Institute of Pacific Relations

Smugglers Busy on China CoastAuthor(s): M. S. F.Source: Far Eastern Survey, Vol. 4, No. 19 (Sep. 25, 1935), pp. 154-155Published by: Institute of Pacific RelationsStable URL: http://www.jstor.org/stable/3022458 .

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decrease its competitive power in world markets. It is probably, moreover, that Chinese cotton on account of its lower quality would compete with Indian even more than with American cotton in the Japanese mar? ket. Yet any diminution in Japanese cotton imports from India would doubtless be met by decreased Indian purchases of Japanese textiles, for which there is some doubt that the Chinese market could com-

pensate.

According to the Chinese Cotton Statistics Associ?

ation, there has been since 1930 a notable increase in cotton production in China, the acreage last year hav?

ing been 6.8 million against an average of 4.4 million for the previous decade, and the crop 3.1 million bales (478 lbs.), against 2.1 million in the previous decade. Estimates for this year show a decrease of

18% in acreage and 14% in output on account of un- favorable weather. Chinese cotton statistics must be used with great caution, however, on account of the difficulties in compilation.

The main centers of cotton production are, first, those on the Yangtsze River, in Kiangsu and Hupeh, accounting in 1934 for 40% of the total acreage, and

32% of the total output; and, secondly, three more or less distinct areas in North China?(1) along the Yellow River in parts of Shansi, Honan and Shensi, (2) in Hopeh, and (3) in Shantung?accounting for

51% of total acreage and 61% of total output. Yields are somewhat higher in the north, and it is in that

region that the greater part of the recent expansion has taken place. Most of the cotton-growing regions in north China are situated in the area now under

increasing Japanese influence. Chinese cotton is largely used in native cloth, in

padding native garments, and for mixing with wool.

Very little of it is suitable for mill spinning, and only an insignificant proportion is comparable with the

bulk of American cotton?that is, can be used in

spinning the higher counts of yarn. Japanese imports from China, which have declined by over 50% since

1931, formed only 2.4% of total cotton imports in

1934, and only 0.7% of the total used in spinning. There has been some shift to American-type seeds in

recent years. A Japanese source states that some 30% of the cotton now raised in Hopeh, and 60% in Shan-

tung, is of American type.

Experts are of the opinion that present yields can be increased considerably by the use of more scien- tific methods, but expansion of acreage would have to be mainly at the expense of other crops since there is

little or no unused land in those parts of China suit-

able for cotton-growing. In the absence of com?

pulsory measures, expansion is conditioned by the relative prices of cotton and other crops. However, the market price in Shanghai is by no means an index

of the return to the peasant producer, since it is

augmented by high transportation costs and fees to an interminable line of middlemen. At present China has an export tax on cotton, removal of which would

doubtless be essential to the success of the Japanese scheme. There is also an import duty, increased last

year to approximately 2 cents (U. S.) a pound. Pro-

tests against this action came from owners of Japanese cotton mills in China, who, incidentally, would pro? vide an important and possibly increasing market for

Chinese cotton.

Should Japan decide to elevate the stimulation of

cotton production in China to the status of national

necessity, a non-economic factor would be introduced

which would make it impossible to forecast the pos? sible repercussions for China, Japan and the United

States. As yet, the matter seems to be confined for

the most part to the realm of discussion. M. S. F.

SMUGGLERS BUSY ON CHINA COAST

The problem of the smuggling of foreign goods into China has demanded serious attention from the gov? ernment in recent years. Increases in import duties sub-

sequent to the recovery of tariff autonomy by China in 1928 offered attractive possibilities to illicit traders, and the government was ill-equipped to suppress the

greatly enlarged smuggling trade which soon grew up. At first smugglers were especially active on the south China coast, goods being run in from Formosa and

Hongkong in small boats. Later the Japanese occu?

pation of Manchuria gave rise to extensive operations both by sea from Dairen to the Shantung coast and across the land frontier along the Great Wall. The severe impoverishment of the Chinese population has contributed an added incentive for the supplying of

goods at lower prices than could be offered by legiti- mate traders.

Rayon and sugar, both articles of comparatively high value in comparison with their bulk and subject to high import duties, are the mainstay of the illegal trade. The specific duty on the lower grades of rayon works out to around 200% ad valorem, and that on

sugar, calculated on depression prices, runs as high as

250%. Kerosene and gasoline, matches, silk, woolen and cotton goods, ginseng, birds' nests, certain sea

products, and jewelry are also among those involved.

Many Japanese products, especially cotton goods, have been brought in by irregular channels in order to elude the vigilance of boycott associations as well as that of the customs authorities.

