The Wanganui Chronicle FRIDAY, JUNE 11, 1937. THE IMPORTANCE OF CHINA

Wanganui Chronicle, Volume 80, Issue 137, 11 June 1937, Page 6

The Wanganui Chronicle FRIDAY, JUNE 11, 1937. THE IMPORTANCE OF CHINA

pHE meeting which has taken place at Berlin between Dr. Schacht, the economic dictator of Germany, and Dr. Kung, the Chinese Minister of Finance, is the prelude to Germany’s bid for an entry into the China market. Unable to find markets for her products among the nations of Western Europe, and having exhausted her coercive efforts in Eastern Europe in order to extend her trade in that direction, it is imperative that Germany find outlets further afield for her goods. South America has beet) given much attention of late, but the prospects there are rot enough for Germany’s need. China, on the other hand, is a vast, country with a large potential demand which will soon be felt in the world of trade. Throughout last year China made steady progress, both politically and economically. The Central Government seemed to be stionger and its fiat ran over a considerable portion of the country. Japan continues to violate the territorial integrity of the country and smuggling of Japanese goods continues, but Japan is aware of the increasing power of military resistance in China, and there is a hesitancy to engage in further acts of aggression in those parts of the country where active military operations are likely to be opposed by the standing army.

An outstanding achievement was the abandonment of the silver currency and the establishment in its place of a paper currency based on sterling. This was strenuously opposed by the Japanese, who desire that the China dollar should be based upon the yen. Variations in the value of the yen would then have had less effect on Sino-Japanese trade. As, however, China will need to borrow extensively in order to re-establish her railway systems and to improve road and rail transport, she was wise to turn toward London. The'Nanking Government has successfully maintained her new currency and confidence therein is growing. Certain provinces, notably the Kwantung and the Kwangsi, have not yet adopted the national currency, but it is safe to assert the use of the currency will grow. Provincialism continues to impede the general flow of trade, but this age-old method of graft eannot be uprooted easily. Exports pass through the hands of monopolies, ostensibly official, but actually in the hands of privileged parties. Nevertheless exports during last year were considerably in advance of the previous year, while imports showed a decline. The excess of imports was reduced in 1936 to nearly half of that of the previous year. China could do with much of the exports of Germany. and a valuable backway trade could be developed. But both countries are in need of extensive external credits. Barter agreements prove themselves to be an unsatisfaetorj’ way of doing business because the country .which receives manufactured goods for its raw products finds that the quality of the goods which it receives arc usually unsatisfactory. If Dr. Schacht can induce Dr. Kung to enter into a barter agreement, after recent experiences of their working in other directions, then Germany will be greatly indebted to its economic director. Competition for the China trade in steel and iron is likely t:. be very keen. Because of the high standard of its technical skill Germany was able to compete in Europe on very favourable terms in the years prior to the war, but there were signs that the ironmasters of England were improving their position. Since the loss of Alsace-Lorraine Germany’s position as an exporter of iron and steel may not be as favourable as it used to be, but whether advantages will be gained when Bilbao changes hands is yet to be revealed. The matter of industrial elficiencey of iron and steel production. however, "will never be re-established on a pre-war, or even an early post-war basis, because of the entry of Australia into iron and steel production. Not only is Australia successfully producing these base metals, but she will be exporting them in the near future, and the export market to which she will naturally look will be China. If the China demand for Australian iron and steel is extensive and permanent—and there is every reason why such a demand should be—then not only will the Australian economy receive an important impetus, but there will be some hidden reactions in the present iron and steel-produc-ing countries, such as the I nited Kingdom, the I iiited States of Amcrien. Canada, Germany and Belgium.