ENG-1947 — Page 84

factories increased from 418 to 883. There were certain new developments in industry, such as cotton spinning, the manufac- ture of aluminium and plastic household wares, and fur processing for hat and glovemaking, and considerable interest was evinced in Shanghai in the possibilities of Hong Kong as an alternative industrial area in spite of certain comparative dis- advantages such as the limited water supply, the scarcity of suitable sites, and the existence of more stringent labour regulations.

Cotton Textile Industry.

Before the war, more persons were employed in the textile industry than in any other single industry in Hong Kong. There were 150 factories engaged in cotton weaving and 450 in knitting, employing 25,000 and 15,000 workers respectively. During 1946, the industry did its best to re-establish itself, in spite of deteriora- tion of machinery and a severe shortage of yarn which was available only from limited stocks found in the Colony and supplies from China purchased at very high prices. By the end of the war, there were over 90 weaving factories in operation but practically no knitting factories. During 1947, supplies of yarn improved considerably, although they were never easy. Fairly large quantities were available from Japan, but only against payment in U.S. dollars, while a certain amount could be purchased from China on a Government to Government basis at prices rather higher than the world level. Small quantities of higher count yarns also became available from the United Kingdom in the second half of the year.

During the first nine months of the year, production did not expand rapidly, partly because of the relatively high cost of yarn and partly because of competition from Japanese textiles, large quantities of which were suddenly released throughout South-East Asia. The industry was using only about 1,000,000 lbs. of yarn per month during this period and no shortage was felt. In the last quarter of the year, the posi- tion altered and, with prices rising elsewhere in the world and local costs declining, the industry received a considerable impetus. A further factor which helped to boost the industry was the stipulation of the authorities in Japan that textiles from that country could only be bought in exchange for U.S. dollars: the consequence was that exports from Japan practically ceased. With production rising, a shortage of yarn began to make itself felt and it is possible that had yarn been available in greater supplies, production would have risen even further than it did. At the end of the year, stocks on hand were negli- gible and future supplies were a matter of considerable concern. There is a tendency in the industry to regard the present situation as a golden opportunity which it is missing simply because of the shortage of yarn, and a failure to realise that the opportunity is largely just another facet of the world-wide

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