ut
CGSF: omr
29
6.
The indications are that the healthy position shown during the last quarter of 1948/49 will not be maintained during the present financial year. There was a recession in trade during March and April, 1949 which may be explained by the anxiety regarding Hong Kong's position vis-a-vis the Chinese communists, but the figures for May, 1949 indicate some recovery. It appears inevitable, however, that developments such as the Nationalist blockade and the communist occupation of Canton, (when this takes place) must have at least a temporary adverse effect on the trade of the Colony.
7.
Revenue receipts are at about the level of the estimates, which as you are aware, were deliberately framed on a conservative basis. There is no indication that the estimates will be exceeded, and it would not be surprising if receipts should show a downward trend later in the year. Moreover unforeseen expenditure during the first quarter of 1949/50 has been extremely high, as a result of ever increasing security commitments, but efforts are being made to offset this by cutting down normal expenditure as much as possible. The need for economy is being stressed in all official pronouncements on the financial position.
H. K. & PACIFIC 21 JUL 1949 REGISTRY