can be no necessity for the establishment of any purely foreign settlement again. Agricultural pursuits concern the fundamental means of existence of the people of a country; and according to the usual practice of all countries, no foreigners are permitted to engage in them. The vested rights of foreigners obtained through lawful processes under the German régime shall of course be respected but those obtained by force and compulsion during the period of Japanese military occupation and against law and treaties can in no wise be recognized. And again, although this same article in advocating the opening of cities and towns of Shantung as commercial ports agrees with China's intention and desire of developing commerce, the opening of such places should nevertheless be left to China's own judgment and selection in accordance with circumstances. As to the regulations governing the opening of such places, China will undoubtedly bear in mind the object of affording facilities to international trade and formulate them according to established precedents of self-opened ports and sees, therefore, no necessity in this matter for any previous negotiations.

(3) The joint operation of the Shantung Railway, that is, the Kiaochow-Tsinan Line, by China and Japan is objected to by the entire Chinese people. It is because in all countries there ought to be a unified system for railways, and joint operation destroys unity of railway management and impairs the rights of sovereignty; and, in view of the evils of the previous cases of joint operation and the impossibility of correcting them, China can now no longer recognize it as a matter of principle. The whole line of the Shantung Railway, together with the right of control and management thereof should be completely handed over to China; and after a just valuation of its capital and properties one-half of the whole value of the line not returned shall be purchased back by China within a fixed period. As to the mines appurtenant to the Shantung Railway which were already operated by the Germans, their plan of operation shall be fixed in accordance with the Chinese Mining Laws.

(5) With reference to the construction of the extension of the Shantung Railway, that is, the Tsinan-Shunteh and KiaochowHsuchow Lines, China will, as a matter of course, negotiate with international financial bodies. As to the Chefoo-Weihsien Railway, it is entirely a different case, and cannot be discussed in the same category.

(6) The Customs House at Tsintau was formerly situated in a leased territory, and the system of administration differed slightly from others. When the leased territory is restored, the Customs House thereat should be placed under the complete control and management of the Chinese Government and should not be different from the other Customs Houses in its system of administration.

(7) The extent of public properties is too wide to be limited only to that portion used for administrative purposes. The meaning of the statement in the Japanese memorandum that such

property will in principle be transferred to China, etc., rather lacks clearness. If it is the sincere wish of Japan to return all the public properties to China, she ought to hand over completely the various kinds of official, semi-official, municipal and other public properties and enterprises to China to be distributed, according to their nature and kind, to the administrations of the central and local authorities, to the municipal council and to the Chinese Customs, etc., as the case may be. Regarding this there is no necessity for any special arrangement, and

(9) The question of the withdrawal of Japanese troops from the Province of Shantung bears no connection with the restoration of the Kiaochow Leased Territory and the Chinese Government has repeatedly urged for its actual execution. It is only proper that the entire Japanese Army of Occupation should now be immediately evacuated. As to the policing of the Kiaochow-Tsinan Railway, China, will immediately send a suitable force of Chinese Railway Police to take over the duties. The foregoing statement gives only the main points which are unsatisfactory and concerning which the Chinese Government feels it absolutely necessary to make a clear declaration. Further, in view of the marked difference of opinion between the two countries, and apprehending that the case might long remain unsettled, China reserves to herself the freedom of seeking a solution of the question whenever a suitable occasion presents itself.

PART VI

A FOREIGN POLICY FOR CHINA

XXVIII. POLICY OF PRESERVATION.

XXIX. POLICY OF RECOVERY.

XXX. POLICY OF THE GOLDEN RULE.

XXXI. POLICY OF WORLD WELFARE.

XXXII. A POLICY TOWARD JAPAN IN PARTICULAR.