CO129-558-11 Mission of Sir F. Leith-Ross to China- proposals for a Hong Kong - China customs... 29-9-1936 - 30-12-1936 — Page 29

COPY.

29

Paragraph 3.

Assuming Hong Kong's imports: exports

4 3, as has recently been the approximate proportion,

this gives the following percentages of total trade:-

Imports for consumption in Hong Kong

(i) from Chinese countries

(ii) from non

*

5%

14%

Exports of Hong Kong produce and

manufacture.

4%

Chinese coastal trade passing through

Hong Kong.

8%

Non-Chinese entrepot trade.

17%

Chinese external trade.

52%

(a) "The

external trade would be little affected".

(b) Hong Kong imports would cost more.

(c) Hong Kong export of local manufactures would be helped.

Coastal trade.

Non-Chinese entrepot trade would be hindered.

Paragraphs 4 & 6(a). This argument assumes that a

free port zone would not be maintained, and is not relevant

to Sir. F. Leith-Ross' proposal, which assumed that it could.

6(b). This, and the later remarks on the same

subject, ignore the fact that duty paid on Hong Kong's

retained imports would go to the Hong Kong Government.

Unless therefore they made this an excuse for increased

expenditure, there would be a corresponding relief to the

Hong Kong community which should largely counterbalance

any reduction in Hong Kong's power of competition.

6(c). This, I think, is the main ground on which

Hong Kong would favour a Customs Union, if it can be

introduced and maintained.

6(a). This, on the figures given above, represents

only 8% of the total trade of Hong Kong.

6(e). It is not clear why there should be any damage

at all, if adequate Free Port facilities are maintained.

It is rather for the Foreign Office than the

Colonial Office to say whether the Japanese could

effectively