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and to meet this estimated doficit we had surplus assets on January 1st, 1928, of $3,985,761 of which $2,025,000 were liquid without counting the repayment from loan funds.
Unless some unforeseen catastrophe should occur to disturb the even tenor of our way between now and the end of the year there is overy prospect that we shall complete the year 1928 with a surplus on our estimates of just over $1,000,000 instead of a deficit of just over $2,000,000.
The year opened with a good many clouds on the political horizon owing to the December upheavals in Canton, but a new era of improved relations with Kwang Tung began with the inter- change of visits between Marshal Li Chai Sum and His Excellency Sir Cecil Clementi in the early part of this year, and this Colony and the neighbouring provinces of China owe much to Sir Cecil's untiring labour for the reopening of friendly intercourse between Hong Kong and its great neighbour, the city of Canton. It cannot be expected that trade should recover in a bound the position from which it had receded. China has been too long rent with civil strife to be able at present to trado with its former freedom. It can neither produce nor absorb the volume of its peace time trado. But at any rate in Kwang Tung and Kwang Sai under their prosent rulers, signs of returning prosperity are by no means lacking. Firacy and banditry are being suppressed, roads and other moans of communication are being cponed up, communism is being kept in check,
and
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