NATIONAL GOVERNMENT OF CHINA IN ACTION
BOARD OF INFORMATION
NEW era has been introduced in the history of East Asia when the Sino-Japanese Basic Treaty was signed at Nanking on November 30, 1940, by General Nobukuyi Abe1, Japanese Ambassador to China and Mr. Wang Ching-wei, President of the Chinese Executive Yuan. On the same day, the Joint Declaration by the Governments of Japan, Manchoukuo and China was signed by the plenipotentiaries of the three countries, thereby clarifying a nebulous relationship between the latter two countries. The three countries have thus entered into a relationship of close collaboration for the avowed purpose of establishing a new order in East Asia. By weathering storms for nearly a year, the new Government of China has achieved a considerable success both in domestic and foreign affairs. Of the diplomatic achievements of the new Government the most important is the adjustment of Sino-Japanese relations—a task accomplished by the conclusion of the above-mentioned Treaty two years after Mr. Wang Ching-wei left Chungking, in December, 1938, or 18 months after the appointment of General Abe as Japanese Ambassador on April 1, 1940.
The Konoe Principles
The Sino-Japanese Basic Treaty is no less than the embodiment of the three principles2 enunciated by Prince Konoe on December 22, 1938, as may be inferred from its preamble which reads: "Being desirous that these two countries should respect their inherent characteristics and closely cooperate with each other as good neighbours under the common ideal of establishing a new order in East Asia on an ethical basis, thereby a permanent peace in East Asia, and with this as a nucleus contributing toward the peace of the world in general." And for that purpose Article 1 of the Treaty stipulates that "the Governments of the two countries shall, in order to maintain permanently good neighbourly and admirable relations between the two countries, mutually respect their sovereignty and territories and at the same time take mutually helpful and friendly measures, political,
economic, cultural and otherwise."
Especially noteworthy is the ban placed on any future campaign of anti-Japanese education, propaganda and boycott, which had been intermittently staged on and off in China since 1918 and greatly aggravated since the inauguration of the old National Government. Needless to add, this campaign had put serious obstacles in the way of amicable relations between the two countries, and eventually led to the outbreak of the present hostilities. This aspect of the problem is referred to in the Treaty as follows: "The Governments of the two countries agree to eliminate and to prohibit in the future, such measures and causes as are destructive of amity between the two countries in politics, diplomacy, education, propaganda, trade and commerce, and other spheres." Doubtless, this stipulation has opened the way for the realization of amicable relations between Japan and China.
As regards the common defence against the Communist activities, the following provision is laid down: "The Governments of the two countries agree to engage in joint defence against all destructive operations of a Communistic nature that jeopardize the peace and welfare of their countries," and "Japan shall, in order to carry out the defence against Communistic activities through collaboration of the two countries, station required forces in special areas of Mengchiang and of North China for the necessary duration, in accordance with the terms to be agreed upon separately." Entrenched as it is in the regions covering the provinces of Kansu, Shensi, and Ninghsia, the Chinese Communists extended its guerilla warfare from Inner Mongolia to the provinces of Shansi, Hopei, and Shantung. With the 8th Route Army as pivotal centre, guerilla units of 1,000,000 strong have been active all over Mongolia and North China—a blight against which such a counter-measure of common defence, as the provision states, is only natural and reasonable.
Economic cooperation is also provided for in the Treaty, with the idea of maintaining close, friendly cooperation between the two countries, avoiding encroachment upon their respective economic sovereignties. Article 6, paragraph 1 of the Treaty reads: "The Governments of the two countries shall effect close economic cooperation between the two countries in conformance with the spirit of complementing each other and ministering to each other's needs, as well as in accordance with the principles of equality and reciprocity," and paragraph 4 stipulates: "The Governments of the two countries shall take all necessary measures to promote trade in general and to facilitate and rationalize the demand and supply of goods between the two countries. . ." These provisions account for the
joint development of defence resources of China, with reference particularly to Mongolia and North China, and also for the promotion of trade and communications in the region of the Yangtze valley.
On the other hand, the Joint Declaration by the Governments of Japan, Manchoukuo and China has resulted in the recognition of Manchoukuo by China,3 thereby strengthening the foundation for the establishment of the sphere of co-prosperity in this part of the world.
