SAVINGRAM
To the Secretary of State for the Colonies.
34
From the Governor, Hong Kong.
Date
No.
4.
2
In the light of the foregoing figures, the financial position of the Colony cannot be regarded as other than satisfactory. The Estimates for the current year were framed at a time when the political horizon was dark, and when it was expected that the trade of the Colony, at least so far as China is concerned, would come almost to a standstill. In actual fact, revenue figures are breaking all records.
5.
This is in all probability due to three main factors. One has been the continued influx of flight capital from China, an influx which it is believed has now ceased so far as China proper is concerned, but seems to be continuing from Formosa. The second is the fact that although trade through official channels with China has fallen tremendously, the volume of trade through unofficial channels continues at a high level. The effect of this second factor is that China is now importing from Hong Kong articles which, instead of passing through the Colony under bond, have in fact paid local duty. Hence the record figures for Tobacco, Liquor, and Other Duties. The third factor is the automatic effect of the influx of population on receipts from royalties from transport companies, entertainment. tax, bets and sweeps tax, restaurant meals tax, and the like.
6.
How long this state of affairs will continue it is impossible to say. But the effect of the falling away in the influx of flight capital is already discernible in that there is some evidence of a drop in the values of land and property. The high yield from Stamp Duties is directly attributable to the high prices paid for land and buildings bought by wealthy refugees, and it seems unlikely that the revenue under this Head will again reach such a large figure.
My above-mentioned Savingram referred to a sharp fall in Railway revenue following the "liberation" of Canton. In actual fact, Railway revenue for the eight months to the 30th November, 1949, totalled $4,537,000 as against the estimate of $5,644,000 for the full twelve months. It is now probable that the estimate will be exceeded, for, although regular through traffic to Canton is suspended, this is for the moment more than offset by an increase in local traffic. How long this will continue is, however, problematical if air activity against railway installation develops on a large scale.
8.
It should be noted that the revenue figure of approximately $190,000,000 for the first nine months of the year includes the sum of $16,000,000, being the non-recurrent contribution of one million pounds made by His Majesty's Government to help solve problems arising out of the war.
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