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 63

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The possible desirability of a Customs Union or other

special arrangement on matters of trade between Hong Kong

and China.

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The very close trade relations between Hong Kong

and China have led several times in the past to considera-

tion being given to the making of a special agreement

regulating trade between them.

[A his

A historical note dealing

in detail with the most recent of such attempts is

attached. It has now been suggested by Sir Frederick

Leith-Ross that affull Custome union might be economically

Customs-union

valuable to the Colony Clearly its value, apart from

any general requirements of British policy towards China,

depends on its anticipated effect on Hong Kong trade.

General Nature of Hong Kong Trade.

2.

Four broad categories may be distinguished:-

(a) imports for consumption in Hong Kong (including

raw materials for certain industries) and exports of

Hong Kong origin;

(b) Chinese external trade passing through Hong Kong,

i.e. Chinese goods re-exported to non-Chinese countries

and non-Chinese goods re-exported to China;

(c) Chinese coastal trade, i.e. goods imported from

one part of China and re-exported to another;

(a) Non-Chinese entrepôt trade, i.e. goods imported

from a non-Chinese country and re-exported to another non-

Chinese country.

3. The Hong Kong trade returns do not distinguish

between imports for consumption and imports for re-export

or between exports of Hong Kong, Chinese and non-Chinese

origin,