§ Sir C. OMANasked the Under-Secretary of State for Foreign Affairs whether he is aware that the interest upon the 8 per cent. Treasury bills and notes of the Chinese Government has been unpaid for a year and more; whether the funds out of which the Chinese Government has expressed its willingness to pay this interest are being withheld by the desire of the Five Powers; and, if so, what is the cause of this refusal to accede to the offer of the Chinese Government?
§ Mr. R. McNEILLI am aware that the Chinese Government have defaulted on these obligations, and repeated representations have been made on the subject by His Majesty's Minister at Peking. With regard to the second and third parts of the question, the Chinese Government offered in July last to secure these loans on the increased Customs revenue to be derived from the 2½ Sur-tax provided for in the China Customs Treaty signed at Washington on the 5th February, 1922– I presume these are the funds which the hon. Member has in mind. The 2½ per cent. Sur-tax will, under Article III of the Treaty, be levied "from such date, for such purpose and subject to such conditions" as may be determined by a Special Conference which is to meet in China within three months of the coming 3187W into force of the Treaty. Under this Article, it would be ultra vires for the Chinese Government to hypothecate in advance, for the service of these loans or for any other purpose, the revenues which will be derived from the Sur-tax.