COMMERCE
Chapter 5.
The year has not been entirely an easy one for trade and commerce. While the hunger for goods in the Far East which resulted from the war had largely been satiated except in those commodities which remained scarce throughout the world, there was, if anything, an increase in the artificial barriers to trade. Hong Kong's trade has in the past been, and must in the long run continue to be, integrated with China's trade; although it is to be hoped that some of the new markets developed in the past two years may be retained and developed. During 1947, China, faced with foreign exchange difficulties and mounting inflation, imposed severe restrictions on imports, while the rising cost of China products and the military situation in the north made it increasingly difficult to trade in Chinese exports. There is little hope of any revival in this trade until political and financial stability have been restored in China. International restrictions on commodities such as rice and sugar limited, and in some cases practically eliminated, trade in them. Exchange restrictions also tended to increase as the U.S. dollar became more and more scarce and the sterling area had to take steps to protect its position.
The Hong Kong merchant reacted to the situation with his traditional versatility and resilience, and in the face of a dwindling trade with China, increased his business with other territories to the south, notably with Malaya and Siam, until in terms of value, China no longer remained the preponderant source or destination of Hong Kong trade. A further impetus was given to this trend by the unsettled situation in China, for quantities of goods originally destined for China were diverted to Hong Kong and then re-exported elsewhere, while many firms, finding business conditions in Shanghai too difficult, moved to Hong Kong and brought with them their experience and business connections.
Trade controls in Hong Kong are confined mainly to controls necessitated either by international obligations (in respect of scarce commodities or foreign exchange) or by the need to protect Hong Kong's own supplies of scarce commodities. Exchange control was exercised on a realistic basis and, so far as was consistent with Hong Kong's obligations to the sterling area, no attempt was made to enforce surrender of foreign
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