Nanyang Storm 1864

Chapter 225: Reciprocal Tariff Agreement
All the ministers were busy, but King of Chu Zheng Guohui and Prime Minister Li Hezhang, who were walking in front, seemed much more relaxed, chatting while inspecting.

Prime Minister Li Hezhang always stayed half a step behind Zheng Guohui to show respect. This distance was more appropriate. The King of Chu did not need to turn around when speaking, and he could answer any question immediately.

"Your Majesty, after receiving the majority of the second batch of equipment, the government has compiled a list of local needs. After eliminating the self-sufficient parts, the government has finalized the third round of procurement, with a total value of approximately $58 to $65."

"We don't have that much money anymore, do we?"

"Yes, Your Majesty. We still have a little over 40 USD left on the loan. This fleet bound for North America will also carry 1400 tons of copper ingots and over 720 tons of tin ingots, valued at $35, to repay the principal and interest, as well as any shortfall in purchases."

"Well, that's about right. You can decide for yourself."

"Your Majesty, do you mean to change the direction of import trade with the United States?"

"Yes, after all, the distance is too far." Zheng Guohui admitted without hesitation, and then continued;

"If there are no bargains to be taken, the cost-effectiveness of trade with the United States will not be high.

It will be impossible for us to export the industrial products we develop in the future to North America. Firstly, there is high tariff protection, and secondly, the North American market is relatively mature and it is difficult to sell them at a good price.

For a long time to come
Without these cheap machines and equipment, the North American market will no longer be cost-effective.

from now on

Industrial development relies mainly on self-reliance. Having purchased so much machinery and equipment, we need to organize personnel to tackle the production difficulties of steel blast furnace equipment and strive to be able to produce ironmaking blast furnaces ourselves."

Zheng Guohui spoke whatever came to his mind. He walked to a pile of machines and stopped, thinking and continuing;

"I've also seen these iron-making blast furnaces. They're big, black, and crude, and they don't have much technical content. They're just some of the difficulties in casting that the foundry has organized people to overcome.

There are also some steel pipes, H-shaped steel beams and other steel materials required for blast furnace equipment. The rolling mill technicians are organized to research and overcome them, and they can design and process the equipment themselves.

Don’t always think about importing. Where do we get so many US dollars?

Once this batch of credit loans from the Bank of China is used up, the centralized procurement will come to an end.

What are the priorities for the third phase of procurement?

"Your Majesty, the main purchases are from three cement plants, some chemical equipment, two blast furnaces, some shipyard equipment, mining equipment, large steam engines, and so on. Regarding light industry, there are some looms and supplementary purchases of rolling mills, rice mills, and the like. The quantity won't be too large."

"Okay, let's leave it at that for now. Don't expand the purchase further." Zheng Guohui looked at it and continued to move forward, saying;
"In the future, we will mainly import talent from the United States, hiring professors and engineers to teach in domestic schools. In addition to teaching students, they can also conduct technical research and improvements.

First of all, I think there is a lot of room for improvement in the steam engine.

In the letter you send to Zheng Xin, you must emphasize this point and recruit technical experts in related fields, even if it is worth paying a high salary.

As long as we have two or three professors taking the lead and bringing a group of students, we can set up our steam engine research and development center.

How to improve the thermal efficiency of the steam engine, to produce higher power and more stable operation under the same volume, all needs to be done step by step.

The key is to discover technical experts, which is like "planting a phoenix tree to attract the phoenix."

Buying these foreign goods is not a skill. What is impressive is being able to learn everything the foreigners know.

Oh, right.

I would like to remind Zheng Xin to pay more attention to the affairs of the US diplomatic field and the appointment and dismissal of government personnel and their movements.

Also... collect more newspapers, foreign technical books and periodicals, maps and other useful knowledge books, and bring them back when you come back.

With the completion of this last batch of purchases, his mission in North America also came to an end.

Leave a few capable people to take care of it there, and Zheng Xin can come back. The Ministry of Foreign Affairs still has a lot of things to do.

Oh, by the way, don’t forget to purchase a batch of Chilean saltpeter. The military needs this stuff to produce explosives.

We have abundant sulfur resources here, and there's plenty of guano, but it's strange that we can't find any saltpeter mines."

"Understood, Your Majesty."

