Britain and the Sino-Japanese War Japan is engaged in a
financial as well as a military conflict in China. The assimilation of the North China currency to the yen is a decisive blow to foreign interests, and its result will be to concentrate foreign trade in Japanese hands. In Southern and Central China, however, which are of greater concern to the Western Powers, Great Britain has taken an important step towards protecting her trade by the estab- lishment of the LI o,000,000 fund, which will be used to stabilise the Chinese currency at the present rate of exchange. This step has aroused not unnatural resentment in Tokyo ; more especially because it shows that Britain's hostility to Japan's policy in China is unabated and because it throws doubt on the finality and on the extent of Japan's military successes. The course of the war is such as to justify that doubt. Guerilla fighting is widespread and extends to the edges of Shanghai and Peking ; the great Japanese offensive on the Han River, west of Hankow, has been decisively repulsed ; the limited area in which the new North China currency will run shows how restricted is Japanese control. The British assistance now offered to China throws a curious light on the war ; Japan is now opposed by Chiang Kai-shek and the Chinese Communists, supported by the Soviet Union and Great Britain, and it is interesting to speculate how this paradoxical combination will develop. * * * *
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