TWO DECADES OF ECONOMIC ACHIEVEMENT
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trade, and this was quickly re-established during the early post-war years. The total value of trade grew at an average annual rate of 35 per cent between 1947 and 1951. The goods traded were mostly manufactured articles, with textile yarn and fabrics ranking as the most important commodity groups. These were traded mainly with Asian countries—but already trade with the United States and Britain together represented more than 20 per cent of Hong Kong's total trade.
The United Nations imposed an embargo on trade with China in 1951 and growth in Hong Kong's entrepot trade was seriously disrupted. As a result, Hong Kong's external trade dropped sharply in the early fifties over practically all categories of goods. Exports to the United States decreased from $309 million in 1950 to $62 million in 1953, after which they gradually started rising again. Exports to Britain started decreasing in 1951, falling from $215 million and reaching a trough in 1953 at $119 million. In 1951 China was the most important market for re-exports. That year's total exports to China were $1,604 million-36 per cent of the overall total. The following year--when the embargo had taken effect-exports to China were $520 million, and some 10 years later they had declined to less than $100 million.
As a result, there was a need for entrepreneurs to seek and develop an alternative source of living. The logical and indeed the only alternative was to develop the manu- facturing sector, taking advantage of the presence of skills, capital and-most im- portant of all--a growing world demand for manufactured goods. This development was encouraged by the acceleration in world trade which, towards the second half of the fifties, was growing in real terms at an average annual rate of 6.3 per cent com- pared with 5.7 per cent for the earlier half.
Hong Kong's participation in this trade resulted in increasingly large imports of capital goods from the early fifties. Imports of machinery and equipment as a propor- tion of total imports grew from around five per cent in the early fifties to more than 10 per cent in 1960. In turn, the value of Hong Kong exports between 1955 and 1960 grew at an average annual rate of 9.2 per cent compared with 7.4 per cent from 1950-5. Unfortunately, there are no measures of the growth in the volume of Hong Kong's exports during this period. But, during the fifties, unit value indices for world exports remained fairly constant, implying that the growth rates of Hong Kong exports in quantity terms were about as rapid as those calculated in value terms.
The New Structure
Hong Kong took nearly 10 years to recover the level of exports achieved prin- cipally through entrepot trade in 1951. But the 1962 level was not merely equal to that of 1951; it also reflected a complete structural change of the economy. Clothing exports, for example, were in 1951 only five per cent of total exports. By 1962 they had grown at an average annual rate of 17 per cent to a significant 26 per cent of total exports.
Exports to China having dwindled in importance, the United States and then Britain quickly established themselves as the largest market for Hong Kong exports. The resumption of the growth in exports to the United States came in 1953 and the value of exports to this market grew for the rest of the decade at an average annual