China is confronted with two very different groups of foreign Powers, on the one hand the white nations, on the other hand Japan. In considering the effect of the white races on the Far East as a whole, modern Japan must count as a Western product; therefore the responsibility for Japan's doings in China rests ultimately with her white teachers. Nevertheless, Japan remains very unlike Europe and America, and has ambitions different from theirs as regards China. We must therefore distinguish three possibilities: (1) China may become enslaved to one or more white nations; (2) China may become enslaved to Japan; (3) China may recover and retain her liberty. Temporarily there is a fourth possibility, namely that a consortium of Japan and the White Powers may control China; but I do not believe that, in the long run, the Japanese will be able to co-operate with England and America. In the long run, I believe that Japan must dominate the Far East or go under. If the Japanese had a different character this would not be the case; but the nature of their ambitions makes them exclusive and unneighbourly. I shall give the reasons for this view when I come to deal with the relations of China and Japan. To understand the problem of China, we must first know something of Chinese history and culture before the irruption of the white man, then something of modern Chinese culture and its inherent tendencies; next, it is necessary to deal in outline with the military and diplomatic relations of the Western Powers with China, beginning with our war of 1840 and ending with the treaty concluded after the Boxer rising of 1900. Although the Sino-Japanese war comes in this period, it is possible to separate, more or less, the actions of Japan in that war, and to see what system the White Powers would have established if Japan had not existed. Since that time, however, Japan has been the dominant foreign influence in Chinese affairs. It is therefore necessary to understand how the Japanese became what they are: what sort of nation they were before the West destroyed their isolation, and what influence the West has had upon them. Lack of understanding of Japan has made people in England blind to Japan's aims in China, and unable to apprehend the meaning of what Japan has done. Political considerations alone, however, will not suffice to explain what is going on in relation to China; economic questions are almost more important. China is as yet hardly industrialized, and is certainly the most important undeveloped area left in the world. Whether the resources of China are to be developed by China, by Japan, or by the white races, is a question of enormous importance, affecting not only the whole development of Chinese civilization, but the balance of power in the world, the prospects of peace, the destiny of Russia, and the chances of development towards a better economic system in the advanced nations.