G
THIS DOCUMENT IS THE PROPERTY OF HIS BRITANNIC MAJESTY'S GOVERNMENT
31
CRET.
E.J. (35) 6.
Printed for the Cabinet. November 1936.
R
CABINET.
Committee on Political and Economic Relations with Japan.
12
Copy No.
36
CHINA.
SIR FREDERICK LEITH-ROss's REPORT ON HIS FINANCIAL MISSION TO CHINA.
Memorandum by the Secretary of State for the Colonies.
I CIRCULATE herewith to the Committee a memorandum containing my observations on Sir Frederick Leith-Ross's Report as far as Hong Kong is particularly concerned.
Colonial Office, Downing Street,
je
(Initialled)
W. O. G.
November 16, 1936.
THE POSSIBLE DESIRABILITY OF A CUSTOMS UNION OR OTHER SPECIAL ARRANGE- MENT ON MATTERS OF TRADE BETWEEN HONG KONG AND CHINA.
THE very close trade relations between Hong Kong and China have led several times in the past to consideration being given to the making of a special agreement regulating trade between them. It has now been suggested by Sir Frederick Leith-Ross that consideration should be given to the possibility of the entry of Hong Kong into a Customs Union with China. Clearly the value of such a union, apart from any general requirements of British policy towards China, depends on its anticipated effect on Hong Kong trade.
General Nature of Hong Kong Trade.
2. Four broad categories may be distinguished :-
(a) imports for consumption in Hong Kong (including raw materials for
certain industries) and exports of Hong Kong origin;
(b) Chinese external trade passing through Hong Kong, i.e., Chinese goods re-exported to non-Chinese countries and non-Chinese goods re-exported to China;
(c) Chinese coastal trade, i.e., goods imported from one part of China and
re-exported to another;
(d) Non-Chinese entrepôt trade, i.e., goods imported from a non-Chinese
country and re-exported to another non-Chinese country.
3. The Hong Kong trade returns do not distinguish between imports for consumption and imports for re-export or between exports of Hong Kong, Chinese and non-Chinese origin, and it is not possible to distinguish the various items of trade accurately. By examination of the individual items of trade, it is, however,
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