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junka at the Customs Stations en route to Hongkong have

been supplied to the Superintendent of Import and Exports.

This has proved a valuable check on the imports of liquor

and has much facilitated the collection of Revenue. In

return for this assistance it was arranged with my

approval that trading junks should be required, although

the requirement cannot at present be enforced by law, to

produce their Customs Pass Books at the Harbour Office,

thus establishing a check on their movements outside

the waters of the Colony, and ensuring their reporting

themselves at the proper Chinese Customs Station.

6.

The second and third articles

aim at preventing as far as possible any smuggling of Salt,

Sulphur, Saltpetre or Dynamite to China. Salt in China is a

Government Monopoly and its manufacture, import and export

is prohibited unless covered by permits issued by the Salt

Commissioner or the Merchant Monopolists recognised by

the Salt Commissioner. I enclose a memorandum by Mr. Harris

regarding Salt in China, dated the 15th. ultimo, which may

assist Your Lordship in considering this matter. On the

other hand, Sulphur, Saltpetre and Dynamite are munitions

of war, and it is as much in the interest of this Colony

as in the interest of China to prevent the smuggling of

these articles, which are much in demand by the robbers

and pirates infesting the Eiang Kuang Provinces.

17.

Articles 4. 5, 6, 7 and 8 are

concessions by China to this Colony and will be of great

value to the trade of Hongkong. The Registrar-General

informs me that the Chinese do not object to the voluntary

examination of cargo by the Chinese Imperial Maritime

Customs at Shamshuipo, while the British Merchants of the

Colony are anxious to obtain the privileges, set out in

these articles, which are similar to those granted by

China to the German Colony of Tsingtao and known as the

"Kiaochow

Enclosure 8.

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