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ADVANCE RELEASE -11- NB-2954 2. The Japanese Confiscated or destroyed the major Chinese Government assets and sources of revenue in occupied areas. 3. The blockading of China and the destruction or confiscation of factories and resources. 4. High forced expenditures, for army and army equipment necessary to fight the war. The analysis said: "It is true that prices today in China are 250 times higher than pre-war prices. I understand several countries in Europe are facing a similar problem. It is true that with more scientific and rigid control, prices might have increased 200 times instead of 250. In a large agricultural country, a country without a very efficient administrative machinery, with poor means of communication, it is quite impossible to have any elaborate price control. The Chinese Government, for example, could not afford an organization like the OPA with anything like an adequate staff to do the job, and I doubt whether it even had enough paper to print the necessary ration books." American sources point out that the inflation does complicate the entire production situation, as does the administrative pattern of China. The war is being financed with a highly inflated currency, but the currency is honored by the people as a basis of exchange. The rise of prices, sharp in the earliest days of the war, has tapered off somewhat in recent months. The index, for instance, was 441 times pre-war levels in Chungking as of the end of August, as contrasted with 440 at the end of July. A September statement from Chungking declares that prices of foods have declined in some areas. The rice crop this year is unusually good, according to the U.S. Bureau of Foreign Agricultural Relations. Some consumer manufacture is being planned, especially in cotton goods, and this also is expected to help. However China's economic problem is basically a war problem. Major relief cannot reasonably be expected before the opening of China's ports, and the clearing of the enemy from her soil. The greater part of China's industrial enterprises were concentrated about a few coastal cities such as Canton, Shanghai, Tientsin and Tsingtao. This was because trade with China and introduction of western business methods naturally focused on the treaty ports where communities, industries and transportation were built up before the extra-territorial system was abolished. This entire area is now occupied by the Japanese. The same thing is true of railways, highways and deep water routes of communication. What is now known as Free China was, at the outbreak of the war, mainly agricultural with very few factories. There was not in that area a single blast furnace, nor a coal mine that produced annually more than 100,000 tons. Thus the Japanese occupations has cost China both her factories and her resources, as well as the chief transport media. NATURAL RESOURCES A summary of China's natural resources and industrial capacity of Free China, as constituted on September 1, 1944, follows: Coal A large proportion of the production that amounted to 22,500,000 tons per year in 1937 was lost to China by enemy occupation soon after the outbreak of hostilities. Since that time, there has been a steady increase in the production of West China mines, both by private capital and by the Government. Exploitation of new mines, plus increased production in old mines, has replaced the resources taken over by the enemy. Present production is placed at between 9,000,000 and 10,000,000 tons a year. (over) X-37382