Movement for Restoring Sovereignty
In the meantime, a marked progress has been made of the movement for restoration of the sovereign rights, which the new National Government initiated. The first step is the repudiation of the lease of Liukungtao. It is recalled, in this connection, that Great Britain coaxed the Chungking régime to renew for 10 more years the expired lease of the island, which right that country had reserved at the time of the retrocession of Weihaiwei. However, the new National Government refused to sanction such an agreement between them and, on September 30, effected the rendition of the island. Then, the Second District Court in the French Concession in Shanghai was taken over by the Nanking Government early in November. As is well known, some remnants of the Chiang régime, such as a court of justice, survived in the International Settlement of Shanghai. The fact of the matter is that Chinese malefactors in the Settlement might be arrested by agents of the Municipal Council, which is under the British domination, and be brought into its court for trial. The presence in the Settlement of judiciary officials appointed by the Chiang régime would only serve to pervert the Chinese attitude toward the Wang Ching-wei régime. The new National Government, therefore, had made the necessary preparations to appoint its own judiciary officials; but the negotiations with the authorities of the French Concession had fallen through. Recently, however, a satisfactory arrangement has been made between the parties concerned, which may be considered a diplomatic success for the new Government. Further, upon the entry of Italy into the European War, the new Government issued in the name of the Foreign Minister, Dr. Chu Min-hsu4, a statement demanding the withdrawal of the belligerent troops and warships in China. The consequence was the wholesale
evacuation of the British troops on August 10, 1940. Moreover, a pledge has been made by Japan through the instrument of the Basic Treaty for the abolition of the extraterritoriality and rendition of the concessions, which formed the central issues of the drive for the abolition of unequal treaties, and which China had demanded from time to time, viz. at the Versailles Conference as well as the Washington Conference of 1921. Article 7 of the Treaty referred to stipulates as follows: "According to the development of the new relations between Japan and China under the present Treaty, the Government of Japan shall abolish extraterritorial rights possessed by Japan in China and render to the latter its concessions; and the Government of China shall open its territory for domicile and business of Japanese subjects." In accordance with this provision, extraterritorial rights will be abolished and concessions returned to China; and the domicile of Japanese in the interior will be recognized. It is recalled that no Japanese subject has enjoyed, in the past, the rights of residence and of business, except in the settlements and treaty ports; and he has had to carry his own "huchao" passport when travelling in the interior. Hereafter, the Government at Nanking, will carry out gradually negotiations with other countries for the full restoration of the sovereignty of China.
Another important move forward in the political life of new China was the election of Mr. Wang Ching-wei to the Presidency of the Republic of China, a post which remained long vacant. At the sessions of the Executive Yuan and the Central Political Council held on November 28 a paragraph in Article 11 of the old Organic Law of the National Government, which read "The President shall be held in no way accountable in political affairs," and also the whole of Article 12, which read "The President is not permitted to assume any other office concurrently, were rescinded. And at the same sessions they unanimously adopted the proposal for electing Mr. Wang Ching-wei, then Deputy Chairman, the new President of the Republic of China, thereby establishing the centre of political organization of the country.
Constitutional Government in Preparation
The most pressing issue of Chinese internal politics today is to enforce constitutional government. The fact is that the Kuomintang Party in its development has passed from the military into the tutelage and into the constitutional phase. In anticipation of a successful execution of the national revolution, the Chungking régime had drawn up and published the draft constitution. It had expected to
call the National Convention on November 13, 1940, to adopt the constitution. However, under the pretext of a lack of preparation due to the emergency, the convocation of the Convention was indefinitely postponed. True, General Chiang Kai-shek and his followers retained the controlling power in the Chungking Government, seeking to grasp a full dictatorship. In the face of the Sino-Japanese conflict, they endeavoured to enlist the cooperation of all factions under the aegis of the Kuomintang Party. The first revolt ever attempted against this plan came from the Chinese Communist Party, which insisted, upon conducting joint resistance against Japan on equal footing with the other factions. In its ardent desire to gain political influence, the Communists demanded the convocation of the National Convention and the establishment of the constitution. Thus the adoption of the constitution became the central issue in Chinese politics. The Kuomintang was forced to temporize and dodge the issue by setting up a National Political Council, a machinery devised to suit itself. When it postponed the call of the National Convention, it also tried a makeshift by increasing the number of Council members, or by extending the power of the Council to counteract such moves. The new Government repudiated, from the outset, party government and dictatorship as espoused by the old Kuomintang and proceeded to advance the cause of constitutional government by the cooperation of all parties and factions.
At the 6th plenary session held in August, 1939, a proclamation was issued by the Nanking Government "to convene the National Convention, draw up the constitution and to carry out constitutional government within the shortest time." Again on March 30, 1940—a day fixed for the return of the new Government to Nanking—it was announced that the major policy of the new Government was to bring about peace and effect constitutional government. In the basic policies formulated by that Government, also, the same measures were prominently included. On July 29th, the Commission for the Execution of Constitutional Government was set up under the leadership of Mr. Wang Ching-wei and composed of 27 members elected from among Government and private leaders. The Commission is divided into 4 sections, the first dealing with the outline of the draft constitution and the National Convention, etc.; the second with the local government system; the third with national economy; and the fourth with education. It is expected that the draft constitution passed in 1934 by the Legislative Yuan of the former National Government will be adopted as a basis for discussion. Such a forward step will prove a serious blow to the Chungking régime, which is struggling to stem the rising tide of the
constitutional movement.
As for the improvement of administration, it is noted that the new Government has embarked upon the reform of the local administration structure. The reorganization of the five Provinces of Kiangsu, Chekiang, Anhwei and Hupei and of the three special Municipalities of Canton, Hankow and Nanking was completed early in October 1940. The system of Provincial Governor has been superceded by that of Provincial Chairman placed under the direct control of the Central Government, thereby bringing to an end the past trend toward feudalism.
