In 1930, the two provinces of Guangdong and Guangxi went to war, a reprise of the wars, which jolted the two provinces in the early 1920s. The final irony of the succession of contradictory events was that in 1931 they formed a long-lasting alliance with Chen Jitang, to oppose Nanjing.
Hong Kong's Attractions as a Base
The complex and messy crisis of 192 9 and its outcome depended on the Guangxi leaders having a safe place from which to make their comeback. This was the role of Hong Kong.
Hong Kong was a comfortable and convenient place for the Guangxi warlords, as for most other southern warlords ; it was secure, stable and familiar. Man y of the Guangxi warlords were Cantonese speakers. They were at home in Hong Kong, so much so that some of them kept part of their family in Hong Kong permanently. Li Zongren's older son spent much of his childhood an d youth in Hong Kon g with his mother, s o that his education would not be disturbed by the vicissitudes of his father's career . His mother, Li Zongren's first wife, a gentle soul, lived there with her son while Li's glamorous second wife Guo Dejie stayed at her husband's side.12
Living in Hong Kong, a place where the rule of law ran, presented an unbeatable form of personal security. In addition, Hong Kong supplied all the needs of a warlord out of power. The stability and the efficiency o f the society guaranteed an ideal base for planning future activities in China.
Information and intrigue
Hong Kong was ideal as a place for collecting and sharing information, both formal and informal. Formal information came through newspapers, which in Hong Kong were much freer than on the Mainland. Informal information was trawled from the continuous stream of gossip, which flowed through hotels, restaurants and the streets; before telephones limited gossip to two people at a time, gossip could be spread more liberally. Intrigues between individuals and groups were carried out in the same hotels and restaurants, and in offices and private houses.
THE GUANGXI CLIQUE AND HONG KONG 16
Warlords had to be circumspect in their dealings with each other. They used intermediaries and subordinates for much of the work. They could not seem too eager for new alliances, especially in the aftermath of defeat, when potential allies might see them as easy marks, but they could not afford t o be too choosey either . They operated within a system in which it was understood tha t no alliance lasted forever, no r did any division. Huan g Shaoxiong quoted the opening sentence of the Sanguo yanyi:
In the general scheme of things under Heaven, unity will eventually be
divided, and division will eventually be united (tianxia dashi he jiu bi
fen,fenjiu bi he).13
Hong Kong was the place for substantiv e intrigue , the place wher e schemes were hatched and delicate negotiations about changing sides in the ever shifting warlord alliances took place. It was much easier for emissaries to meet in a crowded and cosmopolitan place than it was for them to go into the heart of an alien camp. A defeated warlord newly arrived in Hong Kong would start immediately into rounds of negotiations �X and would be sought out by others. Li was visited at his home by representatives of Zhang Zongchang and Sun Chuanfang, two of the most important of the defeated northern warlords, shortly after he established himself in Hong Kong. They wanted to come to Hong Kong from Dalian to talk to Li, but he rebuffe d them. Their representatives were quickly followed by Chen Jiongmimg and Shen Hongying. Li had never taken the field agains t Chen, but he had defeated Shen, a major Guangxi warlord, in 1925. Only four years later Shen saw no problem in them forming an alliance �X though Li did.14 Li was also courted by political figures. Zeng Qi of the Youth Party came to see him four or five times, trying to get Li to abandon the Guomindang and form a new political force.15
The level of attention Li received must have convinced him that the career of the clique was not over, and encouraged him to persevere. At first Li operated on his own, but when Huang Shaoxiong arrived in Hong Kong, he plunged in too and then took over the negotiating role after Li was forced to leave in October (Bai Chongxi did not take part. He was too forthright in his manner to make a good negotiator). Direct contacts continued with former warlords and with politicians. In November, Huang Shaoxiong met Wang Jingwei, who had just returned from Europe and was living at his "underground Centre" in Happy Valley. He and Huang toasted each other in 100 year old Napoleon brandy while they discussed the possibility of an alliance between Wang and the Guangxi Clique. Hong Kong was not a good place for secrets . News o f the meeting soo n go t out, and Chen Jitan g complained to the British authorities, in his capacity as ruler of Guangdong, that "Huang Shaoxiong was taking part in political activities while in Hong Kong, and disturbing the public order." He was told to leave within three days, which he did, returning in secret to his home in Guangxi.16
Huang kept up his contacts in Hong Kong after he left; they were useful when he split with Li and Bai the next year. His emissaries then met Chiang Kai-shek's in Hong Kong, and the terms and conditions for the departure of the disgruntled Huang were discussed. Not until they were completed to his satisfaction did Huang leave Guangxi for Nanjing in 1930.17
Arms
Hong Kong was one of a number of places where warlords could arrange for the supply of one of the basic requirements of the warlord system; arms and ammunition. After the First World War, when China as a whole came under an official arm s embargo, Hong Kong, like Shanghai, Tianjin an d Dalian, became a base for arms dealers.18 The purchase of weapons would be arranged through Hong Kong, though the weapons would be delivered on the Mainland. These weapons sales were handled by a cast o f disreputable dealers , some shadowy, som e very flamboyant, wh o too k advantage o f the tacit acceptance which Hong Kon g gave to people of questionable honesty and probity. It was often difficult fo r these people to function in treaty ports, where they came under the direct control of their consuls, but Hong Kong authorities asked few questions about people with ambiguous backgrounds. Among the dubious characters who flourished in Hong Kong was Maurice Two-Gun Cohen, who purveyed arms to many of the southern warlords in the late 1920s and 1930s. 19 Hong Kong was in effect a permanent arms mart for south China, one which published fe w details on its activities.
Money
Warlords needed large sums of money, both while in power and when they were out of it. Where they got it and how they held on to it was a secret matter. Even in the most frank of warlord memoirs the discussion of money is circumspect. All one can safely say on the matter is that Hong Kong banks acted fo r th e southern warlord s a s the Swiss banks have done for th e insecure elites of the world since the 1930s. The Guangxi warlords did not need large amounts of money for themselves. They had reputations for being
THE GUANGX I CLIQU E AN D HON G KON G 16
modest in their personal needs, but their plans for the future called for them to have money salte d awa y outsid e China. This they undoubtedly had , though it had to be augmented with transfers from Guangxi. In the spring of 1929, Li Zongren supplied the needs of his many subordinates in Hong Kong through a grant of HK$70 000 from Huang Shaoxiong, still the governor of Guangxi. Huang left Guangxi with no funds in the early autumn of 1929,20 but was soon living adequately in Hong Kong, and preparing for his return to Guangxi. Money had been "found" in Hong Kong.
The Hong Kong government
Hong Kong was very useful for southern warlords, but this was a one-sided pattern; th e warlords di d little for Hon g Kong . The British authoritie s tolerated them; they showed little anxiety over the presence of warlords in Hong Kong. They kept a close eye on them, but they seldom interfered with their activities so long as they were discreet and did not destabilize trade with China. Understanding these basic ground rules, most resident warlords were careful not to offend the British authorities, and lived quietly.
When this rule was breached, or when Hong Kong's major partners on the Mainland complained, the n the Hong Kong authorities would act to make their allies happy, and would quickly expel the warlords who had upset their friends. Li Zongren had to leave in the autumn of 1929, after the Nanjing governmen t appealed to the Hong Kong government to kick him out, on the pretext that he was in contact with Feng Yuxiang, Nanjing' s major opponent of the day. Li was still treated with courtesy. Two members of the Hong Kong gentry, Lo Xuhe and Zhou Shouchen, came to see him at the behest of the Hong Kong government and suggested that the time had come for a trip abroad. Li went along with the charade, got visas for himself and some close colleagues for France, but then went instead to Hanoi, where he met a harsher face of colonialism. He and the other travellers were forced to g o through a humiliating experienc e with French custom s an d immigration, in which the intent was clearly racist.21
Why were the Hong Kong authorities so accommodating to warlords? It is easy to suppose that, because Hong Kong was used as a base fo r warlords i n retreat, th e base from whic h they returned t o China onc e circumstances allowed, that therefore the British authorities in Hong Kong were directly involved in supporting warlords, to the detriment of China. This was probably no t true in this instance, sinc e the Guangxi leader s received no direct help from the Hong Kong authorities. Another possibility, that they simply did not know who was coming and going, is clearly not true. A third, put forward by Huang Shaoxiong, with a touching faith in western law, that the Hong Kong authorities were required to offer sanctuary by international law, 22 seems improbable, not least because none of the warlords ever mentioned consulting a lawyer to apply for political asylum. He may have been thinking of what happened to Sun Yat-sen in London, when he was protected from Qing vengeance by the intervention of British law.
The answer is probably a simpler one. The Hong Kong authorities were primarily concerned with continuing trade in South China. In a situation in which it was hard to predict from week to week who would be up, who down, and where causing present offense might mean offending futur e leaders, the authorities served their long-term goals best by giving guarded sanctuary to whoever needed it �X a privilege not extended to people who truly threatened the status quo, communists and other political radicals. The practice of limited sanctuary actually suited everyone.
