HL Deb 08 November 1933 vol 89 cc54-79

EARL PEEL rose to call attention to the policy of His Majesty's Government in China; and to move for Papers. The noble Earl said: My Lords, I desire to present to your Lordships this afternoon some considerations in connection with our policy in China. Our attitude to China is, of course, always a matter of importance, but I think it is even more so to-day because of the changed conditions of the world and our difficulties in trade. The general shrinkage of our exports has caused us to search carefully the word for further markets. We have made our Agreements at Ottawa, our trade treaties with Sweden, Argentina and other countries, but, of course, these efforts, however well intended—and, I hope, successful—can only cover a rather small portion of the ground. We cannot relax, for one moment, our efforts to increase our export trade. We are often advised by noble Lords opposite to cultivate the Russian market. Their advice, no doubt, is extremely well intentioned, but if we are to cultivate the Russian market surely we ought to pay far more attention to the great Chinese market with its 500,000,000 of people. Not only are they incomparably greater in numbers but they are far more responsive in many ways to trade questions. I need hardly allude—I do not wish to do it in any spirit of contrast —to their proverbial commercial honesty.

We have been called a nation of shopkeepers and they have been described as a nation of traders, and indeed one of the most remarkable things in the history of China in the last few years is the extent to which, during the worst troubles and during the most tiresome conflicts between warring elements, they have still carried on their trade under all those adverse conditions. At present, of course, in this country public opinion is deeply occupied with various problems, groups of problems, such as the American Debt, the controversy about the Locarno Treaties, Germany's retirement from the League of Nations and a host of European questions. To some extent, I am afraid, China, which ought always to be in the foreground of trade questions, has somehow slipped into the background. When I say that I am not forgetting the recent incidents at Manehukuo and those armed activities, which I am careful not to call war, between China and Japan. They form a large group of questions to some extent by themselves and I do not intend this afternoon to give them more than a passing reference. I would like to ask the British Government—I think my noble friend Lord Stanhope is going to reply—whether, immersed as they are in so many problems, they have been able to give lately their attention towards the reshaping of our attitude to China in the new conditions that prevail. I wish to consider as briefly as I can some of those problems, and one of the chief reasons I have put this Motion on the Paper is that I hope to obtain a considered statement from His Majesty's Government of their general policy towards China.

In the nineteenth century we always took a foremost part, a lead I might call it, in our relations with China, to which I think we were entitled by great financial and trade interests in that country. Indeed, our interests in China have always been those of trade and if, at different times, we have been led to the brink of a different course it is really, I think, that we have followed in the wake of other Powers rather than followed our own more wholesome initiative. In leading up to the point I wish to present I must start with a reference to the Washington Conference of twelve years ago. The most important of the several results which issued at that Conference was the Nine-Power Treaty, which laid down the policy in general terms to be followed as regards China. I should like to quote the first five lines of the first Article, the governing Article in the Treaty: To respect the sovereignty, the independence, and the territorial and administrative integrity of China, to provide the fullest and most unembarrassed opportunity to China to develop and maintain for herself an effective and stable government. … Owing to circumstances resulting after that Treaty this arrangement has rather tended to become a policy of abstention and not much assistance has been given to China to establish and confirm that stable government which we must all desire.

I think it is a very remarkable fact that among the ten points which were put forward in that Conference by the Chinese delegation was one which says that: provision is to be made for future conferences to be held from time to time for the discussion of international questions relative to the Pacific and the Far East, as a basis for the determination of common policies of the Signatory Powers in relation thereto. It is there—and it is remarkable in view of what has happened in the last ten years—that the Chinese apparenty wished for closer co-operation by urging conferences at stated intervals.

I must also refer to our declaration of policy in 1926 and 1927 which must be comparatively fresh in the minds of your Lordships. I regret to say that that policy, however well intentioned, cannot be said to have been a great success. Not everybody has the gift of prescience and this declaration was succeeded rapidly by revolution. It was, I believe, only a few weeks after the handing over of the Concession at Hankow that Chiang Kai-chek turned out the Russians and Borodin returned to Moscow with Mr. Eugene Chen and other allies. No doubt that was a sample of what we have been so often confronted with in China. We have moved forward with the very best intentions, but unfortunately found there was no settled government on which we could rely to carry out their side of the agreement. Other attempts have foundered, partly owing to the tremendous force of the National movement at that time in China, which was rather apt to interpret the best attempts of other Governments as Attempts to establish some form of control. Perhaps as a result we have been to some extent too much inclined to wait upon circumstances and let matters drift, but it is plain we cannot gain any high degree of respect from the Chinese if we follow such a course and if they see that, instead of following a definite policy, we are merely waiting upon events. May I say in parenthesis that other Powers have shown no slackness of any kind and are only too busy to strengthen their foot-hold in China?

