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Mingchien Joshua Bau.

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that there exist in China to-day only three spheres, — the
French sphere in the Three Provinces bordering on Ton-
kin, the British sphere in the Yangtze Valley and Tibet,
and the Japanese sphere in Fukien, Shantung, South Man-
churia and Eastern Inner Mongolia, and possibly also
in North Manchuria and Outer Mongolia. A report has
been made, which, however, has not yet been substan-



SPHERES OF INFLUENCE OR INTEREST 339

tiated, that these three Powers entered into a tripartite
agreement at the Paris Peace Conference as to their re-
spective spheres of influence in the v iole of Asia. Those
regions which concern China are as follows :

British sphere : Tibet, Szechuan, the Kwangtung region

forming the littoral of Canton and equal commercial

rights in the Yangtze Valley ;
French sphere: Yunnan, Kwangsi, Kweichou and

Western Kwangtung ;
Japanese sphere: All of China, except the regions

above mentioned, and Mongolia. 8A

Whatever may be said as to the authenticity of the report,
the fact remains that there are to-day existing in China
only three spheres of interest — those of France, Great
Britain and Japan, — and that Japan occupies the most
important, if not the lion's share, of these spheres.

Having considered the origin and the recent develop-
ments, we now come to the characteristic features of the
spheres of interest in China. The first feature is the
strategic base, such as Kiaochow, Port Arthur. Kwang-
chowwan and Waihaiwai. While appertaining mainly
to the leased territories, they serve, nevertheless, as
points d'appui for the entire spheres of interest which
are generally adjacent thereto. That is to say. they in-
come the bases of action, alike as the bases of the eco-
nomic exploitation which must be carried on within the
spheres and as the bases of military defense for their
nation.

I he second feature is the railway. In order to ex-
ploit the natural resources and to dominate the economic
life of the spheres, the Powers interested projected rail-
ways into them. Germany constructed the Tsin
Tsinan Railway, which was seized by Japan in 1914;
a built the Chiro tern Railway, the southern

portion of which from Changchun to Dalny and Port



340 IMPAIRMENTS OF SOVEREIGNTY

Arthur was transferred to Japan in consequence of the
Russo-Japanese War in 1905; France constructed the
Tongkin-Yunnanfu line, and Great Britain built the
Shanghai-Nanking, the Shanghai-Hangchow-Ningpo and
anton-Kowloon railways. The distinction must be
pointed out, however, that while the other Powers
adopted a more or less exclusive policy, Great Britain
has, on several occasions, shared the railway concessions
in the Yangtze Valley with the other Powers, the
Tientsin-Pukow Railway with Germany, the Pukow-
Smyang with France, and the Hukuang with France,
Germany and the United States.

The third feature is the claim or right of priority or
first option in loans and concessions. Expressly or tacitly,
the Powers claiming spheres of influence assert their
prior rights, particularly with respect to railways and
mines within their respective spheres. In the Kiaochovv
lease convention this was stipulated, besides the privi-
lege of mining rights within ten miles of the Tsingtao-
Tsinan Railway. 7

"If within the Province of Shantung any matters are
undertaken for which foreign assistance, whether in per-
sonnel, or in capital, or in material, is invited, China
agrees that the German merchants concerned shall first
be asked whether they wish to undertake the works and
provide the materials. In case the German merchants
do not wish to undertake the said works and provide the
materials, then as a matter of fairness China will be free
to make such other arrangements as suit her conven-
ience." 8

This right of first option is now inherited by Japan by
virtue of Article 156 of the Treaty of Peace with Ger-
many of 1919, which reads :

"Germany renounces in favor of Japan all rights,
title and privileges, — particularly those concerning the



SPHERES OF INFLUENCE OR INTEREST 341

territory of Kiaochow, railways, mines and submarine
cables, — which she acquired in virtue of the Treaty con-
cluded by her with China on March 6, 1898, and of all
other arrangements relative to the Province of Shantung."

On September 26, 1914,° France received a pledge from
the Chinese Foreign Office giving preference to French
nationals in railway and mining enterprises in the Prov-
ince of Kwangsi. In an exchange of notes annexed to
the Treaties of May 25, 1915, 10 Japan obtained first option
in railway loans in South Manchuria and Eastern Inner
Mongolia. In the Treaty with Outer Mongolia of Sep-
tember 30, 1914, 11 Russia obligated her not to grant any
railway concessions without first consulting Russia.

