CO129-501-5 Chinese situation- Recognition of Canton Government 22-7-1927 - 28-9-1927 — Page 55

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untenable. As regards the Sugar Refineries the concessions

in the matter of remission of taxation granted by the Chinese Government to the China National Sugar Refining Co., whose factory at Woosung is approaching completion, already

give that Company a strong advantage over its Hong Kong

competitors, and if this discrimination is to be intensified by greatly increasing the burden of duties on imported sugar

without a corresponding increase in the taxes charged on the

native produced article it is to be feared that the market

will be closed altogether to the Hong Kong Companies.

We feel that Hong Kong's industries are entitled to

special consideration in a matter of this kind, and that

they should not be regarded as being on precisely the same

footing as the industries established in foreign countries

in less intimate trade relations with China. The industries

of Hong Kong have been established and developed solely for

the supply of China's needs and in the confidence that there

would be no sudden disturbances of existing conditions; in

the case of the Sugar Refining business the output of the

refineries goes almost entirely to China. We would add that the special intimacy of the commercial relations between

Hong Kong and China has long been recognised, and that

proposals to make them still closer by means of a Customs

Convention were long under discussion between the Chinese

and Hong Kong Governments.

The point on which we desire to lay particular stress,

and in which we hope to have the support of the British Delegation to the Customs Conference is that the trade of Hong Kong is so closely bound up in that of China that in considering the question of any increased import duty on

Sugar, whether it is to be regarded as coming under the

general tariff or is to be classed as a luxury, the claims