Forecast Tokyo, July 22.
With an agreement reported to have been reached on fundamental questions forming the back-ground of the Tientsin controversy, the parleys between Mr. Hachiro Arita, Foreign Minister, and Sir Robert L. Craigie, British Ambassador, were expected to enter a second stage next week for Aiscussion of concrete matters, qualified observers said today.
It was learned in reliable quarters that communiques to be. Issued in London and Tokyo tomorrow were expected to make announcements to the following effect:
That Britain recognizes a state of undeclared war in China; That Britain recognizes that the Japanese forces naturally have varl~ fous demands in connection with self-defence and maintenance of peace and order In eceupled areas: hat, British authorities and British nationals in China should be aware of Britain's responsibility for taking action which might be rejudiciai to Japan or China, Japanese delegates were expected to present the following demands at next week's sessions:
Unconditional surrender of four alleged terrorists whom the Japanese claim are involved in the murder of Mr. Cheng Hsi-kang, former Customs Commissioner and manager of the: branch office of the Federal Reserve Bank; Strict control of anti-Japanese and Communist agitators in the British Concession at Tientsin; Ca-operation between Concession authorities and Japanese officials in searching for such agitators in the Prohibition of anti-Japanese textbooks and control of anti-Japanese speeches and publications in the con-
'A ban on the use of wireless sets by anti-Japanese agitators in the con-
Ca-operation between "concession and Japanese authorities in connection Uppen Ambastration outside Japanese Army Watching Aid to China Money Tokyo, July 22.
Japanese military authorities in Tientsin, concerned over the reports that Mr, Quo Tal-chi, Chinese Am= bassador to London, was endeavouring to. secure a British loan. 3,000,000 to stabilize China's cur-Feney, closely watched the British altitude today, Japanese reports as-
Should the British Government. grant these credits, the Tientsin Japanese military authorities would believe that Britain had decided to adhere to its pro-Chiang Kal-shek and anti-Japanese policies and. fore the present Tokyo conference would in their eyes be meaningless, these Japanese reports continued, Meanwhile, in Tientsin a number of Chinese met and organized a union to boycott British currency, Japanese sources here claimed.
The meeting also decided to retuse to sell Japanese or Chinese goods to Britons, as a means of enforcing. the economic blockade against the British Concession there, these Japanese sources added.—United Press. with circulation of Federal Reserve Bank note
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