The fourth feature leading to spheres of influence is
the declaration of non-alienation. Practically in all re-
gions, the Powers interested made China declare that she
would not alienate in any way the regions in which they
were interested. Thus, France obtained the declaration
of non-alienation regarding the Island of Hainan on
March 15, 1897, 12 and of the provinces bordering on Ton-
kin on April 10, 1898. 13 Great Britain procured a simi-
lar declaration respecting the Island of Chusan, 14 and
Munglem and Kiang Hung. 1 '' She also received the same
pledge regarding the Yangtze Valley:

"The Vaincn have to observe that the Yangtze region
is of the greatest importance as concerning the who!
sition (or interests) of China, and it is out of the ques-
tion that a territory (in it) should be mortgaged, I< I,

or ceded to another 1 ower." " ;

She obtained from Tibet through the Treaty of Septem-
ber 7, L904, 11 a pledge thai British consent must first
be obtained before making territorial concei sions to other
foreign Powers (Art. 9a), which was subsequently rec-
ognized by China in the Treaty of April 27, 1906."

In the tripartite agreement he! ween Russia, China and



342 IMPAIRMENTS OF SOVEREIGNTY

Outer Mongolia, the latter was to have no right to
conclude any international treaty with foreign Powers
respecting political and territorial questions (Art. 3),
regarding which the Chinese Government should be obli-
gati d to come to an agreement with the Russian Gov-
ernment through negotiation in which the authorities of
Outer Mongolia should participate (Art. 3), which is
tantamount to, and inclusive of, the declaration of non-
alienation respecting Outer Mongolia. In 1898 Japan
obtained the declaration of non-alienation respecting
Fukien. 10 In an exchange of notes annexed to the
Treaty of May 25, 1915, respecting Shantung,- Japan
was assured of the non-alienation of that Province.
Among the now celebrated Twenty-one Demands, Japan
demanded the non-alienation of China's coast (Group
IV).- 1 This was finally changed to a voluntary pro-
nouncement by China to that effect.*"

The fifth and last feature which, like the previous one,
is also a method of establishing or safeguarding the
sphere of interest is the international agreement between
the Powers interested pledging to respect the spheres per-
taining to each. On January 15, 1896, Great Britain and
France agreed that they would make Yunnan and
Szechuan their common sphere of influence, rendering
common to both Powers all privileges and advantages
that China might grant to either of them (Art. 4) :

"The two Governments agree that all commercial and
Other privileges and advantages conceded in the two
Chinese provinces of Yunnan and Szechuan either to
• Britain or to France, in virtue of their respective
Conventions with China of the 1st March, 1894, and
the 20th of June, 1895, and all the privileges and advan-
tages of any nature which may in the future be conceded
in these two Chinese provinces, whether to Great Britain

or France, shall, as far as rots with them, be extended
and rendered common to both Powers and to their na-
tionals and dependents, and they engage to use their



SPHERES OF INFLUENCE OR INTEREST 343

influence and good offices with the Chinese Government
for this purpose." M

On September 2, 1898, Great Britain and Germany
covenanted to define and respect their spheres of interest
for applications for railway concessions :

"1. — The British sphere of interest, viz. — the Yantze
Valley, subject to the connection of the Shantung lines
to the Yangtze at Chinkiang : the provinces south of the
Yangtze, the Province of Shansi with connection to the
Peking-Hankow line at a point south of Chengting and
a connecting line to the Yangtze Valley, crossing the
Hoangho Valley.

"2. — ( ierman sphere of interest, viz. — the Province
of Shantung and the Hoangho Valley with connection to
Tientsin and Chengting, or other points of the Peking-
Hankow line, in the south with connection to the Yangtze
at Chinkiang or Xanking. The Hoangho Valley is un-
derstood to be subject to the connecting lines in Shansi
forming part of the British sphere of interest, and to
the connecting line to the Yangtze Valley, also belonging
to the said sphere of interest." 24

As a further recognition of the German sphere of
interest, in connection with the occupation of Weihaiwei,
Great Britain declared to Germany:

"that in establishing herself at Weihaiwei, she has no
intention of injuring or contesting tin- rights and inter-
ests of Germany in the Province of Shantung, or of
creating difficulties for her in the Province of Shantung.
It is especially understood that England will not construct
any railway communication from Weihaiwei and the
district leased therewith into the interior of the Province
of Shantung." M

On April 28, 1899, Greal Britain and Russia eng '
to define and respect each cither's sphere of hit
Russia was to have the region north of the Great Wall



344 IMPAIRMENTS OF SOVEREIGNTY

as her sphere of interest, and Great Britain the Yangtze
Valley :

"1. Great Britain engages not to seek for her own
account, or on behalf of British subjects or of others,
any railway concessions to the north of the Great Wall
of China, and not to obstruct, directly or indirectly, appli-
cations for railway concessions in that region supported
by the Russian Government.

