Nelson Evening Mail THURSDAY, MAY 29, 1930 THE CHINESE CIVIL WAR

Nelson Evening Mail, Volume LXIV, 29 May 1930, Page 4

Nelson Evening Mail THURSDAY, MAY 29, 1930 THE CHINESE CIVIL WAR

THE situation in China again calls for comment, not only because it has become complicated, but because the effect of the political complications has been to precipitate something like a financial crisis at Shanghai, where British interests are of very high importance. The Northerners under General Yen of Shansi and General Feng Yu-hsiang (the so-called "Christian General") who draws his forces from the North-West Provinces, began their campaign at the beginning of April. Before very long General Yen had seized Pekin, where the Foreign Legations are still situated, and so the anomalous situation was created of the Foreign Ministers being in a city which was in the hands of rebel forces which were waging war against the Government to which they were accredited. About the same time Yen's troops compelled the retirement of the Government's forces which were stationed north of Tientsin, and it would seem therefore that the rebels are in command of the lines of communication between that port and Pekin. Yen, however, pioclaimed himself the protector of all

foreigners living in the Provinces which ho had occupied, and apparently the members of the Legations wero content to continue at Pekin. But in addition to these rebels of the North and NorthWost, it was reported that in the South there had been a rebellion of the left wing of the ICuomintang (tho Government's own organisation) under a General named Wang who was reputed to be in a position to take possession of the city of Canton, which he proposed to hand over to General Chang, in command of the "Ironsides," and the rebels of tho Province of Kwangsi. So the hands of Presidont Chiang Ki-shek wero quite full, when ho decided to move his main army north of the river Yang-tsi-kiang, with a view to engaging Generals Yen and Feng in tho country north of that great river. Apparently he has suffered a defeat, and the Northerners are about to launch a general offensive against tho Government's troops.

Tho effect of these disturbances is indicated in tho cablegram of yesterday, which said, "Shanghai is enormously overstocked with silver, warfare preventing distribution to the interior." An even more cogent explanation of the situation is given by "Tho Engineering and Mining World," of New York, which, commenting on the situation in China, said recently:

Although the unrest of China has boon a factor in this situation by concentrating silver in Shanghai for safety, tho ease with which silver can be obtained in the world's markets is undoubtedly the cause—(of the fall in the price 'of silver)—and, wero the Chinese not deterred from importing Western manufactures owing to their heavy cost (based on the rise in wages and material), the' pressure of the falling silver rates would have been even more acute. The balance of trade therefore has been so heavily in favour of China that unusually large imports of silver have been made in order to liquidate the balance. This fact is by' no means a bull point for silver, for, should China's internal difficulties diminish, the impact of Western civilisation will be felt so keenly that the standard of life in China will rise and import trade recover. In that event more manufactured goods will bo taken from the West in exchange for the raw material of China's myriad workers, and less silver will be required to balance the account. 'China's troubles cannot, however, be expected to end

within a year or so. | Therefore it would seem that the New, York journal predicted the present situa- j turn existing in Shanghai, where the glut of silver has caused such a fall in its price that a financial crisis has been caused in that city of many nations. The recurrence of civil war has paralysed a large part of China's industry, Ind so has reduced her purchase of ioreign manufactures; consequently, -aw materials purchased from her by foreign countries have to be paid for largely m sUver instead of in goods, with the. result that the position of Shanghai is as described. But the renewal of civil war has largely prevented the distribution of silver by foreign- firms in exchange for Chinese products purchased, and a condition of financial congestion has resulted in Shanghai. Thus" it will' be seen how interlocked are the interests of international commerce. The internal political strife of China affects not only the Chinese nation, but all nations which are doing business with China. Generals Yen and Feng may be fighting for their own political advancement, and the Government of China may be fighting for the political unity of the whole country—and no one can say which side will winbut tho immediate effect upon international trade and commerce is to create in the great treaty port of Shanghai a situation of the gravest character. That 1 city is glutted with silver, owing to the reasons stated. If the Chinese Govern--1 ment is successful in its resistance of the ! rebels' onslaught, all will be well. But, I supposing the armies of Yen and Feng | should drive the Government's troops southward across the Yangtsi river, and seize Nanking, the present capital, will they, or will they not, seek to possess themselves forcibly of the vast quantities of silver which are stored in Shanghai's vaults?