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6. The Japanese competition which is gradually being followed by Chinese, is driving trade into new channels and leaving high and dry those who previously dealt with European goods. As I have already suggest- ed Lancashire in the cheaper lines of textiles, and Europe generally in many other respects, might just as well accept the inevitable. The channels in which trade is now moving do not render in many instances, a call at Hongkong essential.
7. In addition to the Japanese and Chinese com- petition, there is intense competition in every line and in all directions, banking, insurance, shipping, trading, etc., there is not enough to go round and every one is fighting for it, with the result, that prices are cut to ribbons.
Hongkong will get little benefit from the Ottawa Agreements or from the Colonial Office Empire policy as Hongkong is handling international trade.
8. In every line and in all directions, as far as the British are concerned, there is inter-competition and a total lack of co-operation with the result that whilst the fight is on, others are getting the benefit. The leopard is hardly likely to change his spots in the near future.
9. During the post-war boom many new concerns and mushroom industries came into existence-concerns with insufficient financial backing-the result has been that many have gone to the wall bringing old established concerns down with them or are being kept floating under circumstances which are quite unsound.
10. The general uncertainty of the political out- look throughout the world is a very real deterrent to general trade. No concerns with wide ramifications know where they are going to make their next loss.
11.--The general insecurity in China since 1911 has made trading, save in the Treaty Ports, often out of the question, to which must be added a lack of trading morality which has rendered credit terms a most speculative operation.
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12. The Japanese policy in Manchuria, her general bellicose attitude, and her undoubted interference in the domestic affairs of China, has created a state of mind amongst the Chinese, which seems to interfere with their desire to trade.
13. The low value to which commodities have fallen has lessened the credit facilities obtainable, and greatly diminished the profits hitherto made.
14. The general policy of the Chinese Government both central and provincial is not to benefit Hongkong at the expense of China. If it were possible to eliminate Hongkong altogether China would gladly do so.
In any event, schemes such as special customs facilities, the loop line at Canton, aerial transit, a motor road to Hong- kong or any other form of service likely to unduly benefit Hongkong, will be conceded only with reluctance.
15. Excessive shipping tonnage and poor freights are reflected in Hongkong as the Colony so largely depends on shipping. Nothing but an all-round world improvement or a scrapping of tonnage by arrangement, will be of any value.
16. There is no doubt that our exacting shipping regulations have been found burdensome by some foreign owners, and that an appreciable quantity of shipping, though admittedly not of a very desirable class, does avoid Hongkong although it formerly came here. Hongkong can hardly go back on the position she has adopted in this respect which unfortunately is far in advance of China and certain other countries.
17. There is certainly, owing to the changed condi- tions of trade, much Japanese and Chinese shipping going direct to its port of destination and not passing the cargo through Hongkong.
18. China's new Industrial Reorganisation Scheme is resulting in many goods being manufactured in China instead of being imported from Europe, and this position is bound to get more serious year by year.
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