The President, when promulgating the law for the constitution of the Assembly, acknowledged that it would not be strictly representative nor possessed of full powers, but he considered that the condition of China was not such as yet to warrant the grant of such representation or powers.
An act of the President's which excited more attention abroad was his announcement that the worship of Heaven and the honours paid to Confucius would be continued as of old time, and that he himself would represent the nation in the worship of Heaven and wear the robes of ceremony in use by the Dukes of Chou. Some of the foreign missionary bodies seemed to regard this as a cruel answer to the prayers which they had offered at Yuan Shih-kai's instance for the welfare of China.
In January the town of Liu-an Chou in An Hui was sacked by a body of brigands, who attacked the French missionary station, murdering Père Rich and making prisoners of two other priests whom they afterwards released. The success which attended this exploit encouraged further attempts, and the line which separates successful brigandage from rebellion in China soon became difficult to distinguish. Their leader Pai Lang Chai, known in Europe as White Wolf, took his followers next to Lao-ho-kou, an important mart in Hupeh, pillaged the place—again a missionary was murdered, M. Froyland, a Norwegian—and struck north into Shensi, gathering many adherents and looting Ching-tzu-kuan on the way. In Shensi he was joined by some leaders of the late revolution. He then plundered Lung-chü-chai, in the south-east of the Province, and soon afterwards fought an engagement with troops at Shang-chou where he set the city on fire. Panic followed, and he arrived soon after within a few miles of Si-an Fu, the capital. Some towns in the north of Honan were the next to receive his attention, but a concentration of troops from the north-west of Szechuen forced him to retire into Kan-su. The seventh Army Division under General Lu Chien-chang was then ordered to proceed against him, and he suffered some defeats at the hands of Mohammedan troops which drove him back into Shensi with a small number of followers, and in September the rebellion was finally crushed. The success which attended his arms is said to have attracted much support from revolutionary emigrés in Japan, and among them of Sun Yat-sen, who saw in this movement an opportunity of weakening, if not of overthrowing, the President.
But Yuan Shih-kai showed himself able to weather this storm as well as the financial difficulties which arose out of the war in Europe and the consequent attack on Kiao-chou. Following the example of Europe and Japan, China declared a moratorium, and as foreign loans then under contemplation became impossible made arrangements for domestic loans of 2,000,000l. at 6 per cent. The issue of the loan was attended by very fair success, and, after a short interval of panic, trade resumed its normal course, except that exports were greatly interfered with by the adverse rate of exchange, a circumstance which seriously affected the payments by Government of interest on existing foreign loans.
The conduct of the campaign by Japan against Kiao-chou occasioned strong protests by Germany against the landing of troops in Shantung outside the Kiao-chou zone, and also against the seizure of the German railroad in the Province. The protests were met by declarations that China was acting on the same lines as in the Russo-Japanese War, and that she was powerless to prevent Japan's action. It was also pointed out that Germany had in a measure created the situation through her unauthorised fortification of the port.
An interpellation by the State Council on the subject of Japan's violation of neutrality and the countenance which had been given to this by Great Britain was answered by a statement that protests had been made to the two Powers concerned.
The financial position of the country continues to remain a problem which taxes the brains of those who desire to ascertain on what resources China can rely for further development. An able report by the Maritime Customs on the foreign trade of 1913 places its total at 146,000,000l., and admits that not only is there a heavy trade balance against China, but that an annual deficit of 21,000,000l. is totally unaccounted for, even after taking into consideration remittances of 7,000,000l. from Chinese abroad. An adverse balance has been a constant feature of her foreign trade for years past, but does not seem to affect China's power of purchase to the extent that would seem natural. In the national revenue and expenditure an adverse balance also appears; in 1913-14 this amounted to $84,940,000; but the State continues to run its system of government, even when, as in 1914, loans which were under contemplation with foreign countries were abruptly cancelled owing to the European war. In some respects 1914, in spite of a falling off in Maritime Customs of 1,400,000l., showed an improvement, for remittances from the Provinces to Peking set in pretty steadily, and the Salt Tax, as newly organised by Sir R. Dane, gave a return which exceeded all estimates made in 1913 and surpassed the Customs Revenue. Another satisfactory feature was the success which attended the internal loan of 2,000,000l. at 6 per cent. The exact amount of the loan which was taken up is unknown, but the fact remains that the country showed sufficient confidence in the stability of the Government to allow this measure to meet the needs of the hour. Railway receipts also were good, and the obligations of the Government abroad have been met.
But revolutionaries have not ceased to do their best to weaken the Government, and after "White Wolf's" death plots were discovered in the Yangtse Valley, at Peking and at Canton, which had as their object the death of the President and his Ministers, and the subversion of the Government. The restoration of the Manchu dynasty was aimed at by one of these movements.