Hong Kong continued to act as a haven for warlords after 1929 . Chen Jitang himself had to flee there in 1936, when he was betrayed by his own subordinates wh o returned Guangdon g to the embrace o f Nanjing. Th e giving of sanctuary lapsed during the Japanese occupation, but increased enormously i n the Civil War an d afte r 194 9 Hong Kong becam e a permanent restin g plac e fo r forme r warlord s an d politicians . The las t desperate days of 1949 saw an exodus of all who could get away from the Mainland. Many moved into the houses or apartments which they already owned. The two senior Guangxi leaders went elsewhere, to Taiwan (Ba i Chongxi and some of his closest subordinates) or the USA (Li Zongren) but others moved only to Hong Kong (Huang Xuju). Huang apparently onl y acquired his residence in Hong Kong just before the fall of the Mainland. There were rumours fo r a long whil e that Hong Kong would be th e gathering point for a Guangxi Clique return to the Mainland, but it never materialised.
Concluding Remark s
The activities o f warlords had very little to do with Hong Kong' s ow n history. They showed little interest in what was going on there, and certainly not at the early signs of political activism, unions and strikes �X both anathema to all warlords. Their only interest in the place was as a stable, comfortable refuge .
The comfort was physical rather than psychological. Not far from the
THE GUANGX I CLIQU E AN D HON G KON G 16
front of their minds was the awareness of what Hong Kong symbolized, as a foreign colony, and of what their own contributions were to the disunity of China. Huang Shaoxiong turned his fertile mind to wondering what he and his colleagues were doing, as modem minded military men, engaging in old-fashione d warlor d politics . They wer e intelligent , educate d an d patriotic young me n �X still i n their late 30s. They had nationalis t credentials; they had played a major part in the Northern Expedition. And yet they seemed to be set on perpetuating the disturbed and confused world of their predecessors, the old warlords, the illiterate men raised in the bandit world. Huang could only explain the contradiction by imagining himself and his colleagues as players in a tragedy, which was being directed by some unknown hand.23 He also gave a nod towards Hegelian dialectics, in talking about the mysterious but implacable logic within complex events.24 Thes e rather windy metaphysics were the only explanation he could find for the tragedies, the deaths an d the material losse s that the warlord syste m perpetuated.
At the time, the clique leaders and their confreres took a nonchalant approach to living in and using a part of China occupied as a foreign colony. They calle d themselves nationalists , but their nationalism wa s not ye t centripetal, it would not sacrifice thei r regional interests to those of the Centre. In the shifting relationship between the nation and the region, the region still won.25 Seve n years later, when they came to the service of the nation, i t was clear that the divisions withi n Chin a had contributed t o Japanese success. In 1938 , Li and Bai commanded Chinese troops in the only major Chinese victory over the Japanese �X their victory at Taierzhuang was the only one in a dismal list of defeats in 1937 and 1938. But it was too late to stop the Japanese conquest of much of China.
10
Business and Radicalism: Hong Kong Chinese Merchants and the Chinese Communist Movement, 1921-1934
Chan Lau Kit-ching
At the beginning of the twenty-first century, it is difficult to come to grips with the extent and intensity of the radical nature of the political changes the people in China and the Chinese in British Hong Kong experienced at the beginning of the last century. From the 191 1 Revolution China, with which Hong Kong was inextricably bound notwithstanding its status as a British colony, encountered republicanism, warlordism, and communism, all for th e firs t tim e an d i n quic k successio n i n less tha n tw o decades . Communism was without doubt the most dreaded and regarded as the most radical by the Chinese, especially by the "haves" among them.
Since its retrocession t o China i n mid 1997 , Hong Kon g ha s increasingly been described as "under the rule of the merchants" (shangren zhigang),1 a s if this is a new phenomenon under Chinese sovereignty. In fact, the power and influence of the merchants date back to the early history of British Hong Kong. During the British period, the big British hong s exercised considerable influence over the colonial government but, for the most part, a t least until the Second World War, the y had little direc t involvement with the Chinese community.
Leading Chinese merchants, naturally unlike their British counterparts, formed the elite of the Chinese community and were greatly responsible for moulding the opinion of the local populace in the territory. The leadership role of the important Chinese merchants was largely derived from, besides their wealth, the fact that they were the stable and permanent sector in the British colony and , in some cases, from thei r command o f the Englis h language which turned them into effective link s between the ruler and the ruled a t the grass-roots level. 2 Since the late nineteenth century, local Chinese responses to the major political events in China reflected, i n no small measure, the attitude and concern of the Chinese merchants towards these happenings and their ramifications in Hong Kong.
Knowledge a s to how th e Chines e merchant s worke d themselve s upward and became the elite of the Chinese society in Hong Kong, a process which developed steadily from the 1870s, is assumed in this context. Suffice it to say that the leading Chinese merchants shared among them severa l major status symbols which enabled them to exercise real influence in the peculiar colonial setting of Hong Kong during the period under discussion: directorship of Tung Wah Hospital (Donghua yiyuan) and the Po Leung Kuk (Baoliangju), membershi p of the District Watch Committee (Tuanfangju) which "ranked at the top of the hierarchy of Chinese societies in terms of its political status , influence an d prominence," 3 an d appointment as unofficial Justic e o f th e Peace an d unofficial membe r o f eithe r the Legislative Counci l o r Executive Counci l o r both. Ther e wer e man y instances of individual prominent Chinese merchants concurrently holding multiple appointments.
The power and influence o f the Hong Kong Chinese merchant elit e were further augmented by two other factors. First, the merchants had close ties with the leading local professionals, lawyers, doctors, accountants, and others. Secondly, the merchants effectively disseminate d their views and popularized thei r attitudes through the major loca l Chinese newspapers , prominent amon g which in the 1920 s and 1930 s were the Huazi ribao, Xunhuan ribao, Huaqiao ribao and Gongshang ribao. Each and every of the four newspapers could reasonably be labelled as the mouthpiece of the Chinese merchants.
This chapter attempts to study the attitude of the Chinese merchant elite in Hong Kong towards the beginning of the Chinese communist movement, which focuse d substantiall y i n th e Guangdon g regio n an d therefor e invariably had an immediate bearing on Hong Kong. The years 1921-193 4 formed a distinct time span in that 1921 marked the birth and 1934 the temporary demis e of the Chinese communist movement i n Guangdong . There were two equal periods of six years each: 1921-1927 and 1928-1934. The first period was marked by major political events in the region in which communism wa s clearly discernible . Communism continue d t o have a
BUSINESS AND RADICALISM 17
distinct presence in Hong Kong in the second period of six years despite the absence of specific communist-related incidents as in the earlier period.
Period Marked by Major Events, 1921-1927
The Hong Kong seamen's strike, 1922
What started as a strike of seamen extended to a general strike in which more than 120 000 workers stopped work. Hong Kong was paralyzed. It has now been established that the few communist s in Guangdong an d Hong Kong had little to do with the outbreak and sustenance of the strike. 4 However, th e Britis h colonia l governmen t i n Hon g Kon g believe d otherwise. The governor, Sir Reginald Stubbs, was firmly of the opinion that the strike wa s a communist plot hatched unde r the direction o f th e Bolshevist agents in Guangzhou.5 His view was generally shared by British consular officials and naval officers in the region.6
What is important here is that this interpretation o f the nature of the strike was echoed by the Chinese merchants who were immediately thrown into a difficult situation . As directors of Tung Wah Hospital, the Po Leung Kuk and other charitable organizations, they were entrusted with the social mission of caring for the needy and the poor and were expected to be the champions agains t socia l injustice. A s merchants, they were naturall y concerned about their economic well-being which was gravely threatene d by the strike. Driven by these considerations the merchants, represente d especially b y Robert H o Tung (H e Dong), actively playe d th e role of mediator amon g th e seamen, the shipping companies , and the colonia l government.7
At the sam e time, the Chines e merchant s were , like th e colonia l government, convince d o f th e politica l natur e o f th e strik e an d th e communist role in it. They were therefore anxious to curb the power of the Hong Kong Seamen's Union which they regarded as a dangerous labour union under the swa y o f communism . The two Chinese merchan t representatives who served on the Legislative Council at that time, Lau Chu Pak (Liu Zhubai) and Chow Shou-son (Zhou Shouchen) were even more anxious than the colonial government to put radical labour unionism and Bolshevism under control. It is significant that at a meeting of the Executive Council at the height of the strike and after the government had banned the Hong Kong Seamen's Union, both Lau and Chow strongl y opposed th e Governor's suggestion to consider reinstating the union as a conciliatory gesture to the strikers. They insisted that the government must not "retreat one inch " an d tha t labou r unions , whic h the y believe d "ha d stron g Bolshevist support, " had t o be suppresse d a t al l cost. 8 Ironically , the Governor was displeased with the behaviour of the Chinese leaders. In his report on the strike to the Secretary of State for the Colonies in mid March, Stubbs wa s "highly critical o f the leading member s o f th e Chines e community ... who, he claimed, had not been of the 'slightest use' in either 'calming the fears of the ignorant populace' or obtaining information which would have enabled the Government to deal with intimidation."9
The merchant leaders were clearly confused about their social functions in the presence of communism . Their behaviour in the seamen's strik e contradicted their traditional role of caring, if only for their own interest, the socially underprivileged , i n this case the workers, as see n in thei r involvement in Tung Wah Hospital, the Po Leung Kuk, and other charitable organizations. Moreover their distrust of communism made them reluctant to consider conciliatory measures which they feared would encourage the spread of radicalism in the long run.