Now the situation in China is again different. Since the Revolution of 1911 the present Nanking Government is undoubtedly the best we have seen in China. Among the leaders are General Chiang Kai-chek, a very far-sighted man who can be relied upon to take up one thing at a time and generally to carry it through, and, even more important, to act upon the undertakings he has given, and Mr. T. B. Soong, who has for the moment retired from the Government, though I understand it may not be long before he returns to it. He is a man of great force and ability. He has reduced his expenditure and—rare in these days—has managed to balance his Budget without recourse to loans. Then there is Mr. Wangching Wei, the Prime Minister, a man of great force of character and high reputation for honesty. Three men of, high ability and integrity are enough to form a Government and it was about a year ago that this Government laid down a new line of policy. That was to concentrate all effort on the Yangtse valley and the adjoining Provinces containing a population of something like 170,000,000. They were anxious to construct an efficient State, to avoid lighting any more civil wars, to leave districts outside their own control to their own devices for the present, and to trust that the magnet, as it were, of good government in the Yangtse valley would gradually draw other Provinces to themselves.

On those lines the Nanking Government has undoubtedly had considerable success, and during the last eighteen months has cut down expenditure by £12,500,000. They have had, of course, and still have, great difficulties to contend with. The Communists in South Central China almost constitute a separate Party. They remain undefeated. In spite of many campaigns against them they still hold their own, and their propaganda, as in some other countries, exists almost everywhere over the whole of China. Then the Government have also to contend with difficult matters in the shape of the illicit tax bureaux, which are set up along the different creeks and waterways, and I may perhaps explain that a creek in China is sometimes 200 yards wide. These self- constituted officials, in these bureaux, prey upon the peasants and make their lives hard and difficult. In spite of all the economies to which I have alluded the Government (and I think in this they are not peculiar) suffer from lack of money to carry out their own business, but, more than that, they suffer from a lack of disciplined and trained personnel and civil servants, who have to carry out the orders of the Government in the more distant regions under their control. The Government, I think, fully recognise that in a huge agricultural country like China the future of the country is based very largely on the prosperity of the peasants, and although they have the will to do so they hardly have the power or the resources to carry this out.

Last September, only two months ago, a very momentous meeting took place. The question there debated, at Kuling, was whether or not China should look to the West or to the East. There is, of course, a very strong Party in China, in favour of siding with Japan, partly because Japan is near at hand and partly because they feel that they understand the Japanese better than nations further West. I might add that Japan for her part—and I have no reason whatever to pass any criticism upon her action—has not been at all backward in pressing her influence and attentions upon China; but in spite of all this the Western Party has won its way. There is another element which has had some effect recently, and that is the proposed Russo-American rapprochement. The view, I understand, taken of it in China is that they attribute that rapprochement, however wrong they may be, to fear on the part of America of Japan's political and economic dominance in the Far East. It arises, in their view, from America's desire to counteract that influence.

Now when the Chinese are thinking of the West at that Conference, their thoughts are no doubt going mainly to America and this country. It is possible, and I think it to be true, that of the League of Nations, with its large European content, they are a little suspicious, and it must be added that recent events in connection with that body in the Far East have not added to their respect for that great institution. The advantage that we have is this, that first of all we have been known to China longer than any Western nation, and that indeed they trust us more than they do others. There was, of course, as your Lordships will remember, a few years ago, a great outburst of anti-British feeling in China, but that, I think, was very largely due to Bolshevist propaganda, and with the expulsion of that Russian element from China the hostility very rapidly died down. They recognise, further, the very great trade interests that we have in their country, and many of them, no doubt, would welcome activity on our part as a counter-weight to more pressing influences nearer home. They are well aware—and this is borne out by our history there—that we have no aggressive desires, nor do we wish to acquire any territory there. Indeed, our present policy of devolution in India has made it clear to them that we do not wish to enter into any fresh engagements of a controlling nature in China or the East. There are so many elements, therefore, at the present time, which are favourable to us in China, that one has to ask oneself whether this country cannot adopt a rather more active policy, and, if so, how and in what ways can we offer any assistance to the Nanking Government; or whether we should merely content ourselves with a policy of abstention or of kindly but distant observation.

May I make one suggestion at the moment? and of course it can be only in the nature of a suggestion. The Government have many advisers at present—several of these gentlemen have been lent to them by the League of Nations—but, of course, advisers are of little value if their advice is not carried out, and the results of this advice have not been very obvious, nor have any advisers been entrusted with, executive authority. In the history of China there have been several examples of great administrations that have been most successfully built up under foreign executive officers, but though, of course, under the general control of Government, they were given great freedom of action, probably because their disinterestedness was so entirely apparent. There is, of course, the classic instance of Sir Robert Hart and the Customs. There is the other case, where I think the control exercised by the Central Government was more close—the case of Sir Richard Dane and the building up of the Salt Gabelle. These are instances of the great assistance that has been given to the Chinese by methods which have not done any injury to Chinese pride. I have spoken of the great difficulty that the Government has there in carrying out its own policy. Might it not be possible, for instance, to suggest that help should be given to the Government in the form of a gendarmerie, which could gradually establish and extend order throughout the Yangtse valley? The Chinese Government fully understand that without the establishment of law and order none of their schemes can be fruitful. This, of course, is merely a suggestion, and no doubt your Lordships could suggest many other ways in which assistance could be given, though I do not intend this afternoon to suggest anthing in the way of loans or other financial assistance.

