The Problem of China

residue for sale in the open market.[106] The second item in the China Year Book's list is the Tungkuan Shan mines. All that is said about these is as follows: "Tungling district on the Yangtze, 55 miles above Wuhu, Anhui province. A concession to work these mines, granted to the London and China Syndicate (British) in 1904, was surrendered in 1910 for the sum of £52,000, and the mines were transferred to a Chinese Company to be formed for their exploitation." These mines, therefore, are in Chinese hands. I do not know what their capacity is supposed to be, and in view of the price at which they were sold, it cannot be very great. The capital of the Hanyehping Co. is $20,000,000, which is considerably more than £52,000. This was the only one of the five iron mines mentioned in the Year Book which was not in Japanese hands at the time when the Year Book was published. Next comes the Taochung Iron Mine, Anhui province. "The concession which was granted to the Sino-Japanese Industrial Development Co. will be worked by the Orient Steel Manufacturing Co. The mine is said to contain 60,000,000 tons of ore, containing 65 per cent. of pure iron. The plan of operations provides for the production of pig iron at the rate of 170,000 tons a year, a steel mill with a capacity of 100,000 tons of steel ingots a year, and a casting and forging mill to produce 75,000 tons a year." The fourth mine is at Chinlingchen, in Shantung, "worked in conjunction with the Hengshan Colliery by the railway." I presume it is to be sold back to China along with the railway. The fifth and last mine mentioned is the Penhsihu Mine, "one of the most promising mines in the nine mining areas in South Manchuria, where the Japanese are permitted by an exchange of Notes between the Chinese and Japanese Governments (May 25, 1915) to prospect for and operate mines. The seam of this mine extends from near Liaoyang to the neighbourhood of Penhsihu, and in size is pronounced equal to the Tayeh mine." It will be observed that this mine, also, was acquired by the Japanese as a result of the ultimatum enforcing the Twenty-one Demands. The Year Book adds: "The Japanese Navy is purchasing some of the Penhsihu output. Osaka ironworks placed an order for 15,000 tons in 1915 and the arsenal at Osaka in the same year accepted a tender for Penhsihu iron." It will be seen from these facts that, as regards iron, the Chinese have allowed the Japanese to acquire a position of vantage from which they can only be ousted with great difficulty. Nevertheless, it is absolutely imperative that the Chinese should develop an iron and steel industry of their own on a large scale. If they do not, they cannot preserve their national independence, their own civilization, or any of the things that make them potentially of value to the world. It should be observed that the chief reason for which the Japanese desire Chinese iron is in order to be able to exploit and tyrannize over China. Confucius, I understand, says nothing about iron mines;[107] therefore the old-fashioned Chinese did not realize the importance of preserving them. Now that they are awake to the situation, it is almost too late. I shall come back later to the question of what can be done. For the present, let us continue our survey of facts. It may be presumed that the population of China will always be mainly agricultural. Tea, silk, raw cotton, grain, the soya bean, etc., are crops in which China excels. In production of raw cotton, China is the third country in the world, India being the first and the United States the second. There is, of course, room for great progress in agriculture, but industry is vital if China is to preserve her national independence, and it is industry that is our present topic. To quote Mr. Tyau: "At the end of 1916 the number of factory hands was officially estimated at 560,000 and that of mine workers 406,000. Since then no official returns for the whole country have been published ... but perhaps a million each would be an approximate figure for the present number of factory operatives and mine workers."[108] Of course, the hours are very long and the wages very low; Mr. Tyau mentions as specially modern and praiseworthy certain textile factories where the wages range from 15 to 45 cents a day.[109] (The cent varies in value, but is always somewhere between a farthing and a halfpenny.) No doubt as industry develops Socialism and labour unrest will also develop. If Mr. Tyau is to be taken as a sample of the modern Chinese governing classes, the policy of the Government towards Labour will be very illiberal. Mr. Tyau's outlook is that of an American capitalist, and shows the extent to which he has come under American influence, as well as that of conservative England (he is an LL.D. of London). Most of the Young Chinese I came across, however, were Socialists, and it may be hoped that the traditional Chinese dislike of uncompromising fierceness will make the Government less savage against Labour than the Governments of America and Japan. There is room for the development of a great textile industry in China. There are a certain number of modern mills, and nothing but enterprise is needed to make the industry as great as that of Lancashire. Shipbuilding has made a good beginning in Shanghai, and would probably develop rapidly if China had a flourishing iron and steel industry in native hands. The total exports of native produce in 1919 were just under £200,000,000 (630,000,000 taels), and the total imports slightly larger. It is better, however, to consider such statistics in taels, because currency fluctuations make the results deceptive when reckoned in sterling. The tael is not a coin, but a certain weight of