"2. Russia, on her part, engages not to seek for her
own account, or on behalf of Russian subjects or of
others, any railway concessions in the basin of the
Yangtze, and not to obstruct, directly or indirectly, appli-
cations for railway concessions in that region supported
by the British Government." 20

Similarly, on June 10, 1907, Japan and France engaged
to support each other "in the regions of the Chinese Em-
pire adjacent to the territories where they have rights
of sovereignty, protection or occupation." - 7 On July 30
of the same year, Japan and Russia covenanted "to sus-
tain and defend the maintenance of the status quo,"
which, rendered into ordinary language, means to respect
the spheres of interest pertaining to each. 28 On July 4,
1910, Japan and Russia again entered into an agreement,
this time not only to maintain the status quo, but also
to take common measure against external menace
(Art. 3)." n Finally, on July 3, 1916, Japan and Russia
entered into two covenants, an open convention and a
secret treaty, the latter a secret alliance. 30

We now come to the legal status of the spheres of
interest. It is to be understood that these spheres are
not recognized in international law. Postulating the prin-
ciple of territorial sovereignty as supreme and exclusive
in each state, international law does not admit the valid-
ity of spheres of interest, except by virtue of treaty
stipulations and international agreements. Like extra-



SPHERES OF INFLUENCE OR INTEREST 345

territorial jurisdiction, they come into existence and be-
come recognized, not because of any principle of inter-
national law. but rather by virtue of the consent of the
territorial sovereign as provided in treaty stipulations and
of the international agreements entered into by the Pow-
ers between themselves. Hence, whatever rights the
Powers interested have in their respective spheres are
limited to the treaty stipulations. "It cannot be irrele-
vant to remark that 'sphere of influence' and the theory
or practice of the 'Hinterland' idea are things unknown
to international law and do not as yet rest upon any
recognized principles of either international or municipal
law. They are new departures which certain great Euro-
pean Powers have found necessary and convenient in
the course of their division among themselves of great
tracts of the continent of Africa and which find their
sanction solely in their reciprocal stipulations." 31

Further, the declarations of non-alienation made to the
various Powers concerning the different spheres do not
confer any rights on the Powers concerned, save prob-
ably the right to protest in case China should violate
her own declaration. These declarations do not in any
way earmark these spheres for the eventual control or
annexation by the Powers concerned. They still remain
Chinese territory, full and complete. Even should con-
trol or annexation prove to be necessary, it would have
to be done through treaty stipulations. Thus, these decla-
rations do not detract from the territorial sovereign any
iota of his prerogatives and rights, except the right of
alienating the regions concerned. If they should have
any effect it must hi- in relation to a third Power. They
will probably preclude the other Powers from obtaining
similar special positions in these spheri s. In ca
a break up of China, which was imminent when the
spheres were created in 1S'»S. but which has become a

thing of the past since the Chinese Revolution of 1911,
the Powers in whose favor the declaration of non-



346 IMPAIRMENTS OF SOVEREIGNTY

alienation was made, and especially those who have fur-
ther diligently safeguarded their spheres by international
agreements, will have preemptions as to the respective
spheres. "The assurance merely signifies that, if events
should arise in the remote future which may compel
him (the territorial sovereign) to choose between the
claims of different states, those of the state in whose
favor the declaration has been made will be respected
to the exclusion of all others." 32

We cannot conclude this subject without pointing out
the serious disadvantages of the spheres of interest in
China with a view to their eventual renunciation or abo-
lition. First, the spheres of interest constitute a serious
hindrance to the economic development of China. As
the Powers dominate these spheres, China cannot de-
velop her natural resources, if she needs foreign capital,
as freely as she pleases, but generally she must always
give the first option to the Powers claiming the spheres.
This virtually gives a monopoly to the foreign Powers
in question, particularly with respect to foreign loans.
This naturally results in restraint of trade, in interfer-
ence with the natural operation of the economic law of
supply and demand, and in infringement of China's lib-
erty of action. What is worse, "there have been several
instances of one nation or another who was unable her-
self to supply the necessary capital or the proper men
for a particular enterprise in a region it claims for its
sphere of influence or interest and yet who refused to
allow the enterprise either financed or carried out by
other nations who could supply both the money and the
men." 33

Second, these spheres of interest vitiate the principle
of equal opportunity of trade. The Powers dominating
the regions generally possess preferential or exclusive
rights, which preclude the possibility of competition on
an equal basis. The Powers in question often so en-



SPHERES OF INFLUENCE OR INTEREST 347

trench themselves in their various spheres of interest,
gathering into their hands all the basic industries and
means of communication, that they become the dominant
economic Power in the spheres, rendering equal oppor-
tunity of trade practically non-existent.

