political and industrial awakening of China and Japan has in the last ten years seriously affected her economic influence in the Far East. Moreover, Western European manufactures, notably English cotton goods, have recently, by reason of their low cost of production, been able to compete successfully with Russian manufactures right under the very frontiers of Eastern Russia. Thus, in spite of her political prestige, backed by a military force superior to that of China, Russia is squeezed economically between East and West. Much undoubtedly could be done to strengthen her economic position in these Eastern markets by better commercial organization, and especially by better banking facilities. At present, however, Russia's attention can well be concentrated upon the development of her own internal resources, where she has an unlimited field. Meanwhile she necessarily suffers from her backward industrial system, her high tariffs and high cost of production, whenever her manufactures meet the open markets beyond her political frontiers.
6. THE PRESENT POLITICAL SITUATION IN MONGOLIA
The political horizon both in Inner and Outer China has undergone such rapid changes during the closing months of 1911 and the early days of 1912, and the future is still so obscure and problematical, that the task of reviewing the political situation is no easy one. Nor will the writer here attempt to present more than an indication of the political conditions governing the relations between Mongolia and Outer China.
The watchword of the Chinese colonial policy in
