As you can imagine, our Shanghai Branch operated in confused and difficult circumstances, The Japanese extended further their military occupation of China, and the control of the central Government is now confined to Western China and part of Southern China. It is now alma: entirely cut off from the sea, and though it is making strenuous efforts to open up new avenues of trade with Russia and Burma, the interruption of communications by sea has naturally affected China's foreign trade. Owing to changes in the external value of the Chinese dollar and for other reasons, it is useless io give the dollar figures, but an approximate conversion of them into sterling shows that imports were approximately £50 millions and ex-paris £31 millions, a total of £81 millions against £106 millions last year. The adverse balance of trade was nearly £19 millions compared with £7 millions in 1937. It is not surprising therefore, that the exchange value of the Chinese dollar depreciated during the year. The Central Bank succeeded in ma ing it at 1s. 2'4d. for the first months, but the strain on its sources was too severe, and by the beginning of June the rate had fallen io 8d., and the rate was maintained round about that level for the rest of the year. It is hoped that the Central Bank, with the help of the rew Loan which has just been announced, will be able to prevent any further depreciation. The foreign trade of Shanghai was injured much more severely then that of the rest of China. On the other hand. in the latter part of the year it enjoyed a measure of internal prosperity. Many industries formerly established outside in Chinese territory have gravitated into the International Settlement, and the local cotton and woollen industries did well. In the meantime, the war still goes on, and no one can say when it will end nor what the outcome will be. I cannot close this part of my speech without paying a tribute to our Manager and Staff in Shanghai for their coolness and self possession all through these trying months, Fortunately they are no longer in immediate danger. but they still carry on their work in an atmosphere of strain and tension.
Text read from the printed page and cleaned; old type leaves the occasional error.