4
Industry and Trade
HONG KONG's industrial and commercial sectors continued to forge ahead strongly in 1968. New record levels were achieved in produc- tion and exports, as detailed later in this chapter.
Hong Kong is an industrial territory with an economy based on exports rather than on its domestic market. At the same time it remains basically a free port. The change from dependence upon entrepôt trade has taken place over the past 19 years, although before that industry was not entirely new to Hong Kong. By the turn of the century, shipbuilding and shipbreaking industries had developed as a natural extension of port activities. Some light industries were established before 1939. But industrial development on a significant scale did not take place until political changes in China, followed by the Korean war and consequent trade restric- tions, signalled the end of the entrepôt trade as a basis for the economy. The simultaneous arrival of refugees from the Mainland brought in additional manpower and in some cases technical knowledge and capital. As a result, while the entrepôt trade declined, there was an increase in the manufacture and export of cotton textiles—a development which proved to be the foundation for subsequent light industrial expansion.
United States regulations prohibiting the purchase of Chinese manufactured goods provided another stimulus to the manufacture of certain categories of products in Hong Kong for the American market. Certification procedures designed by the Commerce and Industry Department, in association with the United States authori- ties, were introduced to prevent the substitution of Chinese goods. This protected the interests of local manufacturers and permitted exports of Hong Kong products to the American market. Restric- tions in the trade in cotton textiles between Japan and the United States in the late 1950's caused American buyers to turn to Hong Kong as an alternative source of supply. Since then the United