The Wanganui Chronicle FRIDAY. AUGUST 11, 1939. THE CHINESE CURRENCY

Wanganui Chronicle, Volume 83, Issue 188, 11 August 1939, Page 6

The Wanganui Chronicle FRIDAY. AUGUST 11, 1939. THE CHINESE CURRENCY

'pilE slumping oil the Chinese dollar to 4d will add Io China's difficulties, although the credit aid afforded by Russia—reported to extend to £28,000,000 —should help the Chinese Government to a very considerable degree and may ease the downward trend of the currency's external value from now onwards. The Chinese Government set up a new Stabilisation Fund in London in March, when the general assumption was that the rate could be maintained at over 8d per dollar without difficulty. The resources of the fund were supplied as to one-half by two Chinese Government banks, and the other half by the Hongkong and Shanghai Bank and the Chartered Bank of India, under British Treasury guarantee. At the time, of the setting up of the fund these resources were deemed to be ample for requirements. “Experience has shown,’’ states the Bankers’ Magazine for .Inly, “that the rate at which stability was being maintained was too high under existing conditions in China. The only practical course open Io the authorities was, therefore, to retire from the market, permit, the exchange to adjust itself io a lower figure, and only to resume control operations after the rate had found its natural level. Once made. the. adjustment caused relatively little disturbance, and official assurances that the authorities had ample resources for control was accepted without reserve. Their position has been immensely strengthened by the tiecline in the rate, which should encourage Chinese exports ami restrict any but necessary imports, at the same time increasing the difficulties facing any Japanese designs lo oust the Chinese dollar from popular favour, and increase the circulation of the Japanese-sponsored yen in the occupied territories.” Herein is succinctly explained the root cause of the enmity of the Japanese toward the British in particular. Without British financial support for the Chinese dollar Japanese problems in the occupied territories would be very mucli easier. Further, any seizure of assets in possession of the British Bank in Tientsin or elsewhere would naturally diminish the support which Britain—on purely business grounds—could provide for the Chinese currency. The demand by the Japanese of the bullion deposited in the Tientsin banks is, therefore. Miderstandable from the Japanese standpoint. One ot the major war needs of the new China, however, is that of petrol. Having lost control of the rivers system to the eoast, and having also lost complete control of the railways systems. China has been compelled to resort to road transport from its two main sources of supply. Russia and Burma, both of which are able to provide petrol, are enabling the Chinese armies to continue their mobility, both of action and of receiving essential supplies. It is to be expected, however, that efforts will be made, by the Japanese to operate against the Chinese Equalisation Fund in London, and it is possible that efforts are. now being made to reduce the value of the dollar in order to strengthen that party in Japan which desires a military union with the axis Bowers. It must be the advice of the military parly that if Britain can be given enough worry in l-luropi' she will retire from Hie Far l-lastern theatre, thereby giving lo Japan the opportunity for dealing China a kno n kHit blow.