The merchant corps incident, 1924
This inciden t underline d th e clos e relationshi p betwee n th e Chines e merchant communitie s i n Hon g Kon g an d Guangdong . Whil e th e communists conceivably played a greater role in this incident than in the Hong Kong Seamen's Strike, in reality direct communist involvement in this instance was not predominant or clearly identifiable.10 Wha t happened was that the incident was the climax of strong merchant discontent built up since Sun Yat-sen's return to Guangdong a t the end of 1920 . The Guangdong merchants were bitterly against Sun's administration almost in every respect. What is important, however, is that the merchants perceived, and therefore portrayed, the incident as a communist conspiracy.
The Guangdong merchants had set up militias of their own in different localities in Guangdong for some years before the incident. The mission of these militias naturally was to protect merchant interests which, from th e merchants' poin t of view, became increasingly threatened by disturbin g political trends and social ills, a large part of which was caused by the policies adopted by Sun's government. The merchants' suspicion of Sun was greatly intensified by his association with the Bolshevists and the Chinese communists.11
The Merchant Corps Incident was triggered by the move to form some kind o f headquarters i n Guangzhou t o coordinate the command o f th e
BUSINESS AND RADICALISM 17
various militias and, more importantly, by Sun Yat-sen's confiscation on 10 August of a large shipment of arms ordered by the Guangdong merchants. The merchant s mad e man y attempt s t o retriev e th e arm s fro m th e government and were in fact willing to pay the government a certain sum of money for the shipment to be released back to them. The incident was much publicized by the merchants in Guangzhou under the names of the various organization s wit h whic h the y wer e closel y related . Thes e organizations, which were essentially mercantile and charitable in nature, included th e Guangzhou Genera l Chambe r o f Commerc e (Guangzhou zhongshanghui), Th e Nine Charitable Halls (Jiushantang), Societ y for the Maintenance of Business (Shangye weichihui), Wenlan Academy (Wenlan shuyuan), differen t chamber s of commerce in the province, and others . Copies o f the merchants' appeals , which were characterized b y sever e censure of Sun Yat-sen's government, were sent to the merchant bodies in Hong Kong and elsewhere.12
When appeals, agreement to pay, mediation attempts by various parties had all failed to achieve the desired result, the merchants threatened to strike and to close their shops for business. The merchants' behaviour elicited a strong reprisal from Sun Yat-sen who succeeded in gaining the support of the various military factions then in Guangzhou. In the course of inflicting punishment o n the merchants, different band s of soldiers brought abou t much destruction , especiall y i n Xiguan , a prosperou s distric t i n Guangzhou.13 Th e Guangzhou merchants, for some reasons, were too confident o f themselves an d failed t o take advantage o f a number o f opportunities for compromise.
During th e turmoil, the Guangdong an d especially th e Guangzho u merchants were clearly anxious to arouse the support and sympathy of their counterparts in other parts of China and overseas, particularly those in Hong Kong. Every attempt was made to update them on developments of the crisis which was blatantly and graphically depicted as a communist plot. There was a clear attempt to arouse fear in communism, which was not only depicted as calling for the sharing of wealth and property, but of wives and husbands. In short, communism was painted as a terrible evil from Soviet Russia and a grave threat to social stability and economic prosperity.14
The Chinese merchants in Hong Kong clearly identified themselve s with the merchants in Guangdong. There was more than sympathy an d identification. Disruptio n o f business i n Guangdong invariably had a severely adverse impact on Hong Kong. It has to be remembered that many provincial associations (tongxianghui) ha d long been concerned about law and order in their places of origin in Guangdong and had raised funds fo r the local merchant militias to better equip themselves with arms agains t bandits and other security threats. It should also be borne in mind that Chen Lianbo, the merchant corps commander who was wanted by the Guangzhou government, escaped to Hong Kong immediately after the outbreak of the incident. He was warmly accepted by the Hong Kong mercantile community and was to become an influential and prominent social figure in the colony within a short period of time.15
Apart fro m bein g sympatheti c an d concerned , th e Hon g Kon g merchants took action to support their Guangdong counterparts. The Chinese Chamber of Commerce (Huashangzhonghui), Tun g Wah Hospital, Chinese newspapers, especially the Huazi ribao, and other merchant organization s in the colony, acted togethe r a s a communications link between th e merchants in Guangdong and their sympathizers outside of Guangdong. On many occasion s during the Merchant Corps Incident, Chinese merchan t bodies in different part s of the world, China, and even localities outsid e Guangzhou i n Guangdong sent messages of support to the merchants in Guangzhou throug h on e or more Hong Kon g merchan t organizations . Conversely, the merchant organizations in Guangzhou communicated with the outside world through the Hong Kong merchant network.16 The Chinese press in the British colony was all out in its attack on Sun's governmen t and all other political elements suspected to be in collusion with Sun Yat-sen. Chinese newspapers i n Hong Kon g were particularly importan t in forging public opinion in support of the merchants in Guangdong in that Chinese newspapers in Guangdong were prohibited from criticising Sun' s government.17
The final suppressio n o f the Merchant Corp s Incident shocke d th e merchant community in Hong Kong. People in the colony were confronted with pictures of horrible killing and burning in the newspapers. The extent of destruction in reality must have been colossal in that urgent relief was organized by the Hong Kong Chinese Chamber of Commerce, Tung Wah Hospital and other merchant bodies. The crisis was so severe that the Hong Kong government which had hitherto tried hard to steer clear of Guangdong politics, was reported t o have indicated tha t it "would no t discourag e attempts at sending up provisions and giving charity to war victims but a strictly non-partisan attitude would have to be adopted."18 Th e important point is that the Chinese merchants and, through them, the people in general in Hong Kong linked this graphic scene of horrible waste and loss with communism and the communists.19
BUSINESS AND RADICALISM 17
The Guangzhou-Hong Kong strike-boycott, 1925-1926
The communists contributed significantl y t o the ignition of the strike in Hong Kong. They also played an important part in first creating, and then maintaining, the structure and mechanism which enabled the strike, which later became a boycott against the British colony, to last for 16 months. The communist role, however, was not conspicuous to the ordinary eyes in that the communists were subsumed under the Guomindang identity. Both the Guomindang an d the CCP wer e anxiou s t o underplay th e communis t participation in order to disarm suspicion and maximize the effect and power of nationalism and anti-imperialism.20
However, th e Britis h governmen t i n Hong Kong , stil l le d by Si r Reginald Stubbs, was again convinced of a communist plot, under the camouflage of Chinese nationalism, against British and foreign imperialism. The view was shared by British merchants, the English press, and in fact the entire foreign community in Hong Kong. Consequently, all the walkouts, intimidation of workers, and other strike-related activities were ultimately linked to the communists and Russian Bolshevist agents in Guangzhou.21
While there was clear evidence of an outpouring of nationalism on the part of many Chinese in Hong Kong, it was also clear that the Chinese elite in the colony was strongly supportive of the colonial administration and was in complete agreement with the government assessment, evaluation, an d interpretation o f th e nature o f th e strike-boycott. I t i s perhaps n o exaggeration to say that the British colonial government coul d not have survived the unprecedented crisi s the way it did had it not been for th e unreserved and , indeed, unexpected suppor t of the Chinese upper clas s which was largely made up of important merchants and some prominent Chinese professionals wit h whom they freely mixe d in the same social, political, and business circles. One popular venue for them to socializ e among themselves was undoubtedly the Chinese Club (Huashang huisuo) which was founded by Chinese merchant leaders at the end of the nineteenth century, with Ho Tung elected as its first chairman in 1899.22
For the British colonial administration, the most critical point of the long drawn out strike-boycott was perhaps a t the beginning when large numbers of workers and students went on strike and left Hong Kong, largely as a result of the negotiation and organizational skill s of a number of communists, particularly the well known labour activist, Deng Zhongxia.23 The British colony was threatened with total paralysis in all areas of life.
