CO129-549-14 Commission of Enquiry into trade of Colony 17-7-1934 - 18-1-1935 — Page 37

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bonding or other similar arrangements for the entrepot

goods of the same category, would constitute an interference

with the entrepot trade which would adversely affect the

prosperity of the Colony to a greater extent than would be

compensated for by the Empire preferences likely to be

obtained.

On the whole it seems that we will have to discard

any idea of further p eferences and concentrate on what seems

to be an equally if not more difficult method of bid for

improvement, viz:- arrangements for a closer connection with

China.

I think this position should be stated clearly to

the authorities at home. Though Hongkong may expect some

increased prosperity if conditions in China and general world

conditions improve it is not at all clear that with merely

a laisser faire policy Hongkong will regain former prosperity.

It seems more likely, taking the long view, that China will

become more stable, and that China's industri es will develop

and that Hongkong's prosperity will decline accordingly.

While this state of affairs may not adversely

affect the United Kingdom (indeed increased prosperity in

China may well increase her imports of United Kingdom capital

goods and raw materials from other parts of the Empire) the

question has to be faced as to hether the Imperial Government

will consider it wise acquiescently to envisage the gradual

decline of Hongkong's Commercial importance perhaps

eventually to the state of being a Gibraltar of the Far East,

or whether it will consider that British interests in

general will better be served by a commercially prosperous

Hongkong in as close a relationship with China, short of

absolute political divorcement from the Empire, as is

necessary to achieve this prosperity. This is a very

difficult task, but it seems to be the only one of any