Third, and worst of all, the spheres of interest menace
the well-being of the nations and hence of the world.
They tend to build up in China rival economic kingdoms,
competing with one another for supremacy and aggran-
dizement. Thus, they not only grind down the integrity
and independence of China in the mills of their economic
imperialism and struggle, but induce among themselves
antagonism and hatred, giving rise to international fric-
tion and possibly to war.

In view of these serious disadvantages, the Chinese
Government, through its Peace delegation at the Paris
Conference, asked for the renunciation on the part of
the Powers concerned of their claims to spheres of in-
terest in China and the revision of treaties in consequence
of such renunciation.

"The Chinese Government hope that the interested
Powers will, out of their sincere regard for the sover-
eign rights of China and the common interests of all
nations having trade relations with her. make a declara-
tion, each for itself, to the elTect that they have not any
sphere of influence or interest in the Republic of China,
nor intend to claim any ; and that they are prepared to
undertake a revision of such treaties, agreements, notes
or contracts previously concluded with her as have con-
ferred, or may be construed to have conferred, on them,
respectively, reserved territorial advantages or inferen-
tial rights or privileges to create spheres of influence or
interesl impairing tin- sovereign rights of China." '

The request failed ; but in its place a new champion has

arisen thai IS liable to demolish the economic barriers
erected by the institution of spheres of interest That



348 IMPAIRMENTS OF SOVEREIGNTY

is the New International Banking Consortium. While
paying due respect to vested interests, it proposes to pool
all options of the Powers and the concessions in which
no substantia] headway has as yet been made. 35 The
significance of this measure cannot be overestimated. It
means that the Powers joining the Corsortium surrender
their prior claims or rights to first options in all the loans
that come within the scope of the New Consortium and
that it chooses to undertake. Thus, the New Consortium
obliterates one of the leading features of the spheres of
interest — the right of first option or the claim of pri-
ority. This likewise indicates that while permitting the
economic dykes as erected by the spheres of interest to
remain intact, the New Consortium puts an injunction
on any further walls of exclusion that tend to block the
common interests of the Powers as well as China's eco-
nomic development. Moreover, in pooling options and
concessions in railways, the New Consortium tacitly and
impliedly introduces the principle and practice of the
internationalization of Chinese railways. When mate-
rialized, this will have the salutary effect of establishing
royal roads of freedom running through several spheres
of interest and of promoting the untrammcled economic
development of China and the general well-being of the
Powers concerned. Thus, the New Consortium, incar-
nating as it does the Open Door doctrine, is the antidote
and demolisher of the spheres of interest.



NOTES TO CHAPTER XXI

1. Reinsch, World Politics, p. 113.

2. [bid, p. 114.

3. Hertslet's china Treaties, Vol. 1, No. 59, pp. 350-354.

4. Hertslet, Vol. I, No. ! B, pp. 505 508.

5. Russia made Outer Mongolia a buffer state and herself

suzerain of the same in 1913 and 1915 (MacMurray,
1913/11 and 1915/10); also sec chapter on the Policy of Russia
in China. Japan's 21 Demands in 1915 covered only South



SPHERES OF INFLUENCE OR INTEREST 349

Manchuria and Eastern Inner Mongolia. See chapter on The
Policy of Paramount Influence and on The Twenty-one Demands
as an Exponent of Japan's Policies in China.

6. Vide supra, chapter on The Policy of Paramount Influence.
6A. Millard, China's Case at the Peace Conference, Millard's

Review, Supp., July 17, 1920, p. 18.

7. Hertslet, Vol. 1. No. 59, p. 353. Sec. 2, Art. 4.

8. The Shantung Question, submitted by China to the Paris
Peace Conference, puhlished by the Chinese National Welfare
Society of America, 1920, App. No. 1 to Vol. 2, p. 50.

