New Bet South

There was more evidence than newspaper talk and statesmen's declarations last week that Japan was taking some of its military blue chips out of China and staking them against the game farther south. Shanghai reported that Japan was already withdrawing troops from inner China toward the seacoast. Shanghai prophets predicted that Japan would concentrate its forces in North China and along a southward line following the rail way from Nanking to Shanghai, Hangchow and Canton -- thus controlling China's great seaport sources of trade and revenue.

Such a policy would allow Japan to pull many troops out of China altogether and push them toward the coveted Indies. Ja pan's southward push continued hard on the economic front, with the signing in Tokyo of a trade treaty with French Indo-China. It clearly suggested Japan's idea of a New Order in Asia.

On a most-favored-nation basis, the treaty called for reciprocal tariff reductions and shipping concessions. It gave Japan the right to join Indo-China in exploiting her undeveloped resources (formerly a French monopoly), provided for the building of Japanese schools in Indo-China.

Recently Indo-China has had an export balance in trade with Japan of as high as 13-to-1. The new treaty seemed likely to increase Japan's annual imports from 26,000,000 yen (1939) to 70,000,000 yen (including coal, corn, iron ore, zinc, tin ore, in return for which Japan would sell textiles, porcelain, manufactured goods). In addition, Japan will be allowed to defer payments for one year on the large supplies of rice she expects to buy. Rubber, which Japan sorely needs, was not specifically mentioned--neither was it specifically excluded.

In Tokyo three days later a Thailand-French Indo-China peace treaty was signed, setting a new boundary between the two, providing that Thailand pay Indo-China 6,000,000 piasters (about $1,395,000) for 25,000 square miles of ceded territory, naming Japan as mediator in further disputes.

From the nervous Netherlands East Indies last week it was rumored that trade negotiations with Japan were near breakup. Thin, chilly Dutch Minister of Foreign Affairs Eelco Nicolaas van Kleffens pointedly warned by radio that The Netherlands East Indies would fight whoever attacked them. "We wish to live in peace," he said, "but not at any price." With enthusiasm he quoted Air Chief Marshal Sir Robert Brooke-Popham, Britain's Far Eastern Commander in Chief, to the effect that any attack across a line drawn from Singapore through the East Indies to Australia should be regarded as an attack against the entire line.

The British-American companies who refine Government-owned Netherlands East Indies oil finally renewed their contracts with Japan, following a, November agreement which raised Japanese purchases from a basis of 494,000 to 1,800,-ooo tons a year. In case of war the East Indies has the right to allocate such oil. Last week it was still fueling the Japanese Army and Navy.

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