Financial and Banking Reorganization
The finances of the new Government have an important bearing upon its future development. The new régime has taken firm hold on three main sources of revenue, such as customs revenue, salt gabelle and consolidated taxes thus maintaining a position of enormous advantage over the Chungking régime. Sound as they have been, the finances of the new Government still have to undergo some changes owing to the current wartime situation, which has caused a considerable decrease in customs revenue and consolidated taxes.
The Nanking régime, therefore, in its forward move along various lines, was forced to expedite its financial reorganization. On the one hand, it had to do away with the extortions and miscellaneous taxes of the past in order to stabilize the life of the people and, on the other, to carry out retrenchment in Government expenditures. It was found in this connection, that independence in respect of the right of taxation must be realized in order to effect readjustment of national taxes. With this in view, Article 1 of the Agreed Terms of Understanding concerning the Annexed Protocol of the Basic Treaty has stipulated that "with regard to those various organs for collecting taxes in China, which are at present in a special condition owing to military necessity, an adjustment shall be made promptly in accordance with the spirit of respecting the financial independence of China." As the new Government is located in the rich section of China, there is every reason to believe that the financial adjustment of the country will bring about a steady and sound development of its finances.
An adjustment of the financial machinery is of vital importance to the economic reconstruction of China. Yet, it is indeed a very difficult task. It had to proceed with the utmost caution. As a rule, the urban concentration of financing operation or the preference of investment in Government bonds, practised in the past, has been replaced by the policy of localized financing. With a view to rehabilitating
rural life and to developing commerce and industry, an attempt has been made to reorganize provincial and city banks as well as cooperatives. At the end of August, 1940, the Regulations governing the Provincial and City Banks were issued, thereby establishing banking institutions in every Province and city, through which institutions local reconstruction will be facilitated and the aid to agricultural and industrial enterprises carried out.
Currency unification is one of the most stupendous tasks allotted to the new Government. Needless to add, the control of provincial and city banks as well as agricultural, commercial and industrial banks through the instrumentality of a central financial organ is indispensable. The most important measure along this line is to work out some means of dealing with the old fapi, which is still in circulation under the financial support of Britain and America, as well as of unifying the monetary system of North and Central China. For this purpose the Central Bank of China was established in Nanking on December 21, 1940.
Economic Rehabilitation and Educational Reform
A glance at the economic conditions in China will reveal the fact that with the extension of hostilities to Shanghai, the bulk of industries in and round the city, which constituted the major part of China's industry, was completely lost; the rest being transferred to Chungking and other interior cities. The result was the virtual collapse of new industries arisen in recent years. But General Toshizo Nishio, the Commander-in-Chief of the Japanese Expeditionary Forces in China, made declarations for the restoration of the Chinese factories in the custody of the Japanese army. Accordingly, in the middle of October, 9 factories in Canton, inclusive of cotton mills, soda, fertilizer plants, were returned, and 13 factories in Central China turned over to the Chinese. There are a large number of other plants under negotiations between the two countries. Article 2 of the Agreed Terms of Understanding refers to this matter. It says: "With regard to those industrial, mining and commercial establishments under governmental or private management which are at present controlled by Japanese forces, the necessary measures shall be taken for their prompt transfer to Chinese management in a rational manner, with the exception of those which are of enemy character or under special circumstances of unavoidable character, including military necessity."
Further, the funds remaining idle in Shanghai amount to some 5 or 6 billion Yuan, including those making flight from Hongkong. How
to turn them to account is a challenging question, the solution of which must be reached by the consultation of the Nanking Government with Japan.
The supply of food is another grave problem confronting the new Government. The price of rice has greatly arisen, owing partly to the curtailment of production caused by the hostilities and partly to the dislocation of transportation and distribution. The rice formerly valued at about 10 Yuan per picul has now risen to 70 Yuan. The new Government has disbursed 1,000,000 yen from the special fund of the Treasury for the relief of the suffering people and organized in November the Foodstuffs Control Commission. The three Provinces of Kiangsu, Chekiang and Anhwei and the two Municipalities of Nanking and Shanghai were divided into 7 districts and 21 sub-districts for the purpose of regulating the demand and supply of rice, of maintaining an equilibrium in its price, and of purchasing rice for Government custody, and of controlling rice dealers.
The restoration of educational work is also under way. On October 1, the National Central University was reopened. The institution is divided into nine Departments of Science, Engineering, Law, Literature, Commerce, Education, Agriculture, Medicine and Pharmacology and four Special Departments, with the accommodation capacity for 9,000 male and female students.
After the lapse of less than a year the new Government has made a steady progress in its attempts to reconstruct the national life of China. With the recent conclusion of the Sino-Japanese Basic Treaty, that Government has formally been recognized and its future is full of promise, and is now fully prepared to take part in the establishment of the Greater East Asian sphere of common prosperity. Thus new China will certainly prove to be one of the vital factors in the construction of the new world order.
1 On December 7, 1940, General Abe was relieved of his duty as the ambassador to China and Mr. Kumataro Honda was appointed to succeed him.
2 See for reference the February, 1939, issue of Tokyo Gazette.
3 An exchange of diplomatic representatives has been recently made between the two countries.
4 He is now Chinese Ambassador at Tokyo.