9. MacMurray, 1895/5.

10. MacMurray, 1915/8.

11. MacMurray, 1914/12.

12. MacMurray, 1897/2.

13. MacMurray, 1898/6.

14. Hertslet, Vol. 1, No. 4, p. 16. Art. 3, Convention of April
4, 1846.

15. Art. 5, Convention between Great Britain and China rela-
tive to Burma and China, March 1, 1894, Hertslet, Vol. 1, No.
20, p. 104; also Art. 5, Agreement between Great Britain and
China modifying the Convention of March 1, 1894, relative to
Burma and China, Feb. 4, 1897, Hertslet, Vol. 1, No. 22, p. 116.

16. Hertslet, Vol. 1, No. 23, p. 120, The Tsungli Yamen to
Sir C. MacDonald, Feb. 11, 1898.

17. MacMurrav, 1906/2.

18. MacMurray, 1906/2.

19. MacMurrav, 1898/8.

20. MacMurray, 1915/8.

21. The Chino-Japanese Negotiations, the Official Chinese
Statement, 1915, p. 21 ; China Year Book, 1919, p. 567.

22. The Chino-Japanese Negotiations, 1915, p. 28.

23. MacMurray, 1896/1; Millard, Our Eastern Question, App.
V, pp. 515, 516.

24. MacMurrav, 1900/5; Millard, op. cit., App. I, p. 444.

25. Hertslet, V->1. 1, Xo. 102, p. 584, Exchange of Notes be-
tween Great Britain and Germany respecting the British Occu-
pation of Weihaiwei, April 20, 1898.

26. Hertslet, Vol. 1, No. 104, pp. 586-587; Russia and Great
Britain, on August 31, 1907, again mutually pledged to abstain
from any interference or extension of influence in Tibet. —
Hertslet, Vol. 1, Xo. 121, pp. 620-622.

But whin Russia moved on Outer Mongolia in 1913 and 1915,
Greal Britain made the similar counter move— Vide supra, chap-
ter on the Policy of Greal Britain in China.

17. MacMurray, 1907 7; Millard, op. .it., App. M.. pp. 457-458.

28. MacMurrav, 1907/11; Millard, ibid., App. I), p. 424.

29. MacMurray, l'MO/1.

30. MacMurray, 1916 9.

31. U. S. For. ReL, 1896, pp. 232, 235, Mr. Olney, Secretary
of State, to Sir Julian Pauncefote, British Embassador, Fune 11,
1896; J. B. Moore, Internatl. Law Dig, Vol. 1, pp. 268 269.



350 IMPAIRMENTS OF SOVEREIGNTY

M Tvau, Treaty Obligations between China and Other States,
p. 90.

33. The Shantung Question, op. cit, p. 71.

34. Ibid., p. 71.

35. The United States Government proposed . . . that not
only future options that might be granted but concessions held
by individual banking groups in which substantial progress had
not been made, should, so far as feasible, be pooled with the
Consortium ; that working on these two principles, the operations
of the Consortium would serve to prevent for the future the
setting up of special spheres of influence in the Continent of
Asia. — Thomas W. Lamont, Preliminary Report on the New
Consortium for China, pp. 6-7.



XXII
THE MOST FAVORED NATION TREATMENT

Another form of the impairment of China's sover-
eignty is the operation or rather the abuse of the most
favored nation clause. It was originally conceived in
a spirit to preserve the equality of treatment in her rela-
tions with foreign states, but in actual practice, it has
become a fruitful source of embarrassment and restraint,
resulting in the infringement of her sovereignty.

By the most favored nation treatment is meant that
whatever privileges, favors or immunities, with respect
to commerce and navigation, granted to a given state,
shall be granted to others also. This places the states
on a footing of equality so far as the privileges, favors
and immunities in matters regarding commerce and navi-
gation are concerned. This further rules out any ex-
clusive or discriminating rights in commerce and navi-
gation that the territorial sovereign may grant. It like-
wise creates a community of interest among foreign
states, inasmuch as the privileges, favors or immunities,
in relation to commerce and navigation, granted to one,
art-, ipso facto, regarded as granted to all enjoying the
most favored nation treatment.

The origin of this most favored nation clause goes back
to the supplementary treaty signed between Great Britain
and China in Hoomun-Chae, on October 8, 1843, follow-
ing the Treaty of Nanking, August 29, 1842. It was
stipulated (Art. 8) : *

"The Emperor of China having been graciously pleased
to grant to all foreign countries whose subjects or citi-
zens have hitherto traded at Canton, the privilege of re-

351



352 IMPAIRMENTS OF SOVEREIGNTY

sorting for purposes of trade to the other four ports of
Foochowfoo, Amoy, Ningpo and Shanghai on the same



Online LibraryMingchien Joshua BauThe foreign relations of China: a history and a survey → online text (page 27 of 39)