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 37

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seem to have varied substantially over the last five years,

except that the purely non-Chinese trade appears to have

decreased in relative importance, while the flow of goods

into China has diminished more than the flow of goods out

of China, which is characteristic of the general trade

position in that country.

italx

Probable Effects on Trade of a Customs Union.

6. (a) That part of Hong Kong's trade which is

concerned with the external trade of China might be

expected to be little affected, as it makes little

difference whether such trade passes the Customs barrier

between Hong Kong and China or between Hong Kong and the

third country concerned. Probably some goods which are

at present attracted to Hong Kong by its position as a

free port and ultimately exported to China, would no

longer touch Hong Kong at all, but would go straight to

their ultimate destination.

(16) Hong Kong's own imports, the next largest

single item of trade, would presumably have to pay the

Chinese rates of Customs duty. The reactions of this

are further considered below.

(c) Hong Kong's own exports of manufactured goods

to China would be substantially assisted and there might,

in fact, be a very considerable increase of manufacturing

production in the Colony.

(a) The Chinese coastal trade would be assisted

in so far as Chinese goods at present passing through Hong

Kong lose their national status and have to pay duty

again on re-entry into China. (In this connexion,

however, see paragraph 13 below).

(e)

The non-Chinese entrepôt trade would be

definitely

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