Li Hezhang had a small notebook and a Western fountain pen in his hand. After he quickly made some notes, he put the notebook and pen into his sleeve.

The movements were quite natural and smooth, and it was obvious that this was not the first time he had done this.

He was familiar with His Majesty's style, and he spoke in a very imaginative way.

Sometimes they talked about this, sometimes they talked about that, and talked about whatever came to their mind.

If I don’t have a little notebook, I may not be able to remember everything.

As the saying goes, a good memory is not as good as a bad pen.

Li Hezhang now plays the role of chief steward. He handles all aspects of the Chu government in an extremely organized manner and has taken over a large number of tedious government affairs.

Good fighters have no illustrious feats.

The government has established a file identity for every Chinese immigrant and a household registration record for every Chinese immigrant family. This is a huge amount of paperwork that is both tedious and tiring.

The government has established a comprehensive police system, with police stations in prefectures, police stations in counties, and police stations in towns and villages, which has played an important role in maintaining social stability and security.

The government has established a relatively complete taxation system, customs and the General Administration of Punishment system, and is promoting the construction of the General Inspection System. These are all meticulous efforts to improve government functions.

Li Hezhang needs to clearly divide the responsibilities of various government departments, demarcate management boundaries, and clarify areas of wrangling, so that everyone can assume their responsibilities, return to their positions, and focus on their work.

All this demonstrates Li Hezhang's strong ability to lead the government.

He is like a conductor, guiding various government departments to perform a symphony, which is not easy at all.

There was no precedent to follow in the initial stage, and Li Hezhang had to do many things himself.

these few months

Li Hezhang basically conducts research in various government departments in turn, staying on site to solve difficult and complicated problems.

He personally clarified the boundaries of authority for various government departments, sorted out the departments of authority and the scope of management, and was really busy.

It is precisely because of Li Hezhang, a reliable steward, that King Zheng Guohui can free himself from a large amount of trivial government affairs and consider strategic issues and the future direction of national development.

Those who do not plan for the overall situation are not enough to plan for a region, and those who do not plan for the eternity are not enough to plan for a moment.

Zheng Guohui attached great importance to the international intelligence gathered by the Ministry of the Interior. Combined with his far superior knowledge, he was able to accurately pinpoint the pain points of the European powers, identify their needs, and thus capitalize on the favorable conditions...

Inspected around

More than half of the officials following Zheng Guohui were gone. Most of them just apologized and went on with their own business.

The arrival of this batch of materials made all the departments of the Chu government start working at high speed like a spinning top, working overtime and rushing to meet deadlines.

In the Manila port area, five large storage areas, namely A, B, C, D and E, have been built. Each storage area is a large storage warehouse 5 meters long, 82 meters wide and 16 meters high.

The foundations of these storage warehouses are very solid. First, a one-meter-deep foundation pit is dug, filled with coal gangue and lime layers and rammed repeatedly, and then stone houses and gravel layers are added. Finally, earthen cement made from shell powder is poured to form a whole solid warehouse foundation.

The warehouse area is located in a higher location. The warehouse foundation is 30 centimeters above the ground and is built on it, making it look tall and solid.

A thick layer of waterproof asphalt needs to be applied from the corner of the warehouse wall to a height of one meter to prevent moisture from entering during the rainy season and causing mold and rot in the warehouse.

Each storage area has 12 neatly arranged warehouses, separated by roads, railways, bushes and walls, and more than 200 meters apart.

Even if a fire occurs, it can only affect one storage area at most and cannot spread to the adjacent storage area.

The rails laid in the warehouse area are specially used for horse-drawn flatbed carts to transport large and heavy machinery and equipment, huge quantities of ore and other goods back and forth.

Goods such as ore are stored in the open-air stacking area of ​​the dock, several kilometers away from the warehouses of industrial products and light industrial products, and are not in the same place.

There is a special ore terminal for the ore, which is also equipped with horse-drawn railway tracks, and the ore will be transferred to the nearby open-air storage yard.

At the ore terminal, steam-driven belt conveyors are used to load and unload goods, saving both time and effort.

These belts are made of bison leather imported from North America. They are very tough and durable, and are also affordable and of good quality.