We have had a great deal of experience in the last twenty or thirty years of dealing with China, and we have had some unpleasant experiences. It may be said: Is there not some danger in giving strong support to the Nanking Government? May not that Government disappear, as other Governments have disappeared? May we not be accused of supporting one faction against another? We had an experience of this when in 1913 the Powers recognised Yuan Shih-kai and thought at that time that they were performing rather a liberal and forward action. But not very long afterwards the Southerners treated this action of the Powers as backing up the reactionary Party against the Reformers and Sun Yat-sen. In fact, in the general charge that has been brought against the action of the Treaty Powers this has been one of the main counts in the indictment. I cannot think, however, that in the present situation we should run any such risk. The Nanking Government certainly can be called nothing else but a popular Government, and the Cantonese themselves could hardly maintain that Nanking was not a National Government, though they themselves have not perhaps fully recognised it. Of course, the details of any such policy must be worked out when full advice has been received from our Minister, but in a country so distant as China no doubt the Foreign Office and the authorities concerned give a good deal more liberty to their Minister or representative in working out details than they perhaps would do in countries nearer home.

The question remains whether the Minister should have his headquarters in Peiping, a great distance away, or whether, if he had his residence in Shanghai, he would not be in much closer touch with the Nanking Government, and be able to discharge most of his duties personally, instead of through a minor official. In that way he would attach in the minds of the Chinese perhaps more importance to their own Government because it obviously has more importance in the minds of other Powers.

I should like to suggest, too, that there is a considerable advantage in being in touch with the great British community in Shanghai itself. I certainly do not suggest that in all matters the Minister or the Government should follow the advice of the Shanghai community, but I do suggest that, in a great many cases difficulties and troubles have arisen because the two have not been in sufficiently close touch, and perhaps the Shanghai community has not always understood exactly what the policy of the Government was. On the other hand, there might be some advantage to the policy of the Government in being in close touch with the community there. If we look at the actions of other Powers, we find that they have adopted this policy and that their Ministers—not so much the Ministers' subordinates—are constantly in Shanghai and at Nanking; and it may be (I do not know) that instructions of this hind have already been given to our new Minister. It has been considered—and no doubt I am treading on delicate ground here—that it is quite sufficient to send a Minister, and not an Ambassador, to China. I should like to observe that, for historical and sometimes for sentimental reasons, we are represented by Ambassadors in countries which, if you measure them by the standard of their trade and importance, certainly cannot compare with the gigantic territories of China.

Before making my general request to the Government I must make some reference to the position in Shanghai—so very important an element in our relations with China. No doubt, the position of that community is to some extent anoma- lous, but I think we are no longer moved in these days by what I may call constitutional pedantry, and, if it is an anomaly, it is an anomaly, of course, of China's own making. It was the original hostility and distrust of foreigners that kept them to that particular area and built up that tremendous community to which the Chinese themselves are so ready to resort. The Chinese, of course, enormously outnumber the foreigners in the International Settlement. But it is also a. vast centre of Chinese economic life, and its fortunes depend upon the security which that degree of foreign control affords.

I do not wish to say very much about the risks and dangers connected with this question, because they have been so very fully set out the remarkable Report of Mr. Feetham, with which your Lordships, I have no doubt, are quite familiar. Mr. Feetham points out that the dependence of the judiciary upon the Executive in China is one feature which differentiates our system from that of China, that in order to establish the rule of law the Judiciary should no longer be regarded as a department of the Executive, and that until the independence of the Judges has been secured it will be very difficult to do without those securities which have built up the fortunes of Shanghai. This, however, is an international question and cannot be dealt with except in full harmony with other Powers. I believe that some years ago there was an agreement drawn up for the giving up of our rights and privileges in the Treaty Ports, and also of our rights in Shanghai; but this document, I understand, was never signed. I do not know where the document now is, or whether it is likely to see the light at any time. But it is for that reason that I lay such great stress—certainly in regard to the International Settlement—on not doing anything without the concurrence of the other Powers.

There are also some other problems, upon which I can only touch, connected with the Shanghai Settlement. There is, of course, the pressing forward of the Japanese for some greater power of control in that Settlement. That and similar questions will no doubt come up later. I would just allude to the removal of the battalion from Shanghai, which no doubt was done for excellent military reasons, but as that removal almost coincided with the building of larger barracks by the Japanese at Hongkew, the Chinese were apt to draw some inference from that coincidence.

May I just sum up what I shall ask of your Lordships in a very few sentences indeed? The circumstances of the times are extraordinarily favourable, it seems to me, for a fresh definition of our policy towards China. No sort of suspicion at the present moment rests upon us. We stand high, I think, in Chinese opinion. I have made one or two suggestions, bat I am very conscious of the fact that, as a layman, without official information at my disposal, I can, only make these suggestions very tentatively. The only advantage I have, perhaps, is that of a rather larger field of discretion than has the Government itself. The Government, of course, one recognises, must speak on these matters subject to the law of reticence. But I do say that in view of the experience we have had in our dealings with China for the last fifteen years, if the Government find themselves able to indicate generally the line of policy that they intend to pursue towards China, it will be not only of enormous benefit to all those who are engaged in the great China trade, but it will also be of great value in contributing towards our friendly relations with China itself. I beg to move for Papers.