In response to the government's campaign to discourage workers from striking and leaving the colony and to minimize the effect o f intimidation on them, Tung Wah Hospital worked out an attractive compensation scheme in case of injury or death for the retention of its own Chinesestaff.24 In the mean time it operated its publicity mechanism at full gear and collaborated with other important Chines e merchant organizations i n the colony i n presenting the image of the strike-boycott as a communist plot for both local and overseas Chinese consumption.25
Notwithstanding th e tremendous effor t mad e to stop the workers ' departures fro m Hon g Kong , many did leave, creating an acute labou r shortage in the territory. The Hong Kon g government urgentl y neede d volunteers to man essential services. For this they understandably turned for help to the expatriate community and not the local Chinese community. The manager o f Butterfield an d Swire, G. M. Young, was appointed a s the Controller of Labour with an office in City Hall.26 No significant headway was made in the provision o f essential labour until Tso Seen-wan (Ca o Shanyun), a lawyer, was appointed Assistant Controller of Labour and took matters over from the government. The response of the affluent Chinese to Tso's cal l fo r voluntar y servic e wa s swif t an d overwhelming . Th e government and expatriates were simply amazed by "the immediacy an d scale of Chinese response."27 Around 3 000 Chinese volunteered for service and by the end of July the government was able to report that the "collapse of the strike" was in sight.28
In retrospect, Robert Kotewall, one of the two Chinese representatives in the Legislative Council , unequivocally attribute d th e government' s success in maintaining peace and order during the strike to two reasons:
They were first, the cooperation of almost the entire Foreign Community and the Chinese of the upper and the middle class with the Government; and, secondly, the close co-operation between the Government and the Chinese representatives.29
Even the expatriates fully acknowledged the role of the influential Chinese and its importance. This sense of appreciation can perhaps be capsulized by a comment made by a missionary who was in Hong Kong at the time. He referred t o the influential an d affluent Chines e as "Chinese of character " who "had a real stake in the Colony, and whose 'loyalty' to the Hong Kong government left 'nothing to be desired'."30
After th e initial crisis was over, the strike evolved into a boycott, organized in Guangdong, against Hong Kong. During the lengthy boycott, the leading Chinese merchants became involved, as in the previous case of the Hon g Kon g Seamen' s Strike , i n negotiation s wit h th e variou s organizations in Guangzhou, especially the so-called Strike Committee, with
BUSINESS AN D RADICALIS M 17
the view of restoring normalcy to business in Hong Kong. 31 Whatever stance the Hong Kong Chinese merchants might have adopted during the negotiation process, they did not once depart from the conviction that the communists, who had initiated the strike in the first place and were now in control of the Strike Committee, were the chief culprits responsible for their heavy financial losses. For the time being, the merchants felt that they had to bid e thei r tim e a s the y sa w th e communists , incorporate d i n th e Guomindang which had the Guangzhou governmen t under its control, as having the upper hand.
The Nanchang and Guangzhou uprisings, August-December 1927
The Hong Kon g Chines e merchants' perceptio n o f the strength o f th e communists underwent a drastic change in 1927. In the spring of that year, the Guomindang stron g man, Chian g Kai-she k (Jian g Jieshi) , severe d relations wit h th e communist s an d launche d th e famou s Part y Purg e Movement (Qingdang yundong). Th e Guangdong communist leadership made the decision to move the provincial communist headquarters to Hong Kong t o avoid complet e destructio n befor e orderin g th e rank-and-fil e members to disperse and go underground. For the first time to the people in Hong Kong, communism and communists were now clearly identified a s such without disguise. Communism could not hide so conveniently behind anti-imperialism or plain nationalism as the case might be, and communists could n o longer pass a s Guomindang members . What was eve n mor e important perhap s wa s that the y wer e no t onl y see n clearly , bu t als o increasingly as losers, who nonetheless were capable of causing horrendous loss and destruction i n their fall an d defeat. Th e Nanchang Uprising i n August and Guangzhou Uprisin g in December highlighted this change d situation.
Even before the Nanchang Uprising, the first military endeavour in the Chinese communist movement, the plight of the communists in Guangdong and the desperate attempts of many communists and communist suspects to escape to Hong Kong were publicized in the British colony almost on a daily basis i n the Chinese press. 32 Newspaper reporting also revealed th e existence of close anti-communist cooperation between law enforcemen t agencies in Guangzhou and Hong Kong. The colonial authorities made no secret of the movement an d activities o f the agents o f the Guangdon g Provincial Public Securit y Burea u (Guangdongsheng gonganju) i n the colony, the arrests made by the Hong Kong police, the trials and deportation in many cases of the communists and alleged communists.33
In the Nanchang Uprising, which began early in August, He Long and Ye Ting were ordered to push southward with their troops to the East River or Chaoshan region in Guangdong where Zhou Enlai had been active for some time. Zhang Tailei, who had only recently arrived in Hong Kong as the top communist leader was instructed by the central party leadership to go to the East River region to help with the preparations for the arrival of He and Ye. The plan was to reach Guangzhou.34 Th e movements of the troops of He and Ye were widely reported in Hong Kong. The collapse of their military position at the end of September when they had to evacuate from the Chaoshan area drew even greater public attention. Again through the newspapers patronized by the merchants, the Chinese community was made fully aware of the many arrivals and arrests of the communists fleeing by boat from Haifeng and Lufeng, places near to the sea in the Chaoshan
35
area.
All this media coverage of the communist plight failed to prepare the Chinese population for the shock of the Guangzhou Uprising which broke out on 11 December 1927. The Hong Kong merchants were particularly hard hit and distressed. The uprising lasted only two days but the destruction of life and property and the horror with which such destruction was brought about was totally disproportionate to the length of the event. The city of Guangzhou became desolate, business came to a total standstill, there were graphic scenes of brutal killings, and streets were strewn with dead bodies, including those of children.36 Whe n business suffered i n Guangzhou, the Chinese merchants in Hong Kong invariably also suffered. Muc h of the pillage and carnage was in fact caused by anti-communist action rather than by the communists. However, to the Chinese merchants and people in Hong Kong, communists were the roots of it all.
Period Not Marked by Specific Events, 1928-193 4
It has been seen that the previous six years were packed with specifi c momentous events . This was not the case with the following si x years, 1928-1934. However, communis m by no means disappeared fro m th e Guangdong / Hong Kong region, or from the consciousness of the Chinese merchants in the British colony. In fact, the enforced complianc e of the communists in Hong Kong to the radical Li Lisan and Wang Ming Lines during part of this period of necessity gave rise to considerable visibility and a high profile which were entirely incongruous with the actual strength of the communist position in the territory.37
BUSINESS AND RADICALISM 17
Attention migh t b e gainfull y focuse d o n th e Shanto u mercantil e community in Hong Kong in that there was a substantial number of Shantou merchants in Hong Kong who maintained close ties with their counties of origin. For some time before 1927 , communist leaders, notably Peng Pai, had been active among the peasants in the Chaoshan region. During the few years before the Guangzhou Uprising, there were times when counties in the region, notably Haifen g an d Lufeng, turned "red" under the spell of intensive communist influenc e an d control.38 I t has been seen that what began as the Nanchang Uprising was later extended to North Guangdong and eventually to the Shantou area.
Despite the catastrophic outcom e o f the Guangzhou Uprising , th e communists persisted with thei r effort s i n th e Chaoshan region. A communist plot, allegedly "on similar lines" to the Guangzhou Uprising , was apparentl y uncovere d b y th e authoritie s i n Shantou. 39 Thes e disturbances cause d great panic, many deaths an d severe destruction t o property. The Haifeng Lufeng region was a stark reflection of the gravity of the situation: "The 'Red Terror' policy had been enforced in Haifeng ever since the first uprising of April 1927 ; with the second occupation o f the county city in September, the slaughter intensified. The Soviet adopted it as policy i n November, wit h its resolution o n Th e Eliminatio n o f th e Counterrevolutionaries,' whereb y all collaborators with the 'enemy ' wer e to be shot. When the Peasant Association and the labour unions instructed their members to investigate and seize counter revolutionaries, this was interpreted as license[sic] to kill them on the spot. Those who offered them refuge would meet the same fate, their houses would be burned down, and their wealth forfeited. Th e same applied to anyone found in possession of valuables belonging to the rebels and traitors or offering them assistance." The extent of the loss of life and property on that occasion is evident in the following statistics: "... a conservative estimate of 5 000 would seem near the mark ... In all, some 14,180 houses in Hai-Lu-feng were destroyed; at five persons per household, this would constitute about one tenth of the houses in the two counties. Up to the end of January [1928] , 451 walled villages had been destroyed. Two separate reports put the economic losses in Hai-Lu-feng a t about �D62 000 000."40 Expectedly, missionary work in the area was violently dislodged. According to one reliable Catholic source,
108 Chinese Catholic Christians were killed in Haifeng an d foreign an d Chinese Catholic priests, including Father Lorenzo Bianchi (Bai Yingqi) who years later was to become bishop of Hong Kong, had to flee the region at the end of 1927 and early in 1928.41 Records of the missionaries of the Presbytherian Churc h o f England , one o f the two major Protestan t organizations working in the area, contain graphic details of the horror and desolation created in the locality by the communists.42
Reports of these events became quickly and widely circulated in the Shantou community in Hong Kong . A mechanism of close and regular communication existe d between th e Shantou merchant s in Hong Kong , many of whom aggregated in the Nam Pak Hong (nanbeihang) area, which is situated between the Western and Central districts on Hong Kong Island, and their families and business associates in the Chaoshan region.43 Ther e were also numerous eyewitnesses of the destruction in that allegedly "b y December there were 30 000 Hai-Lu-feng refugees in Hong Kong."44 Some of the refugees did not only provide information on the communist activities back home, they also served as informants and proved to be of great service to both the Hong Kong authorities and the Guangzhou public security agents stationed in the colony in the arrest and conviction of communists and their associates who had fled the Chaoshan region. Moreover, by this time, the distance between the Shantou mercantile communities in Hong Kong and Guangdong wa s markedly reduce d b y the increasingly commo n use of telegraphic communication . Fo r instance, at the beginning o f 1930 , the Association o f the Provincials of Hailufeng (Hailufeng tongxianghui) in Hong Kong received wireless telegraphic news from Hailufeng of the crisis and trouble created in the locality by an escalation of communist activities.45 Their distress and horror over the suffering cause d by the communists to their relative s an d busines s associate s bac k i n Chin a unquestionabl y contributed significantly t o the strong anti-communist tradition which had by then firmly taken root among the merchants in the Guangdong / Hong Kong region.