Chu's foreign trade

Large livestock such as horses, cattle and sheep were mainly imported from Australia, cotton cloth and cotton, as well as a few industrial products, were mainly imported from the Governor-General's Office of British India, and complete sets of industrial machinery and machine tools, ships and shipyard equipment were mainly imported from the United States.

The first two items are long-term trades, but the last one, industrial equipment trade with the United States, was just a way to make some money during the wave of corporate bankruptcies after the American Civil War.

This kind of bargain-hunting business cannot last long and is gradually coming to an end.

What the US really values ​​is the Northern Shenzhou Continent, which has almost endless labor resources, and this is exactly the source of cheap labor that the sparsely populated west coast of North America urgently needs.

The Chu State was unable to provide labor to North America, as its own Chinese immigrants were not enough.

In order to prevent the export of labor, the Chu State introduced a strict law
American businessmen are strictly prohibited from using high salaries to lure workers to work in North America within the territory of Chu. Once discovered, they will be severely punished.

There have been several similar cases before. When the American tour leader wanted to take some Chinese workers away on his return trip, he lured some Chinese immigrants with high salaries, but was intercepted by a naval warship when leaving the dock.

The result is self-evident. The American captain's ship and all his assets were confiscated.

The cargo ship sailors who colluded in the evil deeds and the Chinese immigrants who were tempted by high salaries were all thrown into hard labor camps and paid a heavy price for it.

By doing this, the Americans were actually undermining the Chu State.

Every Chinese immigrant was transported by a fleet organized by the Chu State, and they owed the government a ship fare of up to 99 taels of silver, as well as food, women, farm tools, seeds, etc., which was equivalent to owing a huge debt to the government.

How can it be so easy to just run away without any hesitation?
Not all Chinese immigrants are grateful. Those who claim to have been deceived were actually lured by the high salaries offered by American captains and took the risk.

Don't they know this is betrayal?

These Chinese immigrants were well aware of this, so after being caught, every Chinese person involved in the illegal migration was subjected to the punishment of chrome, which meant having the word "sin" chrome-stamped on their cheeks and having to work in a mining camp for the rest of their lives to atone for their sins. Such sinners could not be forgiven by Chinese society.

Because of these disputes, the Ministry of Foreign Affairs made formal representations to the US representatives, but since the two sides have not yet established formal diplomatic relations, everything is just a matter of wrangling.

Chu's current diplomatic affairs with the United States are handled by the U.S. Consulate in Guangzhou.

The US representative, Tom Chris, is from the consulate in Guangzhou. He is a foreign affairs counselor and his authority is not high.

The Ministry of Foreign Affairs of Chu State does not recognize the current situation of being managed by the US Consulate in Guangzhou, and has submitted a formal note to the US side regarding the establishment of mutual embassies.

Those captured American captains and white sailors could only suffer in the mine labor camps during this period, but their treatment was much better than that of the natives, and at least they could have enough food to eat.

After Zheng Guohui and Li Hezhang finished their inspection, they did not leave the Manila Port. Instead, they sat down in the security room at the door of the "B" warehouse, drinking tea and chatting, as if waiting for something?
After a while
More than a dozen horse-drawn carriages were moving towards the dock in a mighty procession. It looked like quite a large scene.

King Zheng Guohui of Chu and Li Hezhang smiled at each other. The person they were waiting for had arrived.

"Prime Minister, what do you think the talks will be like?"

"Your Majesty, you are asking this knowingly. This is a test for me. Since I have already revealed their hidden cards, if Zheng Yulan cannot reach an agreement, I will bear the consequences and will no longer be able to remain in office."

"Hehehe... Huanzhang's Ministry of the Interior is quite powerful. This proves that my vision is not bad."

Zheng Guohui took a sip of tea and smiled complacently.

Li Hezhang resisted for a while in order to appoint Dong Huanzhang as the Minister of the Interior, but had to give in under the insistence of King Chu Zheng Guohui.

Seeing the King of Chu bring up this issue again, Li Hezhang gave a wry smile, bowed respectfully, and said, "Your Majesty, I am deeply ashamed and beg for forgiveness."

King Zheng Guohui of Chu laughed heartily and said, "Prime Minister, I'm not trying to put you down. This piece of important intelligence alone is worth a fortune. Huanzhang may be inexperienced, but he's very capable in employing people and assuming responsibilities. He's lived up to everyone's expectations!"