My Lords, I am very glad to support the noble Earl in his general request to the Government to define their attitude in regard to China. In doing so I propose to call the attention of the Government and of your Lordships more particularly to the industrial and commercial aspect of the question, the great powers of expansion which seem to lie in the Chinese trade, and the consequential beneficial results one hopes for upon employment in this country. I shall try to give in a very concentrated way some picture of this vast problem which covers so many millions of lives and such a large area of the world's surface. If one looks at the progress of industrial activity during the last century one sees that there has been a great move, both across the Atlantic and across the Pacific, of industrial operations; and, if your Lordships will forgive me putting this in a personal way, it seems to me a striking fact, as I regarded it the other day, that in my grandfather's lifetime, in regard to the manufacture and export of such a product as alkali, he had seen the United States of America begin by being a large importer, become in course of time self-supporting, and eventually become a considerable exporter of that product. My father, in his lifetime, saw exactly the same thing happen in the case of Japan; Japan, originally a large importer, became self-supporting, and in turn became an exporter of that material. It is quite a possible thing that in my lifetime I shall see the same thing occur with China.

Leaving out of account for the moment the general difficulties of the economic nationalism of the future and its effect upon any particular trade, it is clear that if such a development occurs over such a large area the opportunities for the development of our own trade are hound to be very large. In the meantime, and while we need not regard the distant future too much, we must take into account that there will be very large opportunities indeed for the expansion of the trade of this country. The complexities and the difficulties of trading with China are considerable in their own way, but they can be overcome, and a very satisfactory trade can be and is carried on with that country. If I may once again suggest a small picture of the sort of thing that occurs, I think this will present an idea of the way business has to be done. Again taking the product akali as an example, it has been found that it is most suitable to pack it in double bags, and for this reason: It is shipped from this country, and it goes about 1,500 miles up river by steamers, and then it is carried by porters, perhaps 50, 100 or 150 miles, into the interior. These porters are able to take the double bags and cut them up and so form a packet suitable for human transport. Thus you have the distribution of what is one of the world's raw materials going on, on the backs of men. It is, in fact, carried on bamboo poles considerable distances into the interior.

I just cite that as an example of the potentialities of the expansion of trade with a country which is in such a primitive condition—primitive in every sense, not only in regard to its peasant population, large, immobile, and self-supporting, but also in regard to this further fact, that you get great cities of 750,000 or 1,000,000 people where the whole water supply is done by human transport, by carriers. That gives one a picture of the enormous field of expansion which lies in the development of this country, a development which, I think, we can certainly see coming along in the future, and which can only be for the benefit of China itself and of the human race at large, and certainly of our trade. At the present moment we export to China between £9,000,000 and £10,000,000 of goods a year, and in that we are third to the United States and Japan. But it is very gratifying to see that our share has increased between 1931 and 1932 from 8.3 per cent. of the total trade to 11.2 per cent. Of the principal products which this country sends, cotton accounts for £2,000,000, metals for £1,300,000, machinery for £1,000,000, and then one gets chemicals, threads, and tin about £500,000 each. The extraordinary immediate power of improvement, I think, can be gauged from these very remarkable figures—namely, that the increases in the value of cotton and metal exports from this country between 1931 and 1932 were 78 per cent and 50 per cent. respectively. That is an extraordinary reflection, in the disturbed world conditions, of the power of rapid expansion which is likely to take place in that vast country.

I think what I have said is sufficient to show how important this question is to the commercial and industrial interests of this country, and I am bound to draw attention to the importance which this question has upon the policy that this country adopts in regard to silver. I do not propose to enter into a discussion of the merits of silver this afternoon, but it obviously has a very large bearing on the question. As a matter of fact so important has the China trade appeared to us, so far as the chemical industry is concerned, that the Chairman of Imperial Chemicals Industries, Sir Harry McGowan, has only just left China after making a personal survey of the position there and the opportunities which present themselves. One can only wish that this example may be followed by other important industrialists in this country—to go personally and see on the spot what has to be done, and in this way acquire a personal and thorough knowledge of the situation.

There is one other point I would like to put before your Lordships as an example of the possibility of rapid ex- pansion. The figures show that, due to the disturbance of world conditions, there was a shrinkage of 25 per cent. in value in the total trade of the country between 1931 and 1932. That shows that by inference our trade had extended rather more than would appear from the first figures I quoted, but with the extraordinary disturbance in world conditions and with the great disturbance of the position in China, it is clear that as the world settles down, and as China settles down, there is bound to be a large and rapid development in which we ought to get our share. We are hound to a very large extent to be affected by the policy of the Government there. I must say it is my belief that China, which was always essentially one of the best governed and best controlled countries, will once more be well-governed and controlled. I am deeply grateful to the noble Earl for calling attention to this matter, for calling attention to the Far East and perhaps diverting attention from the heated atmosphere of Europe. This matter is of the greatest importance to the industrial and commercial interests of this country and we shall be very glad to hear from the Government what their policy is.


