REVIEW
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revolution came, in the form of capital, entrepreneurs and labour, it was the sharp spur of necessity which speeded it up from 1950 onwards. As the Colony's position as an entrepôt for China trade declined, it began to take more interest in world trade of wider variety. Further, it switched its emphasis from trading to manu- facture and this so quickly that few people, even in the Colony itself, were aware at the time of what was happening. Indeed, it took some years to convince the rest of the world that Hong Kong had become a manufacturing centre of any significance.
In June 1950 the Hong Kong Government banned the export of all goods to North Korea and in_August_it_banned the export to China of some 200 items of strategic importance, including petroleum. Another 100 items were added to the banned list in December and still further items in March 1951. In compliance with the spirit of the United Nations' resolution already referred to, Hong Kong's controls were further augmented and all strategic items became subject to both import and export control. These measures, taken at a time when trade with China was the main part of the Colony's total trade, had immediate and serious effects on the economy. But worse was to follow. The United States Government imposed a total embargo on all transac- tions with China in which its nationals, its resources or its currency were even remotely involved, and initially it applied this embargo to Hong Kong. This was almost a death-blow for the Colony's fledgling industries. Factories which relied on raw materials from the United States immediately found themselves without any sup- plies and were forced to close down. The cumulative effect of the Colony's own controls and the ruthless application of the American embargo led to severe unemployment. Trade with the United States, which had risen from 9.4% of the Colony's total trade in 1938 to 16.3% in 1947, slumped to 4.3% in 1953. Exports to China which in 1938 represented 45% of Hong Kong's total exports and amounted to 18% in 1948 had dropped to 4% by 1956.
Fortunately for Hong Kong the United States Government was willing to modify its embargo on the provision of guarantees by the Hong Kong Government regarding the end-use of U.S. materials shipped to the Colony for its factories. Also, the Colony's