HONG KONG MANUFACTURING INDUSTRY IN THE SIXTIES
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population with compassion, but also nervousness because the previous year had seen a falling off in the growth of exports.
In 1965, there was a crisis of confidence in the banking system due partly to imprudent lending policies to the less efficient sector of small and medium industry, and partly to over-development in the real estate field. These events, while revealing certain weak- nesses in the banking system, revealed also its underlying strength. But, in the short run, it did affect to some extent the credit base of small and medium industry and affect its growth.
More widespread was the effect of the water shortage of 1963 and 1964, resulting from failure of the rains in one year and delayed arrival in the second. It was faced with heroic fortitude by the public at large but also with great stoicism on the part of industry as a whole. Particularly memorable was a miracle of improvisa- tion by the finishing industry which normally needs great quantities of very pure water. Although the Government gave special assis- tance to this industry, an extraordinary degree of self-help was essential. The other side of the picture was the willingness of the Government of China to sell substantial supplies of water to Hong Kong and the completion of two major reservoirs. The combined effect of these measures is to assure industry a 24-hour supply of fresh water in the immediate future.
During 1967, the serious, but limited, disturbances that beset Hong Kong had little effect on the output of manufacturing in- dustry. Although there was some fall-off in normal replacement of equipment, and new investment was temporarily diminished, the export trade figures showed a steady and strong increase, a remark- able tribute to the good sense of buyers in industry's principal markets and to the workers who ensured production when transport was seriously interrupted and there were other reasons for anxiety and strain.
The devaluation of sterling in November 1967 against other currencies and the Hong Kong dollar caused certain temporary difficulties for industry to the extent that existing export orders were largely expressed in sterling; while the smaller devaluation of the Hong Kong dollar against the US dollar caused equally temporary difficulties for those relying on raw materials ordered in