My Lords, I desire to say a few words by way of a footnote to what has fallen from the noble Earl, Lord Peel, with the object of bringing before your Lordships' notice what appeared to me when I was in the Far East as perhaps one of the most important needs of the British interest in China. At the time I speak of, some twenty-five years ago, in the year 1907 and subsequent years, the United States of America had devoted the whole or the greater part of her Boxer Indemnity to the tuition of Chinese in the American Universities, with the result that a very large number of young men returned to China, with very crude and ill-digested ideas of Western democratic forms of government. Reinforced by many other students from Japan and other countries, they exerted a very considerable influence in the political sphere and the result was that the Mancini dynasty fell. At that time there was considerable activity in railway construction in China, and the influence of these students was not less potent in the economic and commercial spheres than it was in the political sphere. Engineers naturally framed their specifications and drew up their tenders according to the standard and the technical terms which are used by the countries in which they had been taught, with the result that the orders for materials went to those countries.

What is needed is that this great demand for Western education should be obtainable by the youths of China without the necessity for prolonged residence in a foreign country where they become completely denationalised. This need not preclude the possibility of their completing their studies abroad, either by graduating in the last year or two of their courses, or by post-graduate courses in foreign Universities. The Hong Kong University was founded with the object of meeting this need and according to the youths of China an opportunity of being trained in their own environment, no longer in antagonism to the traditions and beliefs which their people hold in reverence. It was hoped that some of the students from the University would become leaders in the new era which was inaugurated by the revolution of 1911, that others would supply the trained medical men who were so urgently needed in the country, and that others again would become engineers with some knowledge of British standards and British technical terms. There was, however, at that time a considerable feeling among an important section of the commercial community—a feeling of distrust in the higher education of the Chinese, especially, at any rate, in those branches of it in which it was feared that they might become rivals and competitors. That feeling, I think, has long passed away.

Largely, however, due to the foresight and the generosity of the great firm of Butterfield and Swire, and also to the enthusiasm of the Chinese throughout all parts of China and Malay, who put up the bulk of the money, the project was carried through. The Governments of Peking and Canton lent pecuniary assistance and sent students, and the British Government gave a small sum in order to establish what were called King Edward VII scholarships. Later on, when the students of the Chinese university colleges became leaders in riotous demonstrations, the undergraduates of the Hong Kong University set an example of discipline and loyalty and refused to join in popular strikes, at, I believe, very considerable danger of personal risk to themselves. Owing to the circumstances under which the University of Hong Kong was founded, it was never properly endowed. The world-wide generosity of the Rockefeller foundation has greatly strengthened its medical faculties, and I hope the Carnegie Trust may also give some help. Quite recently, as your Lord ships are aware, a. comparatively small sum of £200,000 has been assigned to the Hong Kong University from the British Boxer Indemnity, which amounts, I believe, to somewhere in excess of £11,000,000, but a sum of £8,000 or £9,000 a year is altogether inadequate to give effect to the potential services which a British-Chinese University situated on the borders of China ought to be able to render, and could render, to the Chinese people, to the Chinese Government and to British commercial interests in China.

I may add that quite recently the University of China Committee has established a. hostel for Chinese youths in London who may come here to go through their post-graduate courses or even to graduate in their last year or two at a mature age when their characters are formed. Here, it seems to me, is an instrument ready to hand to promote in the best possible way British influence and British interests in China, and I trust His Majesty's Government will not lose sight of that instrument.


My Lords, I will endeavour not to detain your Lordships long but having spent some five years in China, from 1923 to 1928, I would like to make some observations on the subject introduced by the noble Earl, Lord Peel. There is so much going on in the world to-day that we are rather apt both to overlook the importance of events that are now taking place in China and to forget the direct responsibility of the West for disorders caused by them. A clash of cultures arose from the West forcing its way into China all through the nineteenth century until, reluctantly and to protect her culture and herself, China was forced to the conclusion that she must adopt some -Western system. Hence she has embarked not on one but on a whole series of revolutions in every department of life—political, educational, economic, industrial, agricultural—and is striving to do in one gener- ation what it has taken us the whole course of our known history to evolve. It was only to be expected that there should be a good deal of confusion. In the past the fall of the Han dynasty, a far simpler matter, was followed by four hundred years of anarchy and civil war.

So my first point is a plea for our cooperation with the rulers of China in a really constructive policy of helpfulness to them. This plea has the powerful support of the Commission presided over by the noble Earl, Lord Lytton, who stated that international co-operation was the final requisite for a satisfactory solution of the problems they set out to consider and also of Mr. Justice Feetham, who laid down international co-operation as the only adequate basis for any genuine system of self-government in the International Settlement of Shanghai, and for such security as that Settlement affords. As the noble Earl, Lord Peel, pointed out, the future of that Settlement and the concessions in other cities of China and of other extra-territorial rights constitute the main problem of our future policy in China. These rights seem to me to have been acquired almost, I might say, as the natural and inevitable consequence of the contact of East and West to which I have referred. When British merchants and others first wished to live and trade in Shanghai they were not permitted by the Chinese authorities to reside within the walls of the City but land was leased to them on the mud flats outside the walls. There they were left to administer their own civil affairs and also to be subject to the judicial control of their own consular authority. It was really a question of practical administrative convenience. It was due to the energy and enterprise of the British and other foreigners who settled on those mud flats that there arose on those mud flats perhaps the most prosperous and important city of modern China.

