FINANCIAL POSITION OF CHINA AND JAPAN.

The opening manu militari of the ports of China and Japan in the middle of the nineteenth century was followed by different political and economic developments, which caused different patterns of financial relations to be established by the two countries with foreign countries. In the course of over half a century, Japan concentrated her financial resources on strengthening her industrial power at home and expanding her economic interests abroad. China's financial resources, on the contrary, were dispersed in individual commercial and speculative ventures; the treaty ports, which drew to themselves a disproportionately large part of the national wealth, remained detached from the traditional economy of the country and developed as commercial entrepots for the Far Eastern area. The outbreak of war with Japan in July 1937 found China engaged in a long-term policy of unification and stabilization. The National Government had gradually expanded its budget, with expenditures reaching a little over one billion national yuan in 1936-37; of this about four-fifths were covered by fiscal revenues and the balance by loans.