"TARIFF autonomy for China is no longer an aspiration; it is a fact," said Dr. C. T. Wang, Foreign Minister of the National Government of China, in an interview on January 9, 1929. He further stated that the negotiation of new tariff agreements with the Powers had removed one important cause of dispute which for years has hindered the establishment of amicable relations. The much-discussed schedule was put into force on February 1, 1929. The day was proclaimed a holiday in Nanking and Shanghai. Demonstrations and parades were held in the flag-bedecked streets, volunteer speakers told those who would pause to listen what it was all about, and students distributed handbills explaining the significance of China's new relationship with other countries.

The tariff question has been a source of friction between Chinese and foreigners for many years. In the eighteenth and the early part of the nineteenth centuries the legal rates of duty were low; but the schedules were not published, and opportunity was thus offered for corruption in the administration. Irregularity and uncertainty developed a controversy so bitter that it ended finally in war between Great Britain and China.

In the treaty of Nanking which followed this conflict, in 1842, China was made to agree that her tariff duties should be at fixed rates, and the next year a tariff schedule of 5 percent ad valorem was adopted on both imports and exports. This remained the standard until the Washington Conference, although it was several times, by revision, brought up to an "effective 5 percent." In the Nine Power Treaty signed at Washington in 1922 it was agreed that the schedule should be revised, that a 2½ percent surtax and higher surtaxes on "luxuries" should be authorized and that a conference should be held in Peking to arrange the conditions and to consider the abolition of "likin" or transit taxes, which for years had been a source of irritation to Chinese and foreign traders alike. This conference was the last occasion that the foreign Powers have enjoyed to deal unitedly with China. The Chinese delegation, led by the present Foreign Minister, Dr. C. T. Wang, declared in the opening session that they would be content with nothing less than tariff autonomy, a question which it was beyond the scope of the conference to decide. China had, therefore, to be satisfied with an acceptance of this point "in principle." The conference failed to reach an agreement after several months of labor.

It will be interesting, perhaps, to consider the means employed by the Chinese under the leadership of C. T. Wang to gain the victory which in 1922 had seemed a forlorn hope indeed. Although many factors, including anti-foreign riots, boycotts, and a change of heart of some of the Powers, have had their share, China's success in breaking down the united front of the foreign nations has been her most powerful weapon. After the Boxer uprising in 1900, and the resulting protocol, the Powers who were signatory to that instrument always spoke with a united voice on all matters having to do with the tariff. The diplomatic corps at Peking maintained a formal organization and dealt with China through its doyen. This procedure continued until the Great War, when of course a distinct cleavage developed in the diplomatic ranks. At the end of the war China negotiated new treaties with Germany and Austria. They were no longer "Protocol Powers." Then a little later Russia dropped out of line, and became a vigorous proponent of every measure designed directly or indirectly to make less tenable the position of the other Powers. Meanwhile, with each passing year China's demands for autonomy became more insistent, and this despite great political disorganization and civil strife. This prolonged note of determination was punctuated by occasional outbursts of violence, and was sustained by a carefully exploited public opinion at home and abroad. It finally became necessary for the Powers to choose between the two apparent evils of having increasingly bad relations with China, or injuring at least temporarily the structure of their business relations with her. The latter course was followed, and on July 25, 1928, the United States led the way by formally recognizing China's right to fix her own tariff rates. It is held in many quarters that in thus acting alone the United States gave the coup de grace to the already badly battered unity of the diplomatic corps at Peking.

The American treaty, which has since been ratified by the Senate, contained the usual "most favored nation" clause, and it was believed by some that our action was but a gesture to gain a preferred position in China, for it was little expected that the other Powers would take similar action. But the American lead was quickly followed. China's announcement that a new tariff schedule was to be applied on February 1, 1929, doubtless provided a further urge, for no single Power desired the task of resisting alone. Japan has not, at the time of writing, signed a new tariff treaty, although it is understood that she agrees to tariff autonomy "in principle."

The new schedule is considered on the whole to be moderate. The list covers 718 items divided into 34 categories. The rate on imports varies from 7½ to 27½ percent ad valorem, with an excise of 32½ percent on cigars and cigarettes. The only items on the free list are cereals and flour, and books, maps and periodicals. The rates are considered only provisional, and will be given a year's trial. The statement of President Chang Kai-shek that they will be further increased at the end of that period seems to indicate that the trial is not an effort to arrive at a schedule which will be most beneficial to China's trade, but that the present schedule represents all that China may expect to collect today without serious trouble with other countries.

It appears that American trade will carry a large share of the burden of the increased rate. The old rate, it will be recalled, was a uniform 5 percent, with a surtax of 2½ percent. More than 80 percent of China's kerosene imports are of American origin, and the bulk of rolled tobacco also comes from this country. The following table will show the new rate which applies to the five principal items of our exports to China:

Percent of total New
Article U. S. exports Tariff
to China Rate
Kerosene 33.8 31%
Tobacco Products 21.7 40%*
Cereals 16.2 Free
Metals 7.4 10%
Machinery 3.1 10%
  * Including an excise of 32½ percent.

The new duties have, of course, immediately been added to the cost of all imported articles, and this will doubtless cause a sharp rise in the cost of living, particularly in the larger port cities. The necessary adjustment in wages will as usual lag, and hardship can be anticipated in some quarters. But an examination of the schedule shows that this burden will fall on the Chinese who are most able to bear it, and on the foreign residents in China. The fact that cereals, the principal article of consumption of the toiling masses, are duty free, will be a distinct benefit, particularly in view of the present wide-spread famine. The ordinary Chinese do not use foreign products to any extent, and the well-to-do can probably afford the difference. The foreigner who must live in western style and who imports a large proportion of his food, most of his clothing, and practically all of his equipment, will need to make the largest adjustment.

The Nationalist Government has agreed to abolish "likin," the vexatious internal tax on goods in transit. Further, it is reported to have made agreements with several large foreign companies that all charges will be collected at the ports and that should additional taxes be exacted in the interior, these will be remitted by the central government. There is strong doubt whether the Nanking régime has yet established sufficient control over the petty war lords in the hinterland to be able to curb their predatory instincts.

Whether or not China will use her new-found power wisely is yet to be seen. The government's effort to disprove the argument which foreign opponents to autonomy have so freely voiced -- that it will act without due regard to economic laws and for the principal purpose of obtaining funds for the support of unscrupulous factions -- may provide the necessary urge to apply the new prerogative with temperance and along lines which will not be too great a burden on the structure of China's foreign trade. Foreign business men who have opposed autonomy will be glad to be proved wrong; and the many well-wishers for the Nationalist cause will rejoice if the new responsibilities which China's leaders have undertaken are discharged with fidelity to the best interests of the country.

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  • WALTER H. MALLORY, Executive Director of the Council on Foreign Relations; author of "China: Land of Famine."
  • More By Walter H. Mallory