Mr. Justice Feetham has pointed out that the settlement system is based on the two fundamental principles of self-government and the rule of law which has resulted in security for life and property and an improvement in the general conditions of life, and that the success attained by the Council of the Settlement has been mainly due to honest and efficient administration. It is because of these advantages that no fewer than 1,000,000 Chinese have chosen to reside in the international Settlement rather than in the Chinese parts of the City in spite of the intense feeling of nationalism that has grown up in China. I think it is generally admitted that the growth of these foreign concessions has been of immense value to the trade, finance and industry of China and in these recent years of disorder they have been the only places in China in which law and order were secure. But for them finance and commerce could hardly have been carried on at all in China. I need not detain your Lordships to argue at length that these same principles of self-government: and the rule of law, honest and efficient administration and security for life and property are desirable not only in a few concessions but are essential for the whole of China, and, in fact, must form the foundation on which the whole structure of New China must rest.

My second and main point that these concessions and our judicial privileges must not be indiscriminately surrendered. but that we should carefully weigh and examine the laws and the administrative system of the Chinese Government and agree to their demand for the recovery of full rights over foreigners when, and only when, we are satisfied that their machinery is working in such a way as to provide for them those essential features to which I have referred. No responsible body of persons can maintain that these Treaty rights can be maintained indefinitely. As long ago as the Treaty of 1902 we undertook to give them up when the proper moment arrived, but, as has already been pointed out, the policy we adopted in 1926 and 1927 in regard to Hankow and other places has not improved our relationship with the Chinese, and if it were extended indefinitely it would impose upon them responsibilities which they are not yet able to bear and would deprive China of some of those centres in which, under foreign protection and administration, Chinese trade has been able to flourish during the last difficult years. Nor do I think that China has gained a great deal from the policy adopted at Washington of leaving her to work out her own salvation if she could. A great deal has already been done with regard to cooperation and I would like to welcome the sending out of technical experts by the League of Nations.

I would point out that there are now five Chinese members on the Council of the International Settlement of Shanghai and there are others who have been co-opted on some of the committees. All these members are doing most valuable work. The future maintenance of the Settlement is also essential to form a training ground for Chinese to go out from it and administer the Chinese cities. It is rather interesting to note that Sun Chuan Fang, one of the ablest of Chinese provincial Governors, when he created a central authority for the Chinese parts of Shanghai, laid this down as his aim: … so that it might have the necessary authority to improve the municipal government, gradually converting the area outside the foreign Settlement into a model city, the result of which should form the basis of our demands for the abolishing of foreign concessions. Further instances of co-operation can be found in the Customs Service built up by Sir Robert Hart and operated jointly by Chinese and foreigners, and more recently in the flood and famine relief work carried out jointly by the Chinese and foreigners under the leadership of Sir John Hope Simpson. That has occurred only in the last few years. Anyone who has studied the record of that administration will see with what extreme ability and efficiency it was carried out by all those concerned.

I would emphasise as the noble Earl, Lord Peel, has pointed out, that the Settlement at Shanghai is not a British concession. It is not for us to surrender even if we wished to do so. It is international and any step we may take must be taken in consultation and co-operation with the other nations concerned. I would further urge that any action we may take should only be taken in consultation with those men on the spot who are most directly concerned—the Municipal Council itself, the chamber of commerce and other representative bodies. The Council have already provided us with the most able and thorough Report of Mr. Justice Feetham which does not seem to me to have received in this country quite the attention which it deserves. Further, we are dealing with an Eastern people, and when we have settled the broad principles of our policy the methods of execution have to be left to those on the spot and to those who know the workings of the Eastern mind. I do not pretend myself to know how the Eastern mind is going to work, but I am certain that it works in an absolutely opposite direction to the Western mind.

I support further the suggestion regarding the movement of our Legation to Nanking. Anyone who has visited Peking must regret leaving such wonderful and charming surroundings, but if our new Minister is to exercise any real influence on the affairs of China he will be handicapped by being so many hundreds of miles away from the present Capital. It would also be well that he should be in closer touch with Shanghai. I regret the reduction of the Shanghai Expeditionary Force by one infantry battalion. I was in Shanghai when the Expeditionary Force first arrived and it was because it was adequate that it was able to achieve its object and to preserve peace without having to fight. There are few better ambassadors of our nation than our troops. The men have their own inimitable way of getting in touch with the people of the country in which they are quartered and among the comments one heard from the Chinese was this: "They no belong soldier; they belong gentleman."

The present time is opportune for a re-statement and a new emphasis of our policy both owing to the character of the present Nanking Government and because a new Minister is going out to represent us. The future of China is of peculiar importance at the present time. The world is seeking markets for its products and a stable, peaceful and orderly China could take almost unlimited quantities of such products as wool and wheat, and manufactured goods. Finally, I would urge that in our policy we might well adopt an attitude rather similar to that adopted by the late Lord Balfour in his very wonderful Mission to the United States of America when she first entered the War—to place at her disposal all our experience in working these Western institutions which she is striving to adopt and to help her to evolve a new system for the benefit not only of British and other merchants, but for the benefit of the people of her own vast country as the whole.


