COPY
PS. M
CONFIDENTIAL.
OBSERVATIONS ON
COLONIAL OFFICE MISCELLANEOUS NO. 445 (CONFIDENTIAL).
This report taken in conjunction with a
general survey of the position of Hongkong serves to
emphasise the fact that Hongkong is different from
any other Colony in the British Empire. It is
primarily a deep sea port and entrepot for China and
fundamentally, from a geographical and commercial
point of view, a part of South China. This may be
presented more vividly to the mind if we imagine
Hongkong suddenly cut off from any connection with
China, There was a taste of this in the strike period
of 1925. In view of this it is generally conceded that
Hongkong must continue to be a free port except inasmuch
as a suitable arrangement for close connection with
China might be possible.
If the principle in the last sentence is
accepted then Hongkong cannot give much, if anything,
in the way of preferences to the rest of the Empire.
The Empire therefore will not give further preferences
to Hongkong. On the contrary the tendency will be to
cut down preferences at present afforded if Hongkong
manufactures compete with other Empire manufactures.
Even if we could r each a formula by which preferences
on certain goods supplied by the Empire for consumption
in the Colony could be afforded, it is very doubtful
whether the effect of these would be sufficient to warrant
the Empire giving preferences on Hongkong manufactures in
exchange. Moreover it is feared that any preferential
taxetion on goods for consumption in the Colony, necessitating
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