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deliberate attempt to hold up supplies; indeed, when the road route at
Man Kam To was closed, there was a compensating increase in the volume of
supplies coming in by sea. The main shortage has arisen in the supply of pigs.
As a result the price of pork has increased but generally prices are firm.
As a precaution, however, the Hong Kong Government are examining the possibility
of securing alternative food supplies and have sent missions to Japan and South
Korea to this end. Enquiries are being made in London about alternative meat
supplies and also about securing advice on rationing schemes.
13. Rains at the end of August considerably eased the water supply situation
to the extent that the reservoirs now hold enough to maintain a restricted
supply until the end of the next dry season even if China should fail to honour
her obligation to resume her supplies on 1st October (there is nothing to
indicate that she proposes to default). In addition, the new Plover Cove
reservoir is one-third full and salinity there is gradually falling towards
acceptable levels. Nonetheless, alternative sources of supply are being sought
and contingency plans prepared for the transport of water to Hong Kong by tankers.
Trade and Industry
14. Hong Kong's economy must inevitably suffer some damage as a result of
Communist confrontation. The extent cannot be clearly seen at the present time.
15. External trade figures show that exports continue to increase in a
substantial way. In June and July, they were 16% higher than in the correspond-
ing months last year. Any effect on order books will not be reflected until
about October. Imports have fallen very slightly in the last two months but this
is attributable to the reduced trade with China and the closure of the Suez Canal.
16. Trade with China has dropped off appreciably partly as a result of China's
internal troubles which has affected trade in food but particularly because
Chinese exports are often deliberately held up or re-routed to maintain the
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