My Lords, the debate this afternoon has covered a very wide field. I am afraid it is a very long time since I had personal knowledge of China and therefore there is little I could say which could be of value from a personal point of view. It may amuse the House to hear that perhaps I myself nearly took part in one of these revolutions because when Dr. Sun Yat-sen was in London he invited me to go out and take part in a movement he was then making. Considerable reference has been made to trade in China and I am sure the House will rejoice that the Chairman of Imperial Chemical Industries has been travelling recently in that country. When I was there more thay twenty years ago one of the complaints made was that firms in England seldom had their own commercial agents there. I entirely agree that with that vast population the chances for increased trade are considerable and I hope the example given by the Chairman of Imperial Chemical industries will be widely followed.

The statement which I have been given by the Foreign Office is rather long, but I hope your Lordships will forgive me for reading it. It is, I feel sure, unnecessary to say that the policy of His Majesty's Government is one of sincere friendliness towards China. Our aim in consequence is to maintain cordial relations with the constituted Government of that country. For a number of years there was, unfortunately, such political confusion in China, with rival Parties claiming or aiming at the position of governing the country, that His Majesty's Government, like other foreign Governments, could only live from day to day and do what they could for the maintenance of legitimate British interests, while taking such opportunities as offered for carrying out the promises which had been made to China after the War and at the Washington Conference, and for laying the foundations of satisfactory relations for the future. It was in this spirit that, in a time of inconclusive rivalry between different Parties, His Majesty's Government took part in the Tariff Conference and in the inquiry into extra-territoriality for which the Washington Conference provided. His Majesty's Government further, took the lead in the so-called December Memorandum of 1926 in proposing that the Powers should pursue a constructive policy in harmony with the spirit of the Washington Conference and going as far as possible towards meeting the legitimate aspirations of the Chinese nation. That was a Memorandum communicated by His Majesty's Chargé d'Affaires at Peking on the 18th December, 1926, to the representatives of the Washington Treaty Powers.

This is a paragraph of the Memorandum. The Powers, it said, should abandon the idea that the economic and political development of China can only he secured under foreign tutelage, and should declare their readiness to recognise her right to the enjoyment of tariff autonomy as soon as she herself has settled and promulgated a new national tariff. They should expressly disclaim forcing foreign control upon an unwilling China. While calling upon China to maintain that respect for the sanctity of treaties which is the primary obligation common to all civilised States, the Powers should yet recognise both the essential justice of the Chinese claim for treaty revision and the, difficulty under present conditions of negotiating new treaties in place of the old and they should therefore modify their traditional attitude of rigid insistence on the strict letter of treaty rights. The Memorandum went on to say that he Powers should endeavour to maintain harmonious relations with China without waiting for or insisting on the prior establishment of a strong Central Government. While there was at the time no Government with which it was possible to negotiate as representing China as a whole, His Majesty's Government proceeded to investigate what measures they could take by unilateral action, without revision of treaties, to meet the aspirations of the Chinese people.

These measures were formulated and were laid before the Chinese authorities in the north and in the south in January, 1927. They implied an immediate and radical modification of the old treaty position, so far as His Majesty's Government were concerned, and were an earnest of further modifications as soon as conditions permitted. The despatch of the Shanghai Defence Force early in 1927, as a result of the danger threatening the International Settlement, was an unfortunate necessity, which in no way diverted His Majesty's Government from their fundamental aim any more than they had allowed themselves to be diverted from it by the unfortunate manifestation of hostility at Hankow and elsewhere about the same time. As a result of this carefully-considered policy the atmosphere in China was soon changed for the better. When at last the National Government of China was set up in the autumn of 1928 and was generally accepted in China, it was speedily recognised by His Majesty's Government among other Powers, and a treaty was signed in that year recognising the complete autonomy of China in tariff matters and ensuring most-favourednation treatment for British goods.

Apart from this, the measures taken by His Majesty's Government to carry out their promises—in many cases before the establishment of this Government—may be summarised as follows: The British concessions at Hangkow, Kiukiang, Chinkiang and Amoy have been returned to Chinese administration; the constitution of the British concession at Tientsin has been reformed, so as to place British and Chinese on an equal footing as regards franchise and representation on the council; at Shanghai, to which Lord Addington referred, five Chinese now have seats on the Council of the International Settlement, and an increasing number of Chinese are being appointed to posts in the municipal administration. The modern Chinese Courts have been recognised as the competent courts for the trial of cases brought by British plaintiffs or complainants, without the attendance of a British consular representative. The Chinese Court in the International Settlement at Shanghai has been restored to the full control of the Chinese authorities. This was done in consultation with other interested Powers. The agreement to this effect was valid for three years, and on its expiry this year it was decided, after most careful consideration, to renew it for a further similar period, and thereafter until denounced by either side. The Chinese Government for their part have given assurances that they have under contemplation measures for remedying certain defects which had shown themselves.

