Chapter 2423: Trade Adjustment Memorandum (III)

"I believe Japan's demand potential is great, but their silver output has already reached its upper limit—around 150 tons per year. Unless we directly intervene in Japan's silver mining—which would add many costs. Given the Shogunate's current mining capability, Japan's outflow is already close to their entire annual output. Even if we sell more goods, we can't get more silver—of course, they can offset part of it with seafood and sulfur, but the value is too low."

"Can we only use administrative or even military means to require them to leave the Japanese market? That doesn't fit the aesthetic of free trade ideology." Xiao Zishan leaned back in his rattan chair and sighed slightly.

Wang Kai remained silent. After a while, Xiao Zishan straightened up and asked:

"According to what you just said, where does the money the Dutch use to purchase in the Indian region come from?"

"Er, also from Japan. And because we allocated our goods to the Japanese market, their procurement in India actually increased."

Many Senators overlooked India when dealing with foreign trade issues. Indeed, in the history of Chinese foreign trade, Indian merchants' shadows were rarely seen, and a large amount of Indian products were transported and sold to China by European merchants.

However, in maritime trade from the 16th to 19th centuries, India was a very key player. It was not only a production area for large quantities of export commodities but also provided financial support for merchants of various countries.

"...The Mughal Empire is working hard to develop its own cash crop industry and doesn't mind earning more silver. We've managed a good business environment in East Asia. We should use our advantages to take the largest piece of the cake. The way things are now, we're fattening up a direct military opponent and fattening up a competitor in produce. And the VOC, as you know—they're insatiable." After Fatty Wang finished speaking, he immediately drank water in large gulps, then was panting.

"Senator Wang, don't rush to rest yet. I agree with your views on trade philosophy. Rather than calling it free trade, we're actually closer to mercantilism. But how do you derive 'elevating trade status through monopolizing Japanese silver outflow'? If we knock out one portion of the Dutch income, can they still do their Eurasian trade? While our thoughts are on this, please continue."

Fatty Wang stood up with a snap. Very quickly. He was also afraid of losing his train of thought.

He walked to the office blackboard, picked up chalk, and began writing.

"We'll now discuss the Dutch single-round Eurasian trade model. We set the Dutch principal as x. The value of goods exported from Great Song to Europe passing through Dutch hands as a, mainly silk, sugar, ceramics, and industrial products. The value of goods exported from the Indian region to Europe as i, mainly cotton cloth, sugar, and saltpeter. As everyone knows, the Dutch are famously stingy. At the same time, the ultimate goal of their trade is silver—silver kept in Europe—so their principal is a pitiful number. They first flip raw silk and sugar twice on the China-Japan route, turning x into 4x to 6x. Then they sell sugar from India to Persia, Indian cotton cloth to Southeast Asia. Chinese ceramics also go through one or two rounds of Asian intra-trade. Finally, they accumulate goods worth about 10x in Batavia. 10x = a + i. After returning to Europe, their goods value becomes 30x to 50x.

"This profit rate is achieved through two larger multiplications and several smaller multiplications. You can completely view the 6x after completing Japan trade as their principal—that makes more sense. They take roughly over 2 years to complete this entire process. Everyone can see that if we take away their Japanese profits, the impact on their overall profits isn't that great. But what it affects is their cycle—it would increase their intra-trade transactions and time consumption to an unacceptable degree. So if we take back the Japanese silver that already belongs to us, then offer them targeted loans, their reaction won't be too intense. They'll actually treat us as a lifeline. I've also sounded out the Dutch—they're mentally prepared for our monopoly and also feel they're getting a great deal. They're more concerned about the principal issue, so they welcome the targeted loan proposal."

"I understand. Targeted loans are for specific goods. It's actually giving them goods on credit—no real money needed. Just calculated in Aussie Dollars. The types and amounts of credit goods are of course our call. You're planning to use this to adjust their goods composition and the proportions from different origins." Director Xiao made a summary.

"Yes, we have data and know roughly the types and amounts of their purchases. Their procurement needs in the Indian region can be exchanged for industrial products we provide. This way, they'll also have more motivation to promote our goods—like the bone china mentioned earlier. The loan can still be understood as a + i parts. We can not only adjust the values of a and i, but the types of corresponding goods can also be fine-tuned. For example, if we have a bumper sugar harvest one year, we reduce the i portion. If we also develop cotton spinning, we increase the cotton spinning amount in a, and further reduce i. This way, even if our ships don't pass the Malacca Strait, we can still influence the Dutch Eurasian trade."

"Can loan security be guaranteed?"

