39. This decision had far-reaching effects. In the field of administration, it necessitated the certification of every consignment of piece goods by a recognised accountant, paving the way for similar certification in the future in other fields in which 100% Empire content is not obligatory.
40. The new Imperial policy had a remarkable effect in Hong Kong. Previously local weaving factories had used Japanese cotton yarn almost exclusively, and there were many complaints about the quality and price of the Indian product. With the outbreak of hostilities in China, however, imports of Japanese yarn practically ceased, while at the same time the quality of the Indian yarn improved and its price dropped. The net result is that cotton piece goods locally manufactured from Indian yarn are now competing on favourable terms in many countries of the Empire.
41. The position as regards artificial silk piece goods is not as good. The only result of the new policy hitherto has been to bring to a complete standstill the local silk-weaving industry. Manufacturers are ready enough to use Empire yarn in place of Japanese yarn, but at the end of the year Empire yarn was practically unobtainable at any price.
42. The total number of factories on the register at the end of the year was 334, as compared with 278 at the end of 1936. A table of the Certificates of Origin issued in respect of the various types of goods manufactured is given in the Appendix.
IX.—TRADE STATISTICS.
43. In the annual report on trade statistics for the year 1936 improved conditions in the Colony were predicted and the note of optimism was fully justified as is illustrated by the trade returns for the year 1937. The total visible trade of the Colony in 1937 increased by 35.0% in terms of local currency, and by 32.2% in terms of sterling, as compared with the year 1936. Imports and exports of merchandise during 1937 amounted to a total value of $1,084.4 millions (£66.9 millions) as compared with $808.3 millions (£50.6 millions) in 1936.
44. During the final quarter of 1937 a certain amount of cargo originally destined for North China ports was diverted to the Colony on account of the Sino-Japanese hostilities, and a considerable proportion of it remained in storage at the end of the year, although a certain quantity, which cannot be estimated, was ultimately disposed of locally and included in local trade returns accordingly. In assessing the relative trade returns for 1936 and 1937 it should be borne in mind that the records do not include transit or transhipment cargoes and, therefore, do not include cargoes originally destined for North China ports which were stored in local godowns at the end of the year. It will be seen, therefore, that the increased trade enjoyed by the Colony during 1937 was not entirely due to diverted imports.