Encouraged b y th e establishment o f a n anti-communist regim e i n Guangzhou and the heavy losses suffered by the communists in 1927, the British Hon g Kon g governmen t maintaine d clos e relation s wit h th e Guangdong Provincial Public Security Bureau in its attempt to eliminate the communist presence in the colony. There is clear evidence that the Hong Kong authorities formally requeste d for assistanc e in the suppression of communism in the colony to the Guangdong Provincial Public Securit y Bureau in the late 1920s and early 1930s.46 There were numerous raids on suspected communis t hideout s an d premises . Man y communist s o r communist suspects were arrested, tried, imprisoned, or deported during the period.
The Chinese merchants expectedly welcomed and endorsed the anti-communist stance adopted by the government. Endorsement was not just a matter of attitude. It assumed a tangible form in the District Watch Force
BUSINESS AND RADICALISM 18
which provided the Hong Kong Police with substantial additional manpower in the arrests of communists and people suspected to be communists. The force, which worked closely with the police, was almost entirely finance d by Chinese merchants. The District Watch Force rose from 12 2 members making 606 arrests in 1927 to 140 members making 1 236 arrests in 1934. Many of the arrests made especially between 1927 and 1932 were those of communists an d communis t suspects , often a s the result o f searchin g passengers who arrived in or left Hong Kong by ship. In the "Report of the Inspector General of Police for the Year 1929," specific reference is made to a raid mounted by both the police and district watchman on 29 September on "a Communist Meeting in full swing at a Chinese Temple on the outskirts of Kowloon City." More than 50 people were arrested and the leaders were later banished.47 A recent study underlines the predominant financial support of the Chinese merchants: "When the financial state of the District Watch Force is considered, it is important to recall that it continued to be funded by local Chinese business men augmented by a small annual donation of $1 600 (later $2 000) which Government made to the Fund between the early 1870s and 1893 and from 1903 to 1936. There has been no change in this important financial principle since its inception in 1866."48 The Chinese merchants' support for the anti-communist action was also clearly reflected in the Chinese newspapers which they patronized. The Huaqiao ribao in particular devoted a good deal of coverage to the ruthless attempts made by the Guangdong authorities to suppress the communists in the province.49 The result was the emergence of a popular consensus that communism and the communists were bad for society and therefore were to be shunned and eradicated.50
Concluding Remarks
The Chinese elite in Hong Kong since the beginning was largely made up of important merchants, many of whom were closely associated with top Chinese professionals i n the colony. The close affinity betwee n the two groups is clearly reflected in the glowing references to some of the foremost Chinese community leaders at the time, such as Lau Chu-pak, Ho Tung, and Robert Kotewall, in the magazine of the Student Union of the University of Hong Kong which, since its beginning in 1911, had been a key venue where local professionals studied and trained.51 The merchants also advanced and maintained their leadership position through being perceived as the main providers of charity and welfare to the underprivileged Chinese, 52 and participation i n public service s in the colony. From the late nineteent h century, the British colonial government became increasingly aware of the importance of the Chinese elite in the smooth administration of the colony. Such awareness culminated in the Guangzhou-Hong Kong strike-boycott of 1925-1926, which the British colonial government considered, and certainly portrayed, to be a communist crime.
Communism was certainly not the first form of radicalism that the Hong Kong merchant elite had been confronted wit h by the early 1920s . It has been seen that, during the period in question (that is the earliest period of the Chinese communist movement) the Chinese merchants in Hong Kong, as well as their counterparts in Guangdong, were firmly opposed to the new ideology and its outworking in the region. However, it must not be mistaken that the Chinese merchants were, and had invariably and consistently been, against radicalism of any form. An obvious example was their enthusiastic endorsement an d practica l suppor t o f th e 191 1 Revolutio n whic h successfully ushere d in republicanism, somethin g radical at that time in China's history. In 1913 , more or less the same group of revolutionaries, whom the merchants had earlier supported, launched the so-called Second Revolution against President Yuan Shikai. But this time, merchant support was not forthcoming. 53 There was therefore n o fixed patter n in the merchants' attitud e towards radicalism an d radicals. What o r who wa s supported one time might not be supported another time. This inconsistency is clearly reflected in the merchants' attitude towards communism and the communists. The period under discussion here was perhaps the time when the merchants in Hong Kong were most united, most uncompromising, and most vehement in their opposition to communism i n the history o f th e Chinese communist movement . Wha t has perhaps bee n consisten t an d expected about the merchants' behaviour is that it is ultimately governe d by business consideration s an d what is best for th e promotion o f thei r influence, position, and status in the society of Hong Kong.
From the early 1920s to the mid 1930s, the main centres of communist activities in Guangdong were Guangzhou and the Chaoshan region. These were, significantly, the two business centres in Guangdong which the Hong Kong merchant s wer e mos t connecte d wit h an d concerne d about . Communism was regarded as the principal culprit in causing severe business disruption in Hong Kong, Guangzhou, and the Chaoshan district in the Hong Kong Seamen's Strike, The Merchant Corps Incident, the Guangzhou-Hong Kong Strike-boycott, the Guangzhou Uprising in 1927, and in the ensuing years.
BUSINESS AND RADICALISM 18
The question of the attitude towards Sun Yat-sen came up repeatedly during much of the first six year period of the present time frame because of Sun's adoption of the "alliance with Soviet Russia and admission of the communists" (lien e rong gong) policy. Britain had always been consistently anti-Sun Yat-sen from the beginning of the Revolutionary Movement at the end of the nineteenth century. There might be changes in the degree of distrust and dislike but, in the main, these sentiments characterized Britain's attitude towards Sun for about 30 years before his death in 1925.54 However, it has previously been suggested that this was not the case as far a s the relationship between the merchants in the Hong Kong / Guangdong region and Sun was concerned. There were multiple reasons for the merchants' rejection of Sun Yat-sen since his return to Guangdong in the early 1920s. One important reason was certainly their genuine fear of communism and the communists.
During the period 1921-193 4 the merchants' anti-communis t stanc e was not unique in Hong Kong. In fact, the entire Hong Kong society could be said to be anti-communist. The British colonial government was anti-communist an d adopted increasingly harsh suppressive measures agains t communism with the removal of the communist-infested Guomindan g regime in Guangzhou a s a result o f the Party Purge Movement. The merchant elite played a significant role in the creation of an anti-communist environment in Hong Kong. This was done mainly through the moulding of Chinese opinion as a result of the merchants' influence over the major Chinese newspapers, and through the merchants' contro l of the local job market. It has to be remembered that the Chinese merchants, apart from the government an d th e foreign firms , provide d th e bulk o f employmen t opportunities i n the colony. Consequently, anti-communis m durin g thi s period transcended class divisions and was commonly shared by differen t social classes.
11
Made in China or Made in Hong Kong? National Goods and the Hong Kong Business Community
Chung Wai-keung
Introduction
Guohuo, national goods, was a term being used from the early 1900s to refer to goods produced in China by Chinese owned and managed factories.1 I t was a notion that emerged in the context of a series of boycott campaigns against foreig n good s fro m th e early 1900 s and , in particular, agains t Japanese goods in the 1930s . A national reaction to foreign invasion, the boycott of foreign goods encouraged the use of national goods produced by the Chinese. Many activities were formed to promote the use and sales of guohuo. Thes e activities ranged from distributin g handbills to organizing factory vending strategies and exhibitions of the product. The campaign was, as a whole, considered to be successful i n arousing the Chinese and the overseas Chinese to use Chinese goods.2
Were goods, produced by Chinese manufacturers i n Hong Kong , national goods? According to the Provisional Standards for Chinese National Goods (Guohuo zanding biaozhun) promulgated by the Chinese government in 192 8 and its later versions,3 they could be. According to the standards, products were classified as national goods as long as they were produced by Chinese owned and managed factories, with Chinese workers and raw materials of Chinese origins. The only problem with the Hong Kong Chinese manufacturers was that their production was in a British colony. This alone made their products non-national. Even though the goods met the standards for Chines e national goods, they were considered a s foreign good s with heavy impor t dutie s adde d t o them . Th e Hon g Kon g manufacturin g community had tried many times to persuade the Chinese government to grant "national goods" status to their products but was denied every time. Ironically, even though Hong Kong Chinese manufacturers had never been recognized officially a s national goods manufacturers, they had organized seven annua l exhibitions o f guohuo betwee n 193 8 and 195 1 to exhibi t products that were mainly produced in Hong Kong.
This chapte r attempt s t o giv e a n accoun t o f ho w th e Hon g Kon g Chinese manufacturing community used the notion guohuo to refer to their own products before and after the Second World War, when this status was actually denied by the Chinese government. The use of the notion guohuo for th e industrial exhibitio n wa s given up afte r 1951 . Instead, th e term Chinese-capital industrial products (huazi gongye chupin), which made the products still carry a Chinese identity, was used to refer to the products exhibited i n the annual exhibitions . The English titl e o f the exhibitions, however, was Exhibition of Hong Kong Products, which instead carried a Hong Kong identity for the products. Based on business news in the Chinese newspaper Wah Tsz Yat Po (China Mail) between 1935 and 1940 4 and other sources for the later period, this paper provides an analysis on this changing identity of the Hong Kong business community before and afte r the war.
