TNAG-0103-FCO40-139-Briefs-and-background-notes-for-Lord-Shepherd-1967 — Page 109

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BACKGROUND NOTES

TRADE AND INDUSTRY

NO. 10

Hong Kong's prosperity prior to 1950 rested on the entrepot

trade, principally with China. With the advent of the Communist

Goverment in China and the embargo on strategic exports to China during

the Korean War, the entrepot trade dwindled rapidly. In its place

industry has assumed a dominant role and over three-quarters of the

Colony's total exports are now manufactured or processed locally. The

arrival of refugees brought in additional manpower and in some cases

valuable technical skills and capital. United States regulations

prohibiting the import of Chinese manufactures provided the stimulus to

develop new Chinese-type products in Hong Kong for the American market.

In 1949 Hong Kong's total trade was £173 million; in 1966 it was £1,104

million.

2. The Colony is now firmly established as an industrial econony

dependent upon exports rather than a donostic market. Since Hong Kong

has to export to live the only industries worth having are those whose

products can be sold in the domestic market without protection or which can

be exported without subsidies. Hong Kong has therefore remained true to

the traditions established when it was an entrepot, i.c. no tariffs other

than those which are designed solely to produce revenue and free ingress

for other goods from any quarter of the globe. The entrepot trade is,

however, still considerable.

3. Hong Kong's exports have been expanding in recent years at the

rapid rate of 12% 15% per annuri. Textiles still account for about 60%

of the total, with woollen knitwear now a rapidly expanding sector

(especially in the United States and Western Germany). Other products,

such as electronics and synthetic textiles, are also showing a considerable

/expansion.

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