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population of the Colony is engaged in “ earning a living. That is to say, this percentage is actually occupied in pursuits of gain Table No. 39 on page 65 of that report gives a synopsis of Industrial Classification which is of considerable interest. The following figures have been extracted therefrom:-
Total population
.849,751
Portion of total population occupied in pursuit of gain....470,794
Portion occupied in Manufacture.....
.111,156
Portion occupied in Transport and Communications
71,264
Portion occupied in Fishing and Agriculture
64,420
Portion occupied in Commerce and Finance
97,026
16. From these figures it will be seen that about one quarter of those occupied in pursuits of gain (or one seventh of the total population) is engaged in some kind of manufacture, while a somewhat smaller number is engaged in commerce and finance. It is estimated, however, that of the rest of the working population a very much greater proportion is engaged in servicing finance and commerce than in servicing manufacture. These figures are merely produced, without any desire to exaggerate, to show that a substantial portion of the activities of the Colony is engaged in industry. It is, of course, quite well recognised that the principal and basic activities of the Colony are Trade and Commerce, and the auxiliary services appertaining thereto, and that industrial activity has only recently arisen and assumed any sizeable proportion.
17. Until we examined the position we were as a body inclined, with others of the community, to consider the industry of Hong Kong as being of very minor importance. As the result of research and evidence, however, we have come to the conclusion that it has assumed a proportion which can by no means be disregard- ed and that while it has arisen in somewhat haphazard style it does contribute sub- stantially to the welfare of the economic unit of South China and Hong Kong. We are of the opinion, however, and all the evidence which we have heard bears this out, that the industry of Hong Kong cannot develop much beyond its present stage except inasmuch as it can form an economic part of the whole industrial develop- ment of South China and even to some extent of North China. While some of the factories at present existing in Hong Kong are solely Hong Kong Units, some of the more important are but sections of industrial concerns, the other parts of which operate in Canton or in Shanghai. That the still closer combination of the industry of the Colony with that of China is the logical development is still more apparent when we note that of the 111,000 engaged therein all but 800 are Chinese. Still more striking is the fact ascertained by research that there are over 400 Chinese managed factories in the Colony mainly producing consumable goods, having a total capital of somewhere about $50 millions. This capital is almost entirely Chinese.
18. From all the above it is not only clear that all the activities of Hong Kong are very much bound up with those of South China but also that from a purely economical point of view there should be no separation or cleavage in those activities. They are indeed in many respects inseparable. Owing, however, to artificial barriers placed between them mainly by way of taxation, normal co- operation and development is greatly retarded. Thus considering the area of South China and Hong Kong as a whole it seems impossible to say that any measures calculated to afford free trade within its borders can be of detriment to any part of it. Prosperity accruing to Hong Kong must be reflected in increased prosperity to Canton and the hinterland and vice versa, and any action causing economic separation can only work to the detriment of both. The fact that South China in- vests money in Hong Kong and that Chinese in Hong Kong remit money to South China alone points to this.
19. It appears equally plain that neither South China nor Hong Kong can ex- pert much increase in prosperity until both internal conditions in China and general world conditions improve. Our desire, therefore, must be to initiate arrange- ments calculated to ensure that when conditions do improve the economic unit of
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Hong Kong and South China may fully return to its former prosperity. Can it do this if Hong Kong continues to be outside China's high tariff and the tendency on the part of China continues to be to side-track Hong Kong wherever possible, in spite of the fact that it is the best deep sea-port for South China?
20. As it is generally agreed that really sound and reliable trade cannot be based on smuggling, it is reasonable that we should be prepared to take active measures to combat it to China's advantage, provided that we too can obtain some advantage more permanent and moral than that possibly accruing at the present time from large scale smuggling.
21. We gave this subject considerable time and thought in view of the fact that in our opinion it is the most important question arising under the second and third parts of our terms of reference, viz :-" to make recommendations for the amelioration of any existing difficulties and for the improvement of the trade of the Colony ".
22. We finally agreed that it would be a desirable thing if, without giving up its Free Port status and without surrendering privileges or authority, this Colony could come to an understanding with China which would enable to have free or preferential entry into China in respect of goods manufactured within the Colony.
23. Further, we were agreed that the Colony of Hong Kong should be prepared actively to co-operate with the Chinese Authorities in safeguarding Customs revenue in return for preferential treatment from China in respect of goods manų - factured in Hong Kong.
24. In order that our suggestions might have the fullest and most careful con- sideration we are of the opinion that they should be frankly discussed with the Chinese Authorities informally and without commitment on either side, so that the ground may be fully explored. We are strongly of the opinion that personal contact and conversation would elicit true facts and a sympathetic understanding of a point of view which correspondence could not achieve.
25. Though there have been newspapaper paragraphs and rumours regarding opposition to measures of this nature, as far as we are aware no discussions have taken place and there has, therefore, been no opportunity for an exchange of views for the purpose of ascertaining whether any mutual concessions could be made or advantages obtained. In our opinion closer connections between Hong Kong and China in the way of informal meetings and discussions would do much to dispel antagonism born out of misunderstanding. Ex parte statements have been made that the interests of Hong Kong and South China are totally opposed. We have endeavoured in the above chapter to show that on the contrary the interests of the whole area are one and that closer collaboration will tend towards increased pro- sperity for that area and the establishment of trade, commerce and industry on a sound and lasting basis. British interests are not opposed to those of China. The British are only too anxious to increase the volume of trade. Success in this direction spells prosperity to China and Hong Kong alike. Inasmuch as Hong Kong is an established trade mart having little or no raw materials for industry whereas South China is a large area having raw materials as yet largely unexploited, it would appear that the future holds out hope of increasing production on the mainland. For this, capital, machinery and equipment, and marketing facilities are required. With regard to these requirements, given adequate encouragement Hong Kong is in a unique position to assist.
Chapter VI.
HONG KONG'S POSITION VIS-A-VIS THE BRITISH EMPIRE.
as
1. In the last chapter we viewed the economie position of the Colony related to China. Here we will take into consideration the fact that Hong Kong is a part of the British Empire.
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