pass cately through period dangerous to its integrity. Weighty reasons have restrained the [Chinese Government from putting the agreement into effect, but we are sorry that this has not been done, Apart from other things it has meant that no foreign loan quotas have been remitted from the ports under Japanese control. Moreover, we had hopes that some similar modus operandi might have been applied to other Jdificult questions of -international concern, In spite of this the pay: ments due on Customs loans were Jmaintained without delay or hesitation throughout 1938. But early in Jan-tory the Chinese Government event-{ually were driven to the decision that since @0 per cent. of the Customs revenue was out of their hands they: Jeould no longer' bear. the whole burden of finding the equivalent of Jsome £400,000 each month to meat these Joan requirements. "However, also been very explicit assurances that no public default has yet taken place and it may still be avoided, The future of the Customs loans is bound up with the outcome of the present conflict, but We feel sure that the Chinese Government will do all they to set matters right as we believe that the maintenance of their' credit through these loans Is a matter about which they take considerable pride.
Text read from the printed page and cleaned; old type leaves the occasional error.