ENG-1958 — Page 17

REVIEW

5

For two years the business boom continued steadily, but in 1947 there were fears of a recession, owing to unsettled conditions prevailing in China. Faced with foreign exchange difficulties and mounting inflation, the Chinese Government imposed severe restrictions on imports, while the military situation in the north made it difficult for Hong Kong merchants to obtain traditional items for export. They directed their efforts elsewhere, particularly to South-East Asia, and, contrary to expectations, business in the Colony continued to prosper. The apparently insatiable demand for consumer goods throughout the whole of the Far East con- tinued until 1949 and it was relatively easy to divert cargoes originally intended for China.

THE DECLINE OF THE CHINA TRADE

Although merchant shipping was embarrassed by the blockade of Chinese ports after 1949 by the Nationalists who had withdrawn from the mainland, deliveries of goods to North China increased and at the end of 1950 there were signs of a brighter future- improved trade relations with China, an increase in the volume of business with South-East Asian territories, and more local industries. In 1950 the Colony's total trade had reached the record figure of $7,503 million. This trade boom was spectacular but short-lived. Trade reached the all-time value record of $9,303 million in 1951, but three factors then completely transformed the Colony's economic position-the first was the imposition of restric- tions on trade with China by the Western powers; the second, and partly a consequence of the embargo, an abrupt change in the trading policy of China; the third, and most important factor of all, the arrival of the refugees.

It was in 1949 that the Colony began to benefit from a substantial influx of capital from the mainland, seeking secure investment, and the first signs of the initial upsurge in industrial development which was to occur over the next four years became noticeable. But it was also the time when the Colony had imposed upon it a back-breaking burden under which it has staggered ever since-a vast, overwhelming influx of population.

The civilian population of the Colony, which was 840,473 at the time of the last census in 1931, had risen to 1,600,000 in 1941.