He spoke highly of the work of the Ministry of the Interior, and Prime Minister Li Hezhang had no choice but to acquiesce.

In a few minutes, the long line of carriages arrived at the door of the "B" warehouse and stopped one after another. A large number of people got off the carriages.

Among them was the cheerful Deputy Minister of Foreign Affairs Zheng Yulan, a group of people from the British Channel Governor's Office, and representatives from France and the Netherlands, a large group of forty or fifty people.

Prime Minister Li Hezhang stood up first and made a "respectfully invite" gesture.

King Zheng Guohui of Chu then stood up and walked out of the small security room. Deputy Minister of Foreign Affairs Zheng Yulan and other officials hurriedly came forward and bowed.
"Your Majesty, I am humbled and honored to have served you well."

"Oh... tell me about it." King Zheng Guohui of Chu asked with interest.

Deputy Foreign Minister Zheng Yulan bowed again, then stood up and replied:

“To reply to your Majesty;

After five rounds of negotiations this week, my country held repeated consultations with representatives from the UK, France, the Netherlands and other countries, and finally reached a fair trade tariff agreement that is beneficial to all parties.

And once all parties return and obtain authorization, they can sign.

英方向我国境内输入纺织品和棉花，分别享有22%和16%的优惠税率，其他的工业品税率在20~30%之间，农业品税率在8~12%之间。

This is the same as the preferential tax rates offered by France, the Netherlands and other parties, and is a mutually beneficial arrangement.

Our steel industrial products, including industrial machinery, enjoy a preferential tariff rate of 16% when exported to the above-mentioned parties, and food and agricultural products enjoy a preferential tariff rate of 8-12%.

The above-mentioned consultations have been recognized by all parties and only await final signing and implementation.”

"Well, not bad." Zheng Guohui couldn't suppress the smile on his face and nodded happily.

Having found out the British's cards, Chu's negotiations on preferential tax arrangements appeared to be extremely resilient and it stuck to its bottom line.

Imported British textiles were subject to a 22% tax rate, which maximized the interests of the Chu State and made the British uncomfortable, but was within the upper limit they could accept.

In order to obtain this preferential tax rate of 22%, the British Straits Settlements Governor-General made significant concessions.

Specifically, the preferential tax rate for steel products and machinery products exported to the State of Chu was only 16%, and for light industrial products and agricultural products it was only 8-12%.

Such a low tax rate is close to that of the four autonomous regions in the British pound trade circle, namely Canada, South Africa, Australia and New Zealand.

The reason why France and the Netherlands were able to accept such preferential tax rate arrangements was mainly due to the influence of the UK and their own needs.

There was no steel industry or modern manufacturing industry under the French Government-General of Saigon and the Government-General of the Dutch East Indies, and all the industrial products and steel products needed were imported.

From small items like matches, cans, shovels, and hoes to large items like steamships, dock loading and unloading equipment, mining equipment, etc., all need to be imported.

The situation in France was different from that in the Netherlands. The French Saigon Governorate was located in the flat and low-lying Mekong Delta, including Cambodia. There were no high-quality iron ore and coal resources, nor were there other rich metal mineral resources.

Such natural conditions are not suitable for the development of heavy industry and are almost zero in this regard.

The Governorate of the Dutch East Indies was rich in mineral resources, but the Dutch were not keen on investing in colonies. Their European homeland was a purely agricultural country and had not yet started the modern steam industrialization process.

How is it possible to invest in the colonies?
Therefore, all industrial products needed by the Governor-General of the Dutch East Indies were completely dependent on imports.

Britain, France and the three colonies did not have a mature industrial system, and importing industrial products from Chu would not have an impact on their own agricultural structure.

They adopted preferential tax rates on imported steel products and machinery and equipment from Chu, mainly in exchange for Chu's concession on preferential tax rates on textiles.

It is precisely because we know the British side's trump card that we can strive for the greatest benefits.

During the week-long tariff negotiations, US representatives only listened and did not participate.

Without domestic authorization, US representatives have no right to participate in such important tariff negotiations, let alone make any decisions.

The colonial governors-general of countries such as Britain, France and the Netherlands were different. They generally enjoyed the right to negotiate trade with various countries, could independently decide tariffs and even launch wars.

