CO537-4999 — Page 246

EFFECT ON TRADE OF IMMIGRATION CONTROL

IN HONG KONG.

Endl. 2

SECRET

Every month Hong Kong handles about H.K.$300 millions worth of goods, of which it consumes or produces less than three per cent. In other words, Hong Kong's business is bringing in other people's goods and sending them out again. It provides storage, insurance, banking and shipping facilities for this transit trade, and the Colony has no other major economic role. Its $190,000,000 annual revenue is based on the prosperity arising from the efficiency with which this role is played.

2.

In broad outline, a sizeable proportion of Hong Kong's trade consists of big ships bringing in big cargoes which are then stored, broken up, and distributed outside the Colony by small ships and small men carrying small bundles; or of infinite numbers of small men and small boats bringing in small packets of goods or materials which are then assembled into big consignments and taken to the ends of the earth by big ships.

3.

It

Whichever way you take it, at one end of the line you have the vast car goes of ocean-going liners; and at the other the multiplicity of parcels carried by junk, sampan, travelling trader and the irrepressible smuggler. The two ends are in mutual relation; the one depends on the other so that the holds of the ocean-going ships would be empty but for the warren of small traders and smugglers and the swarm of sampans and junks. This is the broad trade picture which must be kept always in mind. could be called the splinter method, since its essence is to assemble large consignments from, or distribute them by, splinters.

4.

Hong Kong licensed small craft operate to and from Canton and the West River Delta, north to Swatow and south to Kwongchowwan. They make close to 150,000 recorded movements in a year, with an aggregate of over 3,500,000 gross tons carrying nearly 6,000,000 people across our maritime boundaries. On the railway, every express to or from Canton carries between 500 and 600 travelling traders each with his bundle of goods :3,500,000 rail passengers cross the frontier at Shum Chun annually. Over the land frontier on foot and by unrecorded movement of small craft in the vicinity of Mirs Bay and Deep Bay, no estimate can be given; but, to take one commodity alone, at the moment 10,000 tons of rice reach us every month from China, which officially prohibits the export of rice.

5.

In this whole pattern of mass movement, note that it is all strictly business: there are no tourists or sightseers. Each mover stopped or delayed represents a direct trade loss. There is no complicated economic theory about this loss: we lose exactly what each traveller ca ries and each of these myriad travelling traders carries something in and takes something out. The aggregate, if it could be weighed and counted, would be very substantial.

6.

To restrict movement is to restrict trade. Apart altogether from that undisputed fact, what would result if Hong Kong imposed immigration restrictions?

7.

First of all, the trains to and from China would have to be held on the frontier for checking. The average train carries 1,400 passengers and there are four in and four out every day. The most cursory inspection of individual travel documents could possibly be done at the rate of 300 an hour. This would represent immigration control on the level of bluff but even so it would impose a delay of over four hours on each train,

on a non-stop