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It may be that the prosperity which is
reported in the telegram No.6 is something of an
Indian summer, but we are entitled to derive what
passing benefit there may be from the present
stormy conditions which surround the Colony.
Hong Kong has survived typhoons in the
past and is long accustomed to a heavy bill for
Special Water expenditure, but it has always been
sensitive to any interference of its shipping trade
whether in the relatively mild form of the post- war
"blockade" by the Chinese Customs Service or the
partial but more savage war on junk traffic in the
Canton River estuary by the present Japanese forces.
But Hong Kong will remain the only satisfactory
ocean port in S.China and one cannot think that its fortunes can be permanently eclipsed whatever
degree of interference and aggression it has to suffer
temporarily. One potentially important economic
asset has come to the Colony under the stress of
war, namely, a through railway connexion with the
Canton-Hankow railway, and if the Japanese are left
at the end of the present war in a permanent
dominant position at Shanghai the importance of
Hong Kong's rail connexion to the Yangtse valley at
Hankow may be all the greater.
The Estimates for 1938 have been, as usual
in Hong Kong, framed on a Conservative basis, and
experience has again and again shown that we need
not be apprehensive merely on account of a deficit
being shown in the budget.
At the end of 1938 the Colony will show
surplus assets of $12 million dollars of which all
but some $2 million have been advanced to finance
necessary
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