The Creation of a Chinese Identity
Hong Kong was basically a trading port with little industrial production before the 1930s . Industries in Hong Kong started to develop in the late 1920s and early 1930s and increased rapidly in scale only until the final few years before the Japanese occupation in 1941. There were probably about 200 major factories i n Hong Kong during the late 1930s. 5 Because of the small size of the local market, products from Hon g Kong were intended mainly for export to China (mainly south China), Southeast Asia and, in lesser quantities, t o America an d Europe. 6 Since after th e Chinese government had gained back her custom autonomy in the late 1920s , the Hong Kong factories had lost their competitive power over foreign goods. Although predominantly owned and managed by the Chinese, Hong Kong goods were treated as foreign goods simply because of Hong Kong's status
MADE IN CHINA OR MADE IN HONG KONG? 18
as a British colony.7 Because of the heavy import duties that were added to the Hong Kong products, Chinese manufacturers in Hong Kong became less competitive. They coul d not benefit muc h from th e extensive busines s networks developed by the Hong Kong traders in China that had contributed 40 percent of Hong Kong's total import export trade.8 At more or less the same time, the Imperial Preference under the Ottawa Agreement of 193 2 gave Hong Kong products a chance to enter part of the British Imperial market with favorable import tariffs. The inherited discrimination agains t the colony's industrial products by the Imperial market, however, limited the potential market for Hong Kong Chinese manufacturers.
Mainland China, especially south China, used to be a major market for Hong Kong products . According t o a survey o f 112 Chinese owned factories,9 mos t factories reported multiple markets for their products. 70 out of the 112 factories, or 62.5 percent, reported that they exported to China (mostly south China). Except for a few factories whose products were either cheap enough or remained competitive for other reasons, most factorie s claimed that the China market had shrunk to be almost non-existent afte r the Chinese government increased import duties.10 The real impact of the rise in Chinese import duties cannot be calculated, since no official data is available for the quantity and value of exports to China. The above survey, however, reported that because of sudden changes in the Chinese market, Hong Kong's weaving industry had shrunk from a total of more than 600 factories of various sizes in 1929 to just about 130 in 1934. The Weaving Association, which mostly involved larger factories, used to have about 60 member factories, but the number decreased to around 30 factories by 1934. A knitting factory i n 193 6 reported that sales in China had reduced fro m 30^-0 percent to 10 percent of its total sales since the rise of import duties.11 In the same survey, 92 factories, or 82 percent of the factories, reporte d Southeast Asia (and some parts of India also) as their major market. And 38 factories, or only about 34 percent of surveyed factories, reported that their products had a local market (six reported that the local market was their only market).12
Due to the fact that during that time there existed no organization that could represent Chinese manufacturers in Hong Kong, a few key Chinese manufacturers created one in 1934.13 The main function of the organization was to coordinate Chinese manufacturers i n Hong Kong to persuade the Chinese government to grant them, if not a totally equal status to the indigenous Chinese goods, at least a favorable status for export of Hong Kong goods to the China market.14 Originally , the organization was to be named the Hong Kong Overseas Chinese National Goods Manufacturers ' Union (Qiaogang guohuo changshang lianhehui). 15 Th e title explicitly indicated ho w the y identified themselve s an d that they would lik e th e Chinese government to see them as national goods manufacturers. The name finally decided upon was the Chinese Manufacturers' Union of Hong Kong. The part "o f Hon g Kong " was seldo m see n in most context s afte r it s creation, which again may mean they wanted to emphasize more on the Chinese an d not o n the Hong Kong origi n o f th e organization. B y discussing, formally and informally, with provincial officials in Guangdong and central officials i n Nanjing, th e union constantly requested for mor e competitive marketing conditions for its products. The requests, however, were never granted.16
Hong Kon g products wer e not considered a s Chinese products i n mainland China. In Southeast Asia, however, the situation was different . Probably based on a looser definition of "Chinese," Hong Kong's products were considered just a s Chinese a s products fro m th e Mainland. Fo r example, Hong Kong manufacturers were invited by the Singapore Chinese Chamber of Commerce in 1935, along with other manufacturers in Hankou, Shanghai, Guangzhou, Xiamen, and Fuzhou, to participate in an exhibition of Chinese goods in Singapore.17 Simila r exhibitions in the Philippines, Vietnam and Indonesia (then the Dutch East Indies) also invited Hong Kong to participate.18 Hong Kong products had captured a large market in Southeast Asia especially after the boycott of Japanese goods resulting from the Sino-Japanese conflicts.
The Hong Kon g Chines e manufacturers migh t not have considere d actively creating an image of national goods manufacturers for themselves yet when they decided to participate in a National Goods Exhibition. In 1938, The Propose to Use National Goods Group (Chang yong guohuo tuan), founde d b y the Hong Kong YMCA and YWCA, proposed to the Chinese Manufacturers' Union to organize a National Goods Exhibition in Hong Kon g to promote the use of guohuo i n the colony. First reactin g passively to this proposal, the union accepted the suggestion but worked slowly on the preparation an d did not finalize th e exhibition's rules and regulations until 20 days before it was due to begin.19 Th e reaction fro m the manufacturers, moreover, were not good either,20 partl y because there wasn't enough time for the manufacturers to prepare for the exhibition, and partly because they were not sure about the benefits that they could get from the participation. In the first few days after the official announcement of the exhibition, only 20 factories agreed to send exhibits. The union managed to have about 8 0 factories an d companies agree d to participate before th e opening of the exhibition on 4 February 1938.21
MADE I N CHINA O R MAD E I N HON G KONG ? 18
Figure 11.1
Despite the fact that the exhibition was called Exhibition o f Chinese Products (Zhongguo huopin zhanlanhui), o r more commonly Guohuo zhanlanhui, mos t o f the participants were actually Hong Kong-based factories and companies, with very few of them from the Mainland.22 Hon g Kong goods became guohuo in the exhibition. The identity would certainly be familiar withi n the Southeast Asia overseas Chinese population, but it might not be that popular for the local market. I have yet to find mor e evidence on this matter but, based on the limited evidence that I cite below, the notion of guohuo was seldom used to market Hong Kong-made products in Hong Kong. From the manufacturers' advertisements that I collected,23 I found very few factories and companies in Hong Kong that used the notion guohuo to promote their goods.24 For companies that had business both in China an d i n Hong Kong , most used th e notion guohuo o n thei r advertisements in China but not in Hong Kong. For example, Tian Chu, a prominent figure in the National Goods Movement (Guohuo yundong) in China, put the term guohuo on an advertisement in China but not for one in Hong Kong.25
Figure 11.2
35
Am fil m B
E�G f ? tt! 8 > 3S
Figure 11.3
MADE I N CHINA O R MADE I N HON G KONG ? 19
Probably becaus e o f th e uncertainty o f thi s idea, th e Chines e Manufacturers' Unio n used many ways to advertise the exhibition and to promote the idea of using (and buying) guohuo to the Chinese resident of Hong Kong. These included radio broadcasts; newspaper advertisements ; posters hung on buses, ferries, and in theatres; letters to every school; and requests to bookstores to display books on the National Goods Movement, etc.26 T o attract more people t o come, the exhibition als o provided entertainment such as new style opera and traditional Cantonese opera.27
The opening ceremony of the 1st Guohuo Exhibition sheds light on how the Chinese Manufacturers' Union and the Hong Kong government defined this event. It was quite clear that, through the exhibition, the union was trying to introduce a Chinese identity for Hong Kong goods to the public.28 The opening declaration of the exhibition given by Ip Lan Chuen, chairman of the union, used a lot of Chinese-identity notions to refer to the event.29 By using phrases such as "national calamity" (guonan), "love one's country" (aiguo), "national resurgence" (minzu fixing),an d "fellow countrymen" (guoren), Ip was trying to suggest at the same time that Hong Kong Chinese should identify themselves with th e Mainland. 30 Also, he associated th e industrial development of Hong Kong with that of the Mainland, and suggested that to love our country, we should use guohuo; even though the guohuo a t the exhibition were actually Hong Kong products (Xianggang huo)? x
In contrast to the Chinese definition o f Hong Kong products given by Ip Lan Chuen , th e speec h give n b y Si r Robert H . Kotewall, Kt. , the n president o f the union but also member of the Executive Council o f the colony, represented a perspective that the colonial government might have adopted. I n his speech , Si r Robert use d notion s suc h a s "Hong Kon g products" (Xianggang chupin), "Chinese people" (huaren) and "Hong Kong Chinese people " (Xianggang huaren)? 2 Th e use of these Hong Kong -identity notions carried a latent implication of a distinction between Hong Kong an d China.33 Th e use of huaren, a s an ethnical term, rather than zhongguo ren might also be used to avoid the political connotation that the term zhongguo ren might carry. The Hong Kong Chinese were only ethnic Chinese who happened to be living in Hong Kong. In his speech in 1940, during the 4th National Goods Exhibition, he emphasized the role of the Hong Kong government i n the development of the Hong Kong industry . Rather than seeing Chinese manufacturing businesses as part of the Chinese national economy, his speech reassured that the local economy wa s the Hong Kong colonial government's responsibility.34
Made in China or Made in Hong Kong?
