1. INDUSTRIAL SHANGHAI VS. INTERIOR CHINA-part three

The tragedy of Shanghai industry is that it does nothing to improve the economy of the interior. Shanghai is actually a foreign city. Only 20% to 25% of the raw cotton in 1940 was supplied by Chinese farmers, and this came from Japanese territory. During the first five months of 1940 Shanghai imported US$24,000,000" worth of cotton (101,428 tons) from the United States, India, Egypt and Africa.

During January-May, 1940, Shanghai exports of cotton yarn and piece goods averaged US $2,000,000 monthly, one-third being yam and two-thirds piece goods. Half the piece goods and 65% of the yarn was marketed in the Asiatic parts of the British Empire. British India, the Netherlands East Indies, Siam and the Philippines are the best customers outside the British Empire.

Shanghai accounted for over half of all the foreign commerce of China, and only 1/5th of the city's trade was produced from, and goods sent to, the interior. Of China's total imports in 1939 valued at Gold Customs Units 539,000,000 (as compared with GU 386,000,000 for 1938), the Japanese Empire supplied 34%--in spite of the great quantities of raw cotton brought from elsewhere and the competitive textile boom in Shanghai. The United States supplied 16%. In 1939 raw cotton was imported from abroad to the value of GU 69,700,000, whereas in 1938, also a year of heaw imoorts, the figure 5,500,000.

 The abnormal and unhealthy condition in this fantastic city of Shanghai can hardly be described. The price level rose to more than four times the pre-war figure, and the real wages of labor dropped over half. Rice riots and strikes  resulted, while industry was reaping huge profits. Due to the uncertain status of the city, investment is largely speculative--it seeks inordinate short-term profits hoping to withdraw when danger threatens. In 1938, for example, one of the Chinese Sung Sing cotton mills in Shanghai made a profit of $9,000,000, unprecedented in history. Ewo, the big British cotton mill, made a profit of $8,000,000, while all the cotton mills in the Settlement made profits of over a million. Since the beginning of 1938 net profit on a bale of yam manufactured has been from $50 to $150--this in spite of the low exchange of  Chinese currency for purchase of raw cotton abroad.

 How does this compare with the situation in Free China? According to the above tables, about nine Chinese mills have been in continuous operation outside of Shanghai, presumably in Free China, and about six moved their machinery to Free China. These tables may not be quite complete, as the Ministry of Economics reported that 80 weaving and spinning units were transported inland, though probably most of these were small factories not counted among the big mills, and some are for silk, ramie, etc.

No separate figures on textile factories were available when these figures were given out.

As compared with 100 big cotton mills in Shanghai and Japanese-occupied territory, 71 being in the hands of the Japanese, Free China has probably about a dozen big mills operating and three times as many smaller factories, aside from the Industrial Cooperatives who have about 600 wool and cotton weaving societies, and employ in addition about 35,000 men and women spinners and weavers, with over 50,000 spindles and looms. In addition domestic industry is being revived.