The tariff negotiations achieved their intended purpose, and King Zheng Guohui of Chu likened it to "worth a million gold," which was absolutely correct.

What needs special attention is that

The so-called British colonies lacked a mature industrial system, referring specifically to the Straits Settlements, and not other places.

The preferential trade agreement signed between the Chu State and the British Straits Settlements only covered the British Straits Settlements, and did not include the Governor-General's Office of India and the European mainland.

The preferential tax rates formulated in this way will only serve as a reference for the British government and will not be recognized or implemented.

In today's era

The Sterling Trade Area is the world's largest free trade area. Only the governments of countries that have been recognized by the British royal government and formally included in the Sterling Trade Area can enjoy preferential tax rates within the Sterling Trade Area.

Countries other than these cannot enjoy preferential tax rates.

This includes the franc trading zone countries, the Americas and most European countries that are still playing alone, and most Spanish-speaking countries in Central and South America.

High tariff barriers are popular all over the world today.

In order to protect its still immature domestic industry, the United States imposed high tariff barriers on British industrial products, which Britain hated and regarded as the biggest obstacle to the promotion of global free trade.

Of course, Britain would not indulge America. It also imposed high tariffs on cotton, the largest commodity imported from the United States to Britain, which made the plantation owners in southern North America both happy and painful.

The British textile unions united to lower the price of American cotton. This was a noose around the necks of southern North American plantation owners for decades, forcing them to reduce planting costs as much as possible while earning huge trade income.

Therefore

The use of cheap black slaves to cultivate cotton fields was the only way to ensure that white plantation owners in the South would not sell at a loss and could guarantee a meager profit.

American cotton wins by its good quality, low price and large quantity. Not only does it have to endure the joint price-cutting by the British Textile Union, but it also has to endure the high tariffs imposed by the British side.

The supply and demand status of Britain and the United States is seriously unequal. Britain is not without choices. It has a large number of cotton fields in Egypt and India, producing high-quality cotton.

Looking around the world, the British textile industry consumes more than 85% of the world's cotton, making it the largest buyer and producer.

White plantation owners in the Southern United States who wanted to sell cotton to Britain had to endure price pressure from the British textile unions, which was also Britain's punishment for the high tariff barriers imposed by the United States.

The grudges here cannot be fully discussed in a short time.

Governor Ord of the Straits Settlements and his entourage, along with representatives from France, the Netherlands and the United States, were invited to attend the ceremony. They stayed in Manila for between twenty days and more than a month, and some for more than two weeks.

The trade tariff arrangement has been negotiated this time, and we are about to embark on the return journey.

King Zheng Guohui of Chu and others were here, firstly to get the results of the trade tax rate negotiations as quickly as possible, and secondly to see off representatives from various countries and demonstrate sincerity.

You don't have to send them all the way to the dock, just exchange a few words of greeting at the warehouse door and show that you are polite.

Among these foreigners, the only one who could have an equal dialogue with King Zheng Guohui of Chu was Mr. Ode, the Governor of the British Channel. The representatives of other countries were of a lower status and just sat quietly as listeners on the side.

"Mr. O'Dea, your visit has promoted the close development of market trade between Britain and Chu. I have high expectations for this and hope to meet you again." Zheng Guohui said with a smile on his face.

Governor-General Ode basically achieved the purpose of this trip, which was one of his diplomatic achievements.

So, Governor Ode was in a good mood, with a rare smile on his face as he replied;

"Your Majesty, I have gained a lot from this visit. The most gratifying thing is to witness the joining of a new partner, which is exactly the direction we are looking forward to."

"Hehehe... No one wants to have a quarrel with the British Empire. As long as we can respect each other's concerns, I believe the relationship between the two sides will become closer." Zheng Guohui's official remarks were also made casually.

Governor Ord replied with a smile, "Of course I will, Your Majesty. I will report the relevant progress to my country as soon as possible and pass on your personal letter to Her Majesty Queen Victoria. It is my honor."

"Thank you, Mr. Odd."

After exchanging a few pleasantries, Zheng Guohui watched the Ministry of Foreign Affairs and others accompanying representatives from various countries to the dock, and then he and Li Hezhang got into the carriage. The accompanying personnel got on the carriages behind, and the convoy drove towards the city.

(End of this chapter)