"We only accept fixed asset collateral from the Asian region. We have the ability to recover their collateral ourselves. For the East India Company shareholders in the Seven Provinces, paying for completed business—even Dutch penny-pinchers will gladly pay, if only for next year's business."

"Not bad, not bad!" Director Xiao nodded. "You've explained it very thoroughly. I have no objections to the Colonial Trade Department's adjustment plan. First, this isn't under my jurisdiction. Second, in this area I'm just a primary school student with no opinions worth expressing."

"You're too modest..." Fatty Wang quickly served up a tall hat.

Xiao Zishan's gaze fell on some point outside the window. After a moment, he said: "The Light Industry Department intends to develop the cotton textile industry on a large scale. They've also drafted a promotion plan and started implementing it. But we don't have raw cotton production areas—what do you think?"

Wang Kai didn't expect Xiao Zishan to suddenly raise such a question. He wasn't too invested in this matter. But thinking roughly, whether Hainan Island, the Two Guangs, Kaohsiung, or Jeju Island, none were suitable cotton-growing regions. Where would this cotton mill's raw materials come from?

"If we can't import from Ming territory, we could consider importing raw cotton from India." He immediately thought of a countermeasure. "As long as we convince the British it's profitable for them."

In old timeline history, India had always been one of the world's major cotton and cotton cloth producers. In this timeline, it was the Senate's largest cotton cloth supplier. Indian cotton cloth accounted for almost over half of the Senate's cotton cloth imports, rivaling Songjiang cotton cloth.

"I think so too. The VOC is indeed very strong, but BEIC is also a potential stock. The Cabinet's opinion is that slave trade should no longer extend to the homeland. In the future, except for small-scale 'special use,' we should turn this chapter of population trade as soon as possible."

Wang Kai was somewhat baffled. He couldn't understand why the conversation suddenly jumped to this. He could only echo:

"I agree with this. In the long run, the Sanya mines should still primarily use worker labor. Slave labor should be gradually abolished. There will definitely be legacy issues in the future."

"I heard the Nanyang Company is preparing to develop cash crops in Southeast Asia?"

"Indeed there's such a plan. Southeast Asia's climate is more suitable for planting cash crops than Hainan Island. After all, historically, tropical crop plantations were mostly concentrated in Southeast Asia." Wang Kai didn't expect Director Xiao to be so interested in cash crops. "For example, currently urgently needed rubber, oil palm, cinchona, jute, coconut..."

"Mm, plantations are indeed a very efficient agricultural production organization," Xiao Zishan said. "More consideration could be given to having immigrants and private capital participate. If the VOC and BEIC want to participate, my personal opinion is that it's also not out of the question."

"The Dutch are already operating rubber plantations for us. They'll be more interested in the future."

Wang Kai didn't know Director Xiao was actually so interested in operating plantations. When he mentioned private capital, Fatty Wang thought he was going to hint that some naturalized citizen was "very enterprising" or "very progressive." He didn't expect him to go off on a tangent about VOC and BEIC. Did these two need him to mention them?

After leaving Xiao Zishan's office, Wang Kai's mood was unprecedentedly good. Currently, all obstacles had been removed. He could go to that "promised land" of Southeast Asia and really spread his wings.

Wang Kai had been back at his own Nanyang Lingao Liaison Office for only a few minutes when he received a phone call from Zhou Wei. As Zhou Wei's voice rose and fell on the phone, Fatty Wang's expression gradually changed from "joyful" to grave, then to "troubled," and finally to bitter gourd.

"I say, General Zhou, you're dumping the shit pot on your own head here." Fatty Wang couldn't help griping. "Who the fuck asked you to handle this? They have sinister motives—obviously trying to cause us trouble..."

He listened patiently for a while more: "Right, right, I know she's very useful, professionally suitable. If nothing goes wrong, it's good for you, good for me, good for everyone. But if something does go wrong, we'll have mortally offended Lin Hanlong! Besides, she's currently the number one red person beside Lin Hanlong. We'll be gone at least half a year. Would Lin Hanlong just casually release someone?"

Then Zhou Wei said something else on the phone, and Fatty Wang said helplessly: "I really wish I could shoot your life secretary! Your business hasn't even opened and you already owe a pile of debts—this surnamed Chu really isn't a good person. Crafty commoner! Crafty commoner!" Fatty Wang ranted on the phone.

After a while, he finally put down the receiver with a face full of helplessness. No matter what, these seven Senators had definitely latched onto the Nanyang Company. Zhou Wei was "presiding over the situation" in Sanya, and he just happened to be in Lingao. This matter fell to him to handle.

Of course, if he could get Sonia to join this Nanyang expedition, he would be even more like a tiger with wings. It's just that the risk was too great.

(End of Chapter)