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 65

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been examined, the proportions to not 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.

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

Brotat third country concerned. Possibly 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.

(b) 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.

(a) 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)