Alarmed by the serious losses of revenue occasioned

by smuggling, the government has taken measures to

remedy the situation. A Customs Preventive Secre- tariat was inaugurated in 1931 and has since been

154 ?

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building up an organization for the suppression of

smuggling. Its fleet contained last year 26 seagoing units as well as many smaller craft. Establishment of

many new coast and frontier stations, division of the coast into patrols, promulgation of more stringent regu- lations (including the establishment of a twelve-mile limit in 1934) and other measures have enabled the authorities to deal more vigorously with the problem. Proceeds from fines and confiscations amounted to $7.9 millions (Chinese) in 1934, against $6.4 millions in

1933, $3.7 millions in 1932 and $2.7 millions in 1931.

Although these figures may be interpreted as indicat-

ing a growth of the smuggling trade, it is more prob? able that they represent increased vigilance on the

part of the customs patrols. Nevertheless, smuggling is by no means ended as is

evident from the customs report for 1934. In that

year nearly one third of the rayon and over one fourth of the sugar imports recorded consisted of confiscated

goods?and how much escaped confiscation is of course unknown. In the Chefoo district?to take what is

probably an extreme example?about one fifth of the

volume of imports and one third of the revenue there-

from came from intercepted cargoes. In the Lungkow district, also in north China, recorded rayon imports increased from 12,000 to 140,000 quintals from 1933 to

1934, and those of sugar from 4,000 to 16,000 quintals,

largely as a result of seizures. In the Bank of China's estimate of China's balance of international payments for 1934, an allowance of $154.5 millions (Chinese), or

15% of the recorded merchandise imports, is made for

proceeds of the smuggling trade.

Smuggling obviously affects the reliability of cus?

toms statistics as indices of total trade. It also means

severe losses in customs revenue and the general dis-

couragement of legitimate trade. It tends to defeat, furthermore, the efforts of the Chinese to encourage domestic industries, most of which are now hard

pressed from various directions. The authorities are

well aware of these evils and appear to be bending every effort towards the elimination of the illicit trade.

M. S. F.

SMALL INDUSTRIES AID TO DIVERSIFICATION IN P. I.

Increasing attention is being paid by Filipino lead? ers to the potentialities of household industries in the Islands. The Philippine economy in the past has been built upon agricultural exports. But the insecurity of such specialization has now been brought home by six

years of world depression and mounting restrictions in the American market. With commonwealth status in the offing, drastic economic readjustments appear in- evitable. It is obviously necessary to develop new

applications of productive resources if only to prevent a serious decline in the national income.

Such a move, however, also has positive aspects to recommend it. Increasing self-sufficiency offers the

hope of greater economic stability. Moreover it may lead to the exploitation of varied potentialities long latent in the Islands but neglected in favor of the

production of a few specialized crops. Many such

potentialities lie in the promotion of household and

workshop industries in which the surplus labor of the farm population is applied to a variety of raw mate? rials ready at hand.

The possibilities in the development of small indus?

try were surveyed recently by the Philippine Bureau of Commerce. Abundant raw materials, most of them

widely distributed, include the following: rattan, bam-

boo, coconut, nipa, wood, scrap iron, cotton, leather, clays, ticug, cassava, pandan, maguey, kapok, buri, hemp, abaca, shell, jusi and pina, nito, fruits and fish. From these a wide variety of articles of food, clothing, and household usage can be manufactured. Household

industries already exist on a considerable scale. It is

the opinion of Cornelio Balmaceda, Director of Com?

merce, however, that they can be greatly expanded through energetic promotion.

The labor for cottage industries is ready at hand. The population of the Islands is predominantly agra- rian, and farming, being seasonal in character, offers much idle time for subsidiary occupations. In a few

lines tariff protection against cheap Japanese manufac? tures may be a requisite. But the chief needs are for

leadership, organization, and credit. Producers' asso? ciations might be set up to standardize and improve products and to provide marketing services. Doubt- less outside capital would also be necessary, however, and this raises an important point. Experience shows that the direction of such industrial development and the distribution of its benefits are determined to a con? siderable degree by the nature of control over its finance.

The further development of small industry in the

Philippines would place limitations on agricultural occupations without displacing them as the chief source of Philippine income. At the same time it would not involve the costly and undesirable creation of

heavy industry on a large scale. In view of the im?

portant changes now pending in the status of the

Islands, it is encouraging to note that the Department of Agriculture and Commerce has recently undertaken

energetically to foster diversification in agricultural and semi-industrial pursuits. W. W. L.

? 155

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