At this juncture a report on the economic possibilities of China must be read with considerable reserve. The reserve will have; a hint of ruefulness in it and it can be modified only by the most determined optimism which seeks to look to the future when Sino-Japanese differences no longer obscure the view. Sir Louis Beale's departmental report for the period April 1995 to March 1937 has thus an unfortunate time of appearance and it is not surprising that the author carefully adds to it a note that it was written in May last "before the development of recent events". Nevertheless some observations may stand on record for attention when the proper occasion arises, For example in stating the need for foreign capital to reinforce China's inadequate resources and in noting a reluctance to attract such capital "by permitting the investor to take reasonable precautions to ensure that loan conditions are fulfilled" Sir Louis is impelled to observe that Enterprises—even predominantly Chinese enterprises—in which there is any foreign participa ation are discriminated against in the matter of taxation. A loan of money is welcomed, but not the technical administrative, and accountancy guidance which would not only give confidence to the investor that the money would be wisely spent and administered in the initial stages till the enterprise was firmly established on sound lines and the loans repaid, but would also ensure that when the enterprise was finally taken over by purely Chinese control it would be a sound and healthy concern. On such terms industrial development would be greatly facilitated and encouraged.
Sir Louis strongly repudiates the suggestion that the precautions which investors seek to institute are "reflections on Chinese competence end honesty" for they are such as are often necessary in new industries in any country "not only to ensure efficient managements in the initial stages, but also to inspire confidence amongst investors and suppliers of equipment abroad", especially as the latter may know very little of modern conditions in China and not unnaturally are influenced by the knowledge that many advances made in China in past years were misused and never repaid in Arising out of these hesitations are tendencies to proceed too rapidly in covering the legislative direction of industry, to take throw excessive responsibility on the Government for economic activities, thus exposing developments to the check of serious disappointment when the inevitable failure emerges,
Text read from the printed page and cleaned; old type leaves the occasional error.