37
Sec: File No. 1170/47s
SAVINGRAM
To the Secretary of State for the Colonies
From the Governor, Hong Kong.
Date 29th September 1948
No. 80.
SECRET
R. British Consul General,
CANTON
(NO 61.
British Embassy,
NANKING (NO. 45.) Comm. General,
SINGAPORE (No. 5. ) úa.C., HONG KONG.
Following is a political report for Hong Kong for the two weeks cuding 20th September 1948.
Economic matters have dominated the scene during the last two weeks. The Chinese efforts to establish successfully the new Gold Yuan currency have been watched with close attention by the business com- munity in Hong Kong. The Chinese Government have been hinting that Hong Kong will be asked for the closest cooperation in supporting the new currency, and there has been talk of plugging all leaks with the implication that the major one is Hong Kong. The drastic measures taken in Shanghai by Major-General CHIANG Ching-kuo's economic police have had some effect, but have not impressed favourably. Hong Kong has already cooperated in several tangible ways, notably by (a) persuading nearly all the press, Chinese and English language, in Hong Kong to refrain from publishing black market quotations of the Gold Yuan; (b) by restricting the amount of Gold Yuan currency that travollors can bring into the Colony to G.Y. 20; and (c) by issuing on 20th September an official notification to all exchange and licenced banks prohibiting dealings in Chinese currency except through banks authorised to deal in foreign exchange. It was announced that these measures wore introduced in order to "lend neighbourly support to the new currency in China, tho success of which is so important to tho Far East as a whole". There has been no official Chinese reaction as yet to these latest measures, though it is feared that the Chinese might ungraciously denounce them as mere window-dressing, since it is known that they wish Hong Kong to take far more drastic steps. The answer to this is that Hong Kong is not prepared to take measures quite impracticable of realization when China's own currency control is so unreliable.
2.
As part of their currency control measures the Chinese authorities since September 12th have required Chinese travellers from Shanghai to Hong Kong to obtain exit permits. It is believed that a similar system will be put into force for Canton. The Chinese Foreign Office has informed the British Embassy in Nanking that to make such control completely effective it would bebe necessary to control the land frontier between Hong Kong and China, and that special passes would be arranged for Chinese residents in the frontier area in order not to interfere with the supply of foodstuffs to Hong Kong. They emphasised that the travel restrictions wore not directed at Hong Kong but were designed to prevent rich Chinese taking refuge in Hong Kong. Over 30,000 Chinese are alleged to have left Shanghai for Hong Kong recently. The restrictions are not likely to harm Hong Kong, and they may provide a useful precedent should Hong Kong wish to enforce at any time immigration control on its
side/