Extract from Far Eastern Economic
Review, July 14th, 1949.
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HONG KONG'S FINANCES.
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In line with the rather gloomy picture of Britain's gold dollar position laid before us by Sir Stafford Cripps in true Churchillian style, is the subdued outlook displayed by the Hong Kong Government's Financial Secretary Mr. Follows when moving in the Legislative Council the supplementary provision of KK.12 million for the fourth quarter ending March 31 of this year. For the whole year 1948-49 the grand total covered by supplementary votes is $37.6 million, or, when savings totalling $2.9 million are taken into account, additional supplementary provision amounts to $34.7 million. Mr. Follows draws attention to the gratifying results of last year's working expressed in a surplus of approximately $33 million, due to the abnormally high rate at which revenue came in during the last few weeks of the financial year the receipts for the last week in March reaching the record figure of slightly over $8.5 m. as compared with the average weekly figure of about $3.5 m. but warns that a similar result at the close of the current financial year should not be anticipated, indeed that it would not be surprising if revenue receipts were to show a further downward trend "as the present developments in the political sphere are bound to have a marked effect on the Colony's trade, though this may not become apparent for some time". Mr,Follows also adds that "there is as yet no general realisation that the period of prosperity which Hongkong has enjoyed since the liberation appears to be drawing to an end. "
As the Financial Secretary points out, the revenue estimate for 1948-49 was drawn up on a deliberately conservative basis, but so far receipts are only on the level of that estimate, with no indication that it will be exceeded. Consequently in his opinion, there is little hope that there will be any surplus on the current year's working with which to meet the additional unforeseen expenditure during the first quarter of the year, due to ever increasing security co mituents even though economies in normal expenditure are as far as possible being introduced.
It is all to the good that the Financial Secretary should range himself on the side of conservatism in dealing with the Colony's finances, but the man in the street may be pardoned if he wonders whether in view of the surprising surplus of $33 m. on last year's workings, the situation may not again have been underestimated for this year? During the first five months of 1949 trade, so far from showing a decline as had been prophesied by many businessmen, showed an increase of 16% in imports and 24. 94% in exports as compared with the same period. in 1948, May being a record month in the Colony's trade. Undoubtedly the set-back in trade with Shanghai and other ports in Communist-held China will make itself felt sooner or later, but this does not mean that a "recession" is on the way. In fact, the stability of the Colony as reflected in the very manner of conducting its finances compared with the uncertain financial methods adopted for its unhappy neighbour China, is what gives confidence in its future and a certainty that when trade is once more free Hongkong will be found ready as in the past to meet China's requirements.