this Resolution and the action taken by the United Kingdom and other Commonwealth countries, Hong Kong extended its export controls over an even wider range of commodities and introduced import licensing over all these controlled goods. Trade, which is the life- blood of the Colony and which had already been considerably curtailed by the previous restrictions, was inevitably even more seriously affected, and the economic activity of the Colony generally suffered a serious setback.
It is no exaggeration to say that the Korean war and the world events following it have put Hong Kong in an economically impossible position. Trade in the few non-strategic commodities still permissible has been hampered by the insistence of the Chinese authorities wherever possible on barter arrangements. Towards the end of the year, stresses in the trading structure were beginning to make themselves felt, and many of the smaller trading and shipping firms were in financial difficulties; others, including some factories, were considering transferring their activities and capital to other areas. Attempts at smuggling naturally increased, which entailed increased Government expenditure on preventive measures.
Despite the opulence which was still apparent to the casual observer as he walked through the streets and admired the displays in shop-windows, and the remarkable building activity going on all over the Colony, unemployment began to assume serious proportions as more and more of its inhabitants were reduced to a bare subsistence level.
The
Viewing events in a longer perspective an equally serious and possibly more lasting threat to the Colony's industries was the reappearance during the year of Japanese goods in markets of the Far East which had until recently been an easy Hong Kong preserve. quality and range of
of post-war Japanese products and the low prices at which these are being sold, due to overhead expenses including wages being lower in Japan than in Hong Kong, have given the Japanese undeniable market advantages. The Sterling Payments Agreement concluded with Japan in September considerably facilitated trade in Japanese goods and of course this trade was not without profit for some of the Colony's merchants. The really hard hit were the Colony's textile manufacturers who, compelled by the embargo to use expensive grades of cotton, now found themselves competing with Japanese factories supplied with lower priced cotton from the United States.
On the brighter side attempts were made, and not without success, by Hong Kong manufacturers to develop markets for their produce in those parts of South-East Asia on which they had not hitherto bestowed much attention, and to extend those markets already developing, as in Thailand for example. An Exhibition of Hong Kong Products was
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