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 The Japanese appeared to be especially concerned over the potential competition of the Chinese lines and the port of Hulutao, and complained that the purpose of the Chinese in planning to construct many new railways and in developing Hulutao Harbour was to make "the port of Dairen as well as the South Manchuria Railway itself as good as valueless ".

Viewing these many railroad issues as a whole, it is evident that a number of them were technical in character and were quite capable of settlement by ordinary arbitral or judicial process, but that others of them were due to intense rivalry between China and Japan which resulted from a deep-seated conflict in national policies.

Practically all these railway questions were still outstanding at the opening of the year 1931. Beginning in January and continuing sporadically into the summer, a final but futile effort was made by both Japan and China to hold a conference in order to reconcile their policies with respect to these outstanding railway questions. These Kimura-Kao negotiations, as they were called, achieved no result. There was evidence of sincerity on both sides when the negotiations began in January, but various delays occurred for which both Chinese and Japanese were responsible, with the result that the formal conference, for which extended preparations had been made, had not yet met when the present conflict started.

With the exception of their railway controversies, the Sino-Japanese issues of greatest importance which were outstanding in September 1931 were those which arose from the Sino-Japanese Treaties and Notes of 1915, which in turn were a result of the so-called "Twenty-one Demands". These issues mainly concerned South Manchuria and Eastern Inner Mongolia, since, with the exception of the question of the Hanyehping Mine (near Hankow), the other agreements negotiated in 1915 had either been replaced by new ones or had been voluntarily given up by Japan. The controversies in Manchuria were over the following provisions:
 * (1) The extension of the term of Japanese possession of the Kwantung Leased Territory to ninety-nine years (1997);
 * (2) The prolongation of the period of Japanese possession of the South Manchuria Railway and the Antung-Mukden Railway to ninety-nine years (2002 and 2007 respectively);
 * (3) The grant to Japanese subjects of the right to lease land in the interior of "South Manchuria"—i.e., outside those areas opened by treaty or otherwise to foreign residence and trade;
 * (4) The grant to Japanese subjects of the right to travel, reside and conduct business in the interior of South Manchuria and to participate in joint Sino-Japanese agricultural enterprises in Eastern Inner Mongolia.

The legal right of the Japanese to enjoy these grants and concessions depended entirely upon the validity of the Treaty and Notes of 1915, and the Chinese continuously denied that these were binding upon them. No amount of technical explanation or argument could divest the minds of the Chinese people, officials or laymen, of their conviction that the term "Twenty-one Demands "was practically synonymous with the "Treaties and Notes of 1915 "and that China's aim should be to free herself from them. At the Paris Conference, 1919, China demanded their abrogation on the ground that they had been concluded" under coercion of a Japanese ultimatum threatening war ". At the Washington Conference, 1921–22, the Chinese delegation raised the question "as to the equity and justice of these agreements and therefore as to their fundamental validity ", and,