JAPAN'S VULNERABLE FRONT.

Hawke's Bay Herald-Tribune, Volume 81, Issue 74, 20 December 1937, Page 6

JAPAN'S VULNERABLE FRONT.

While on all her military fronts in China Japan is meeting with signal success, there are close and well-informed observers in Japan itself wlio are of the definite opinion that she will eventually find herself beaten by sheer exhaustion on the economic front. Her outgoings in eonnection with the war still in progress have been something enormous in their relation to the country 's natural resources and national income. Then, of course, the greater the area reduced into Japanese oceupation the greater must be the cost of maintaining hold upon it in the ir.idst of a bitterly hostile population, while at the same time persevering with turther aggressive military operations. Especially must this be the case if, as is indicated, she really contemplates seriously extending the invasion to Southern China. On the other hand, it may be that Japan, realising her financial weakness, is making this move in the hope of shortening the war. Authorities on the spot point out that Japan 's financial and economic difficulties had assumed substantial proportions even before the outbreak of the present war. It is admitted that, owing to secreey and jugglery in the conduct of the national finance, it is difficult to arrive at any really close estimate as to how it stands. But there is no possibility of coneealing the fact that for the last five or six years her national debt has been steadily, and in the last year or two rapidly, mounting. This can be attributed to the huge appropriations which even before the war was launched were already absorbing more than half of the entire national revenues. The conquest of Manchuria ,though speedily effected, was a very eostly undertaking ,and one which has so far yielded nothing but a very inadequate return upon the money spent upon it and upon the development of the virtually annexed area, within which ,too, it is said the great Chinese majority of the popula- I tion is far from being contented under Japanese rulc. J In Japan itself, though the lieavy expenditurc on armauicnts has maintained employment at a high level, the rapid rise in the cost of living, unaccompanied by any corresponding increase in the rates of wages, resulted earlier in the year in f considerable labour unrest, culminating in numerous strikes. So seriously were these manifestations regarded by the Japanese Government that not a few are of opinion that the war in China was speeded up in order to divert popular attention from internal troubles. In the long run, however, these difficulies cannot but be aggravated by a highly expcnsive war which, whatever patriotic appeal it may make to the Japanese people, must be straining financial resources well towards the breaking point. Amidst all these warlike distractions Japan 's export trade has neccssarily languished, and for the first half of this year her external trade resulted in an adverse balance equivalent to £46-million sterling. This, of course, meant a shortage of foreign exchange wherewith to purchase essential supplies, particularly of the raw materials which in normal times constitute no less than two-thirds of her imports. The deficiency thus incurred has compelled settlements with gold, of which her reserves, though fairly substantial, are thus being steadily depleted. Then, at the same time, Japan 's own armies in China are actively engaged in antagonising, even destroying, what has for years been the best market for her wares. Cf outside financial assistance Japan can have but small hope. Neither of her newly found friends, Germany and Italy, is in a position to help her much in this respect, for they themselves are operating on a very scant margin, as witness, in its small way, the nature of Germany 's trade agreement with New Zealand. Under conditions sucli as these it can scarcely but be that Japan regards with some appreliension any very great prolongation of her war with China. Doubtless, too, Marshal Chiang Kai-shek is fully apprised of this and thus encouraged to continue resistanee, the vital question for him . being as to how long his people will stand to him under the severe haminering to which they are being subjected. Japan, on her part, cannot but view with greatly increased uneasiness the suggestion put forward that both- the Britisli Empire and the United States may possibly cut off trading relations with her.