silver, and therefore its value fluctuates with the value of silver. The China Year Book gives imports and exports of Chinese produce for 1902 as 325 million taels and 214 million taels respectively; for 1911, as 482 and 377; for 1917, as 577 and 462; for 1920, as 762 and 541. (The corresponding figures in pounds sterling for 1911 are 64 millions and 50 millions; for 1917, 124 millions and 99,900,000.) It will thus be seen that, although the foreign trade of China is still small in proportion to population, it is increasing very fast. To a European it is always surprising to find how little the economic life of China is affected by such incidents as revolutions and civil wars. Certain principles seem to emerge from a study of the Chinese railways and mines as needing to be adopted by the Chinese Government if national independence is to be preserved. As regards railways, nationalization is obviously desirable, even if it somewhat retards the building of new lines. Railways not in the hands of the Government will be controlled, in the end if not in the beginning, by foreigners, who will thus acquire a power over China which will be fatal to freedom. I think we may hope that the Chinese authorities now realize this, and will henceforth act upon it. In regard to mines, development by the Chinese themselves is urgent, since undeveloped resources tempt the greed of the Great Powers, and development by foreigners makes it possible to keep China enslaved. It should therefore be enacted that, in future, no sale of mines or of any interest in mines to foreigners, and no loan from foreigners on the security of mines, will be recognized as legally valid. In view of extra-territoriality, it will be difficult to induce foreigners to accept such legislation, and Consular Courts will not readily admit its validity. But, as the example of extra-territoriality in Japan shows, such matters depend upon the national strength; if the Powers fear China, they will recognize the validity of Chinese legislation, but if not, not. In view of the need of rapid development of mining by Chinese, it would probably be unwise to nationalize all mines here and now. It would be better to provide every possible encouragement to genuinely Chinese private enterprise, and to offer the assistance of geological and mining experts, etc. The Government should, however, retain the right (a) to buy out any mining concern at a fair valuation; (b) to work minerals itself in cases where the private owners fail to do so, in spite of expert opinion in favour of their being worked. These powers should be widely exercised, and as soon as mining has reached the point compatible with national security, the mines should be all nationalized, except where, as at Tayeh, diplomatic agreements stand in the way. It is clear that the Tayeh mines must be recovered by China as soon as opportunity offers, but when or how that will be it is as yet impossible to say. Of course I have been assuming an orderly government established in China, but without that nothing vigorous can be done to repel foreign aggression. This is a point to which, along with other general questions connected with the industrializing of China, I shall return in my last chapter. It is said by Europeans who have business experience in China that the Chinese are not good at managing large joint-stock companies, such as modern industry requires. As everyone knows, they are proverbially honest in business, in spite of the corruption of their politics. But their successful businesses—so one gathers—do not usually extend beyond a single family; and even they are apt to come to grief sooner or later through nepotism. This is what Europeans say; I cannot speak from my own knowledge. But I am convinced that modern education is very quickly changing this state of affairs, which was connected with Confucianism and the family ethic. Many Chinese have been trained in business methods in America; there are Colleges of Commerce at Woosung and other places; and the patriotism of Young China has led men of the highest education to devote themselves to industrial development. The Chinese are no doubt, by temperament and tradition, more suited to commerce than to industry, but contact with the West is rapidly introducing new aptitudes and a new mentality. There is, therefore, every reason to expect, if political conditions are not too adverse, that the industrial development of China will proceed rapidly throughout the next few decades. It is of vital importance that that development should be controlled by the Chinese rather than by foreign nations. But that is part of the larger problem of the recovery of Chinese independence, with which I shall deal in my last chapter. FOOTNOTES: [99] For the history of Chinese railways, see Tyau, op. cit. pp. 183 ff. [100] China in 1918. Published by the Peking Leader, pp. 45-6. [101] Op. cit. chap. xi. [102] China in 1918, p. 26. There is perhaps some mistake in the figures given for iron ore, as the Tayeh mines alone are estimated by some to contain 700,000,000 tons of iron ore. Coleman, op cit. p. 51. [103] Page 63. The 1922 Year Book gives 19,500,000 tons of coal production. [104] Modern China, p, 265. [105] Pages 74-5. [106] Coleman, op. cit. chap. xiv. [107] It seems it would be inaccurate to maintain that there is nothing on the subject in the Gospels. An eminent American divine pointed out in print, as regards the advice against laying up treasure where moth and rust doth corrupt, that "moth and rust do not get at Mr. Rockefeller's oil wells, and thieves do not often break through and steal a railway. What Jesus condemned was hoarding wealth." See Upton Sinclair, The Profits of Religion, 1918, p. 175. [108] Page 237. [109] Page 218.