The Customs Revenues have been freed from Diplomatic Body control, and the Customs administration is no longer an instrument of foreign tutelage, but has become once more a Chinese administration. Wei-hai-wei has been returned to China, and an agreement has been reached as regards the remitted Boxer Indemnity, by which most of the funds are to be spent on railway and other materials manufactured in the United Kingdom. The biggest question still remaining to be adjusted is that of extraterritorial rights. His Majesty's Government recognised as long ago as 1902, in the so-called Mackay Commercial Treaty, that changes were necessary in this system. It was again recognised at the Washington Conference, and the problem was fully enquired into by an International Commission in 1926. Conditions in China for some years following were such as to keep the question in abeyance, but when at last there seemed again to be grounds for hoping that stability of administration had been reached, negotiations of the details of an extraterritorial agreement were begun.


When was that


I cannot say exactly, but it was after 1926. Good progress was made by the negotiators, and a stage was reached when the progress could be reported to the two Governments. Meanwhile, however, in the summer of 1931, civil war again broke out and later there came the Manchurian dispute and a further spread of the Communist movement, so that the question remains in that position. From what I have said your Lordships will see that we have tried to meet the national aspirations of China in very full measure. In China, as elsewhere, of course, there is a strong national sentiment sweeping through the country, and therefore with regard to one of the suggestions of my noble friend, that as to the gendarmerie, he will agree with me that the first move must come from China herself. Should such a suggestion be made His Majesty's Government would do their best to see what assistance could be given.

Then another question was raised with regard to the removal of the Legation from Peking. This question has been periodically under the most careful consideration, but up to the present time His Majesty's Government have not considered that any change in the existing arrangements is either necessary or desirable. It is very much open to doubt, when all factors are taken into account, whether any real increase in efficiency would result from the change, and the question is complicated by important considerations of health and expense. It is probably not generally realised what a large staff is employed at the Legation, and what a great expense would be incurred by building adequate permanent accommodation for them. The Chinese Government have themselves, once or twice in recent years, at critical junctures, transferred the seat of Government to other places from Nanking, and the permanent removal of the Legation headquarters to Nanking might involve some risk of proving to have been made in vain. Besides the provisional capital, Loyang, which was the actual seat of Government for some months last year, there is an auxiliary capital, Sianfu, officially so designated by the Chinese Government.

Peking is superior to Nanking and Shanghai from the health point of view, and Shanghai, which has sometimes been suggested as an alternative site, is open to the objection that its own special problems, important as they are, might absorb too much of the energy of the Minister, instead of being dealt with, as they should be in the first place, by the Consul-General. A great deal of thought has been devoted to making the most suitable arrangements for the conduct of business. Sir M. Lampson, the present Minister, has paid constant visits, often of long duration, to Nanking, and the Counsellor of the Legation—he is hardly what some noble Lord described as a subordinate official—normally resides there. Somewhat similar arrangements are observed by other important Powers. The United State and Japanese Ministers are represented at Nanking by Consular officers with diplomatic rank, and the French and German Ministers by Secretaries of Legation.

Lord Lugard raised a question with regard to the Hong Kong University and education in China. I am informed that the sum paid from the Boxer Indemnity was settled by agreement, reached with the Chinese Government in 1930, and put into effect, so far as legislation was concerned, by the Act of 1931. The disposal of the fund is governed by that agreement and apart from sums already allotted to the Hong Kong University and the Universities China Committee, is in the hands of the Board of Trustees set up by the Chinese Government in China. His Majesty's Government have no power to devote any further money from that source to Hong Kong University.

The statement that I have made is of a very general character, but of course I have had to cover a very wide field. I think, however, it will be clear from what I have said that His Majesty's Government have done as much as—indeed more than—any other single Power to demonstrate their friendliness to China, and consideration for the legitimate and reasonable aspirations of the Chinese people. It is a matter of the deepest regret that there is not at this moment a greater measure of peace, stability, and uniformly effective administration. His Majesty's Government have played the part that a proper regard for British interests and genuine friendship for the Chinese people have dictated, but the essential problem of further progress is one which only the Chinese people can solve, and if it is suggested that His Majesty's Government can take further action to help them, it is difficult to see what could be done that would not involve interference in Chinese domestic affairs, and entail commitments beyond our strength. Such interference, even if welcomed by the Chinese themselves, would in all probability in the long run prove useless, if indeed it did not delay the final settlement for which we all hope.


My Lords, I do not think that the noble Earl's apology for the length of his statement need have been made; indeed, I was longing to hear a good deal more. I was very much impressed when he told us that he very nearly became a revolutionary. I think it is a compliment to him to say that I should not have suspected it unless he had informed me of the fact. But I am in some difficulty as I feel that I cannot press the noble Earl for answers on various points, because he has very frankly told us that he is communicating, not his own knowledge, but a statement handed to him by the Foreign Office. It is obvious, therefore, that I cannot press him with further questions. I can only say that in my view it is very unfortunate that in your Lordships' House, where there is such a number of Peers who really have great knowledge on this subject, we have not got a direct representative of the Foreign Office who would be able to answer. I am very much obliged to the noble Earl. He would fill any post of that kind with great skill and I am only sorry that he is not in that position. I do not press my Motion for Papers because there are so many Papers, and I do not want to be overwhelmed with the plethora of them. Therefore I beg to withdraw my Motion.

Motion for Papers, by leave, withdrawn.

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