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shipowners are definitely opposed to it for the following reason. In fact the ships, which would mostly profit by it, are in most cases
owned entirely by Chinese and may only fly the British flag by favour
of legal technicalities. The result is that, whenever there is any
kind of trouble over one of these ships with the Chinese authorities,
the British authorities are confronted with the dilemma of seeing
the British flag insulted or of incurring the odium in Chinese opinion of protecting Chinese (although nominally British subjects) against their own authorities. Article X was inserted for what it might be worth, to help the industries of Hong Kong; but here again we as manufacturers do not think this Article worth retaining, if it prejudices the chances of settlement with the Customs.
Our latest news is that now the Hong Kong Government are not
willing to allow the Customs to function in the Colony on any condition, although apparently they are willing to do the work for them at their
expense, Apart from the fact that this is not acceptable to the Customs, it would in our opinion lead to continual trouble, in that
the Customs, having been refused their own proposal, would never be
satisfied that the Hong Kong Government were doing the work properly,
which again would lead to constant friction with the Chinese Government. There is every expectation among firms in the Chinese trade,
that, if this agreement is not made, the Inspector-General of
Customs will take very drastic measures for stopping smuggling,
which besides costing the Customs a lot of money, will at least cause
the utmost inconvenience to the local trade between Hong Kong and China.
We quote from letters from our Eastern houses, which shew still
more the importance of coming to an agreement.
Hong Kong May 14th
"With increased duties in China Articles IX "has become more important so that Chinese goods "imported into Hong Kong from a Treaty Port in "China and re-exported to another Treaty Port do "not lose their original status as regards freedom "from import duty."