NEWS OF THE WEEK
IChina, both sides are preparing for prolonged hostilities ; 1 on another page a correspondent emphasises Chiang Kai-shek's military losses and the difficulty of replacing them, yet the Marshal appears confident of his ability to continue his resistance. Indeed, he is reported to be preparing for a defence of Canton as determined as the defence of Shanghai, while Japan has been exploring the possibilities of an invasion through landing-parties at various points on the South China coast. Two Chinese victories are reported from Hankow, the first in Shantung, at Sunchitien, on the railway south of Tsinan, now encircled by the Japanese, the second on the borders of Shansi and Hopei provinces, where the famous 8th Route Army has been conducting a guerilla war. Pour encourager les mares, the Shantung war lord, Han Fu-chu, has been executed by the Chinese. Some conception of Japan's preparations may be obtained from the estimates which have been drafted in Tokyo. Japan is calculated to have spent L140,000,000 on the war since it began in July, and for the financial year beginning on April 1st the Army and Navy estimates amount to £233,000,000. She may intend to recoup herself for her expenses by discriminatory tariffs such as have been imposed by the Provisional Government in Peking, in flagrant violation of the principle of the open door in China. But her financial situation must steadily deteriorate.