After th e first exhibition , the public reaction on guohuo wa s better than expected by the union. Thereafter, the exhibition became the union's regular annual activity. The strategy of calling Hong Kong goods "national goods" remained unaltered for the next six exhibitions.35 Even though exhibits from China became more visible, the exhibition was still dominated b y Hon g Kong goods. For example, at the 4th Guohuo Exhibition, an agent in Hong Kong organized abou t 20 Shanghainese factorie s t o participate, but th e made-in-China guohuo were all put under a special section of the exhibition site and were separated from the remainder of the exhibits.36 The promotion of guohuo b y the union in Hong Kong, therefore, might not really mea n guohuo from China. Even though, they did promote guohuo from China at the same time, and could be considered as one of their patriotic acts,37 the promotion of Hong Kong goods, now named vaguely as guohuo, was still their first priority.
The union's latent definition o f their guohuo as made-in-Hong Kon g products wa s obviou s whe n w e loo k a t their relationship s wit h othe r organizations that were at the same time promoting the use of guohuo in Hong Kong. The key national goods organization (guohuo tuanti) in Hong Kong was the Chinese National Goods Production and Sales Association (Zhonghua guohuo chanxiao xiehui). I t was originally the Friday Lunc h Gathering Society (Xingwu jucanhui), a group of key Shanghainese bankers and entrepreneurs which had actively participated i n the National Good s Movement when they were in China.38 A Hong Kong branch of the jucanhui was established in 1938 , when key participants of the jucanhui fle d fro m Shanghai an d settle d i n Hon g Kon g afte r th e Japanese occupatio n o f Shanghai.39 The Chanxiao xiehui was established later, in 1940.40
These peopl e represented th e most authenti c grou p tha t ha d bee n involved in the National Goods Movement in China. Even though both were talking about how to promote guohuo, the Chinese Manufacturers' Union , however, had never developed any intimate relationship with them. Ip Lan Chuen was one of the committee members of the Chanxiao xiehui, but his involvement probabl y wa s merely symbolic . Philip Gockchin (o r Gu o Quan), the then chairman o f th e Hong Kong Chines e Chamber o f Commerce, was also being invited to be one of the committee members, but this again was more as a symbolic act. It was mentioned that the Chanxiao xiehui had helped to prepare the 3rd Guohuo Exhibition,41 but this was never acknowledged in any document from the union that I have come across. So, very likely, they may have played a minor role in the Hong Kong Guohuo
MADE IN CHINA OR MADE IN HONG KONG? 19
Exhibition, or at least the union did not want to talk about it. Another event that shows the distance between them was in 1939, when both groups sent investigation teams to Macau to see if it was suitable for investment. The two teams went separately.42 There were a few other guohuo tuanti in Hong Kong, but all had few connections with the union.43
The differences i n what the union and the Chanxiao xiehui actuall y wanted to promote were again obvious when we look at how they tried to organize the sales outlets for their respective guohuo. Guohuo in China had been organized to sell through the China Products Company (Zhongguo guohuo gongsi). A branch, therefore, was established in Hong Kong to serve the same purpose. The company was set up in 1938 with China Bank (HK) Co. and Communications Bank (HK) Co. as the key shareholders. A group of factories an d people with Shanghai origin also held some shares. The company sold made-in-China guohuo, but it is not certain if they also sold made-in-Hong Kong guohuo. The shareholders' list indicates that only very few Hong Kong factories and people held shares and they were in very small quantities.44 Ip Lan Chuen, for example, held 315 shares which constituted less than 0.25 percent of the total. This may very well indicate that the China Products Compan y i n Hon g Kon g ha d fe w tie s wit h th e Hon g Kon g industrial community.
Rather than using the newly established China Products Company as an outlet, the Chinese Manufacturers' Union actually tried to set up its own guohuo gongsi righ t afte r th e first guohuo exhibition. 45 Because of the success of the exhibition, a meeting was held by the union to discuss with the exhibition participants what they should do in the future to promote the sales of guohuo. Th e participants conclude d that they should organize a Chinese products department store as an outlet for the guohuo. The company was named as Chinese Products Co. Ltd. (Zhongguo huopin youxiangongsi) and articles of association of the company were passed a few days after the decision. Interestingly, even though the company was going to be registered in Hong Kong, the company was organized in a typical Chinese way when we look at how the company's articles of association were written.46
According to the plan, manufacturers in Hong Kong could rent booths in the department store to sell their products.47 While the exact purpose of setting up the company is far from clear, it sounds like the company was set up for the sales of local guohuo, (i.e. Hong Kong products) as their main business. Guohuo from other places of the Mainland probably would be sold on a conditional basis . The company, however, was never established. According to news reports, a few meetings were scheduled after the horse racing and football seaso n in Hong Kong had started, and were cancelled because of insufficient attendance. 48 Manufacturers probably lost interest since they might not be sure about the sales and therefore were not willing to commit capital to the company.
Market-driven Identit y
I have yet to discover an y direct evidence that may determine wh y th e Chinese Manufacturers' Unio n decided to use guohuo to refer to products that were actually made in Hong Kong. Nevertheless, I would like to argue that i t was ver y likel y tha t th e adoption o f th e notion guohuo wa s a pragmatic market expansion strategy. When the union was organized, there was a debate on whether Hong Kong manufacturers should move north to explore the Mainland market or move south to develop the Southeast Asian market.49 Based on the socio-political context during the wartime, no matter where Hong Kong manufacturers went , they could have benefited fro m using a guohuo label.
The only way for Hong Kong products to compete with other foreign goods in the China Market was to be considered guohuo, s o that import duties could be lower and prices could then be more competitive . Th e adoption o f the guohuo identity in a public way, such as organizing a n exhibition under the title guohuo, then might actually be part of the strategy to persuade the Chinese government. To label products as guohuo was also a good marketing strategy to promote sales in China and the crowded-with-refugees loca l market , whe n Guohuo yundong i n Chin a ha d alread y succeeded. This unilateral adoption of the guohuo label was, of course, not totally successful . Rather then granting Hong Kong manufacturers a vast market, the most direct response from the Chinese government in terms of assisting Hong Kong manufacturers was to suggest they move (neiqian) into Guangdong. Substantial assistance, including cash subsidies was provided. Most manufacturers, however , responded t o this suggestion i n a very conservative way but some factories di d move into Guangdong.50 A t this point, Hong Kong manufacturers had already given up hope that the Chinese government would change its mind and had decided they should look for export markets outside China.51
Sales of Chinese guohuo became very good in Southeast Asia in the late 1930s, and was much better than in the Hong Kong market.52 Guohuo exhibitions were organized by the local Chinese Chamber of Commerce in different Southeas t Asian cities as early as 1915. 53 The overseas Chinese, especially those in Southeast Asia, had a strong preference for Chinese-made
MADE IN CHINA OR MADE IN HONG KONG? 19
goods. A guohuo label, an authentic one, certainly guaranteed good sales in the Southeast Asian market. The union issued its own guohuo certificate to Hong Kong products as a proof of their Chinese origin. 54 The Guohuo exhibition i n Hong Kon g was an additional way to sort out, with stric t examination, authentic Chinese goods (mostly Hong Kong-made, though) by displaying them publicly.55
Having failed to convince the central government to allow Hong Kong products t o enter th e China marke t a s indigenous products , the unio n changed its strategy, instead asking for the issue of a National Good s Certificate (guohuo zhengmingshu) fro m th e government a s a proof of authentic "Chineseness" for the Southeast Asian market.56 The proposal was turned dow n agai n a s might hav e been expected . Th e Ministry o f th e Economy, however, agreed instead to issue an "Overseas Chinese industrial products certificate" as a guarantee of authenticity to qualified Hong Kong manufacturers. Th e criteria were relatively more flexible an d most Hong Kong manufacturers should be qualified.57 I t was quite clear how eager Hong Kong manufacturers wante d to be seen as guohuo producers simply because of market considerations.
Figure 11.4
Figure 11.5
A guohuo label could also be used as a marketing strategy for the Hong Kong local market. Most companies in Hong Kong did not use it as a selling point simply because it might not work for the Hong Kong local population. The notion guohuo was first considered for local market use when refugees from the Mainland constituted almost half of the Hong Kong population.58 In 1931, the population of Hong Kong was 840 473 and remained steady until 1937, when 100 000 refugees arrived in Hong Kong. Another 500 000 came in 1938 and yet another 150 000 in 1939.59 When a significant, and indeed, overwhelmin g proportio n o f Hong Kong's populac e wa s fro m China, and thus more familiar wit h the nationalistic notion of guohuo, it became a feasible strategy to promote the sales of products manufactured in Hong Kong by using the notion. Some local manufacturers did, in fact, adopt the strategy, and used it in their advertisements.60
MADE IN CHINA OR MADE IN HONG KONG? 19
Concluding Remarks: 'Hong Kong People Use Hong Kong Goods"
The use of guohuo to refer to Chinese made products in Hong Kong was finally give n up in 1951 , probably i n reaction to political changes in the Mainland.61 The annual industrial exhibition, which to a large extent was an exhibition fo r Hon g Kong goods, now was renamed as Exhibition o f Hong Kong Chinese-capital Industrial Products (Xianggang huazi gongye chupin zhanlanhui). Withou t the nationalistic connotatio n that guohuo carried, huazi stil l implied a n ethnic identity distinguishable fro m othe r kinds o f capital. The English titl e of the exhibition, whic h was not fo r ordinary Chinese to read, however, did not have the "Chinese-capital" part and was simply called Exhibition of Hong Kong Products.
