China The stage is set for war in China, though
war may still be avoided. The insurgent Government in Canton, after requesting the Powers to withdraw their recognition from Nanking, last week seized the Customs, of which, however, it is their declared intention to retain only the surplus while continuing to set aside the sums required to meet foreign loan commitments ; for it would not do to alienate the Powers. Chiang Kai-shek has mobilised troops against Canton, but his attitude remains rather conciliatory. He has taken the field in person, but against the Communist banditry, and not against the Cantonese ; the military leaders in the South share to -a great extent his enmity to the Reds. So far the cam- paign of suppression is not making much progress against an elusive enemy who is no more unpopular in the country- side than are the military themselves. Chang ITsueh- Hang is controlling the troops in the North with as firm a hand as his illness will allow him. There is much uneasiness in China, reflected in a heavy drop in domestic bonds.
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