1. The governments of Japan and China will readjust diplomatic relations in conformity with "The Fundamental Principles for the Readjustment of Relations between Japan and China" explained in a separate paragraph.
2. Matters decided on by the existing local governments before the resumption of new diplomatic relations will be accepted as they are for the time being and will be adjusted in conformity with the principles of Clause 1 as the situation permits.
3. During the course of the Incident, special conditions will exist. These conditions will be adjusted in conformity with the principles of Clause 1 as the situation changes or the Incident is settled.
Japan, Manchukuo and China will unite as good neighbors in mutual support of each other with the ultimate goal of establishing a new order in East Asia and will seek, as their common objective, the creation of an axis for peace in the Orient. The fundamental principles to be realized are:
1. Principles for cooperation between Japan, Manchukuo and China based on reciprocity, a good neighbor policy, and joint anti-Comintern and economic coalition principles, will be established.
2. Zones in which close cooperation between Japan and China for national defense and economic reasons will be practiced, will be established in North China and Mongolia. In addition, in Mongolia special military and administrative positions for anti-Comintern defense will be established.
3. In the area along the lower reaches of the Yangtze River, close economic cooperation will be effected between Japan and China.
4. Close military cooperation in the specially designated islands off the coast of South China (Hainan Island and Quemoy Island off Amoy) will be effected.
5. In order to achieve this an agreement will be concluded in with "The Specific Principles for the Readjustment of Relations between Japan and China."
I. Good Neighbor Policy
Japan, Manchukuo and China will respect each other's inherent characteristics, cooperate closely to secure peace in the Orient, conceive measures for mutual aid and amity in various field in order to fulfill a good neighbor policy.
a. China will recognize Manchukuo. Japan will respect the integrity of the territories and the administration and sovereignty of China. Japan, Manchukuo and China will resume new friendly relations.
b. Japan, Manchukuo, and China will remove any measures
or cause which might destroy friendship in the various fields of politics, diplomacy, education, propaganda and trade, and will prohibit their introduction in the future.
c. Japan, Manchukuo and China will conduct diplomatic relations based on mutual cooperation.
d. Japan, Manchukuo and China will cooperate in the creation, blending and development of culture.
e. As friendly relations between Japan, Manchukuo and China are restored, Japan will gradually consider the return of concessions and extraterritorial rights.
II. Joint Anti-Comintern Defense
Manchukuo and China will enter into a joint anti-Comintern defense pact.
a. Japan, Manchukuo and China will eradicate communistic elements and organizations in their territories, and will cooperate with each other relative to information and propaganda concerning anti-Comintern defense.
b. Japan and China will jointly carry out anti-Comintern defense. To this end, Japan will station troops in areas deemed necessary.
c. Japan and China will cooperate with each other in the preservation of public order.
d. China will, under separate agreement, comply with the requests of Japan, made out of military necessity, on those matters pertinent to garrison areas and on railways, aviation, communications,
principal ports and waterways connected therewith. In peacetime, however, Japan will respect the administrative authority and control of China.
(Note: Regarding b, c and d, special precaution in handling these matters is necessary since they are military top secret matters and have a bearing upon China's internal maneuverings.)
III. Economic cooperation
To realize the benefits of mutual aid and anti-Comintern defense, Japan, Manchukuo and China will in essence be equal and reciprocal with a view to offset merits and demerits and minister to each other's wants with respect to industry and economy.
a. In regard to specific resources in North China and Mongolia, especially ore deposits necessary to national defense, Japan and China will cooperate in their exploitation to effect joint anti-Comintern defense and economic cooperation, and in regard to their utilization, special concessions will be granted to Japan upon due consideration of the requests of China.
In other areas, also, necessary concessions will be granted to Japan with respect to exploitation and utilization of specific resources necessary to national defense. In utilizing the resources, the requests of China will be given due consideration.
b. As for industries in general, Japan will render necessary aid to China in accordance with the agreement concluded with the latter.
c. In regard to finance, banking (particularly the estab-
lishment of the new Central Bank and circulation of new currency) and the establishment of the economic policy of China, Japan will render the necessary aid to China in accordance with the agreement concluded with the latter.
d. Promotion of commerce and trade between Japan, Manchukuo and China will be developed by respecting tariff autonomy and mutual interest and by the adoption of sound tariff and customs procedures. At the same time, the supply and demand of materials between Japan, Manchukuo and China, especially between North China and Central China, will be facilitated and rationalized insofar as the self-sustenance of each country is maintained.
e. For the development of transportation, communications, meteorology and survey in China, Japan will render the necessary aid to and cooperate with China in accordance with the agreement concluded with the latter.
f. For the construction of a new Shanghai, Municipality Japan will render the necessary aid and cooperation based on the agreement with China.
a. China will, under separate agreement, employ Japanese advisers and staff in charge of matters relative to cooperation between Japan and China.
b. Japan will cooperate in the relief of Chinese destitutes arising out of the Incident.
c. China will indemnify the loss of rights and interests sustained by the Japanese people in China since the outbreak of the Incident.