ENG-1958 — Page 14

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HONG KONG ANNUAL REPORT

one of uncertainty and dismay. It would have required a bold and imaginative person, surveying the chaos and confusion which reigned, to predict the transformation which was to occur and the amazing resurgence of vitality and faith upon which this was based.

AN INDUSTRIAL BALANCE SHEET

Upon what basis does Hong Kong's industrial development rest? Of the factors usually considered essential for such development, nearly all are missing. There are no raw materials available locally save fish, building stone, a small quantity of minerals-only some of which can be used in the Colony-and a variety of agricultural products insufficient to supply the needs of the population. There is no local_coal, oil or other source of power, and there has been for many years a persistent and serious shortage of water. There is an acute lack of suitable sites and premises for industry. The Colony's internal market is not sufficiently large to offer a solid base for expansion, and, with free trade the life-blood of Hong Kong's existence, there has been no tariff wall or other protectionist device to shield the growth of industry from overseas competition. In its exposed geographical and political situation, Hong Kong has had to accept the serious consequences to its normal trade of the embargoes imposed for the common good of the United Nations since the outbreak of the Korean War. The extraordinary overcrowding in the urban areas which has occurred since 1947-a density of 2,000 persons to the acre is common and even 3,000 is not unusual-has produced vast, urgent social problems to hamper the administration in its striving after orderly progress and to absorb huge sums in public expenditure.

On the credit side, favouring the development of industry, can be placed the existence of a stable government, which has provided an atmosphere of peace and security, free from violent social and political upheavals; the attraction of capital into the Colony, particularly from areas in South-East Asia shaken by discord; a deeply-rooted tradition of efficiency in such services as banking, shipping and insurance, all of them vital to industrial growth; a large merchant community with trading links all over the world; a sheltered, deep-water harbour; the existence of an abundant, hard-working and adaptable labour force; an influx from the Chinese mainland of skilled workers and industrialists (not only