These facts tend, I think, to dissipate, if not entirely, at any rate in part, the illusion about the famous ‘Yellow Peril’ which has so greatly disturbed certain worthy people. That ‘peril’ seems to me to be still remote, for, even if the people of the Far East did succeed in producing nearly all the articles which they now import from Europe, it would necessarily follow that the trade in them, being infinitely greater than it now is, would increase their profits likewise very considerably. It is equally certain that the first effect of the introduction into China of European industries must lead, as it already has done, to the bettering of the condition of the Chinese labouring class, both by augmentation of wages and consequent improvement in manner of living. If, therefore, European export trade may apparently suffer from the manufacturing of goods hitherto imported by the Chinese, such as cottons, for instance, matters will balance themselves eventually for the simple reason that, the richer the Chinese get, the more they will buy. Japan has already shown how the introduction of machinery has created a new branch of import of great value. In order to realize these brilliant prospects, several very drastic alterations in the present position of affairs are needed. The permission, granted at the instance of Great Britain in 1898, allowing European navigation on the inland waters of China, and the concessions for the creation of railways and exploitation of mines, may subsequently lead to very remarkable results, but up to the present they have not been entirely successful. Industrial activity is still limited to the free ports and their immediate vicinity. The reasons for this state of affairs are worth examining, especially as they illustrate the determined opposition of the Chinese authorities to all measures of reform, and also indicate many points against which Europeans should complain. The Chinese Custom-house duties were determined according to the treaties as much as possible 5 per cent. _ad valorem_. They may therefore be safely described as comparatively light, and are collected with great regularity for the Imperial Government on the European system by a staff admirably organized by Sir Robert Hart.