}^0^mMm!^^^
Figure 11.6
During the 1950s, the major market for Hong Kong products was still export markets . To what extent a Chinese identity (claimed as huazi or Chinese capital) could help to cultivate the overseas market during that time still needs further research, but obviously an ethnic Chinese identity would probably help connect a product to the widely spread Chinese business networks that could be found in East and Southeast Asia.62
Figure 11.7
The alternative identity, a Hong Kong identity, was first mentioned in 1954 but was becoming mature in the late 1950 s when the population of Hong Kong reached 3 000 000. In response to this potential local market, the Chinese Manufacturers' Union launched a new campaign. During the 15th Exhibition of Hong Kong Products, the slogan "Hong Kong People Use Hong Kong Goods" was promoted as a way to support the industrial growth of Hong Kong. 63 Both the chairman and the government official wh o attended the opening ceremony urge d Hong Kong manufacturers no t to neglect this potential market. 64 Once again, the identity of products was changed as it was driven by a new market. Old identities, on the other hand, faded out from public awareness when there was no practical need for them. The highly vaunted notion of guohuo status disappeared in most documents published later about the history of the Exhibition of Hong Kong Products. In an essay that provided a historical review of the exhibition, all past exhibitions were called "exhibition of industrial products" (gongzhanhui), a contemporary term that was not used until the late 1950s.65
12
Hong Kong's Economic Relations With China 1949-55: Blockade, Embargo and Financial Controls
Catherine R. Schenk
Hong Kong's post-war relations with China were rocked by three shocks associated with the victory of the Chinese Communist Party in 1949. The first wa s th e blockade o f Shangha i an d the Pear l Rive r by retreatin g nationalist forces and subsequent air raids on shipping. The second was the embargo on trade with China, Hong Kong and Macau piloted by the USA in 1950 and reinforced by a United Nations embargo in 1951. The third was the freezing o f US$ assets owned by Chinese, which was imposed by the Americans i n December 1950 . Together, these constraints o n China's foreign trad e are widely credite d with ending Hong Kong' s traditiona l entrepot role and encouraging instead the manufacturing secto r of Hong Kong. They also, however, created opportunities for Hong Kong traders and shifted the direction of their international trading links.
This chapter will explore the genesis and impact of these successiv e shocks to Hong Kong's economic relations with China. New evidence will be presented fro m th e archives of the Hongkong Bank (HSBC), Foreign Office, Treasury, Bank of England and the US State Department.1
Nationalist Blockade
Trade with communist-occupied north China was initially disrupted by the uncertainty associated with the changeover of political control. In the first months after th e communist take-over, trade was conducted either o n a barter basis or using privately supplied foreign exchange. Towards the end of March 1949 , three Hong Kon g steamer s chartere d b y local Chines e merchants departed from Hong Kong for Tianjin to resume trade on a barter basis.2 The communist authorities limited imports to essentials to conserve foreign exchange , resulting in losses for Hong Kong merchants who had held contracts dated from before the liberation. The Commodities Exchange Bureau in ports in North China required all inessential imported goods to be returned to Hong Kong. The ensuing congestion and uncertainty brought trade with Hong Kong to a virtual halt by mid-May 1949.3
Conditions ease d through June, but the bombing o f the Anchises in Shanghai and the announcement by the KMT (Guomindang) o n 26 June that communist held ports were to be blockaded forestalled the resumption of trade. The blockade included the mining of the Yangzi River as well as air and sea attacks. After the fall of Canton to communist forces at the end of October 1949 , the blockade was extended to the Pearl River, with the further disruptio n o f shipping fro m Hon g Kong.4 Despit e protests by the British and the Americans,5 th e blockade was formally lifte d only in late May 1950. 6
The blockade was initially effective al l the way up the Chinese coast but in the first part of July the KMT lost control of islands off Taku, which made any blockade of Tianjin or Qingdao impossible. From mid-July, the KMT concentrated its attention on blockading the port of Shanghai and so ships destined for ports further north (Qingdao, Tianjin, Yingkou) were left relatively unmolested. 7 Foreig n ships were very active in running the blockade. In particular, Jardine Matheson and Co. and Butterfield and Swire ran 30 000 tons of cargo to north China from August to mid-October 1949.8 In September 1949 , these two companies were agents for five out of 1 5 sailings from Hong Kong to Tianjin.9 Th e American Isbrandtson line dominated the trade to Shanghai. Four Isbrandtson ships were engaged in runs to Shanghai from the beginning of September 1949, suffering varyin g degrees of interference, especially on their return journeys to Hong Kong. The East China Foreign Trad e Control Burea u reported that , from th e beginning of June to the end of October 1949, goods imported into Shanghai using private foreign exchange amounted to US$8.5 million, �G1.44 million, and HK$30 million.10
Nevertheless th e damag e cause d b y th e blockade t o th e trad e o f Shanghai was substantial. The communist newspaper, Economics Weekly, reported in January 195 0 that 50 000 tons of shipping (equivalent to more than half the Shanghai shipping stock after the KMT retreat) had been sunk or damaged as a result of raids by nationalist aircraft.11 A variety of steps were taken to ensure the continuation of supplies into Shanghai. To evade the blockade, goods were initially shippe d a t night but this proved to o hazardous because of the destruction of buoys and navigational aids. The shortage of willing sailor s was countered with a policy to compensat e families o f crewmembers kille d while transporting essentia l military o r government supplies . Other government incentive s include d grant s an d loans to salvage damaged shipping, and air defence stations established as safe havens for shipping along the coast from Shanghai to Jiujiang.
The Northern ports of China recovered relatively quickly, helped by the loss of competition from Shanghai.12 In September 1949, total imports into Tianjin doubled and exports increased 50 percent over August to exceed the pre-war level. While about 90 percent of Shanghai's trade was conducted by State Trading Companies, the state was responsible for only about one third of the trade of Tianjin. O f the other two thirds, foreign merchant s accounted for 21 percent of exports and 5 percent of imports. Just over half of exports from Tianjin were destined for the USA and 41 percent for Hong Kong.13 The Shanghai manager of the Hongkong Bank reported that during the blockade:
certain small coasters, run by local mushroom companies have traded between Hon g Kon g an d Shangha i bu t their hig h freigh t rate s an d uncertain services inspired little confidence, and most traders preferred the train routes to Tientsin (Tianjin) and Tsingtao (Qingdao).14
There were a total of 97 departures from Hong Kong to China and North Korea between 29 September and 26 November 1949,15 close to half of which were in November. On average about one ship set sail for these ports each day in September and October. British flag ships dominated the traffic, accountin g for just over half of the total sailings. Butterfield an d Swire were the agents most involved in this trade, contracting 19 departures, mainly t o Tianjin . Panamania n ship s wer e th e nex t mos t common , accounting for 18 departures, half of which were destined for North Korean ports.
By contrast, in September and October only seven vessels set sail for Shanghai and most were intercepted by the Nationalist Navy and charged "squeeze" in return for continuing their journey. The American ship Flying Trader of the Isbrandtsen Line reached Shanghai on 3 October with freight worth HK$10 0 pe r ton an d paid $HK2 5 per ton in bribes.16 I t carried cigarette paper and machinery from New York, cotton from Karachi, rubber from Colombo and Singapore and a wide selection of industrial goods from Hong Kong including chemicals, dyes, pharmaceuticals an d oil.17 O f 13 ships which lef t Hon g Kon g fo r Shangha i afte r 2 3 October, onl y fou r succeeded in reaching the port and returning with varying degrees of risk, delay and damage.18 Anothe r Isbrandtsen ship, the Sir John Franklin, was heavily shelled and unable to leave Shanghai, prompting a public protest from the US State Department.
Foreign businesses in China complained bitterly about the impact of the blockade o n their profits an d the lack of official respons e from thei r governments. The Americans officially acquiesce d to the blockade as part of thei r ebbin g suppor t fo r th e nationalis t cause . Despit e Britain' s detachment from th e KMT and imminent recognition of the communis t government, it was unwilling to antagonise the Americans by sending naval ships to break the blockade.19 Finally, from 1 November 1949, the British Navy announce d tha t i t woul d protec t Britis h ship s outsid e Chines e territorial waters (a three mile limit) while on their voyage to Chinese ports. Despite the continued American recognition of the KMT, at the end of 1949 the US Isbrandtson ship Flying Arrow was shelled by nationalist forces as it approached Shanghai . Th e CIA reported tha t "the Nationalists hav e explained that the action was taken to prevent the vessel from sufferin g certain destruction by mines . The real motive, o f course, was thei r determination to prolong the isolation of Shanghai by sea." 20 From the beginning of 1950, after the USA change of policy with respect to Taiwan, the blockade became indiscriminate an d the US Navy agreed to operate rescue missions as a humanitarian gesture for US ships in danger.21
Despite this protection, the UK Trade Commissioner in Hong Kon g advised in December 194 9 that "the blockade in the mouths of the Yangzi and the Pearl Rivers continued to be regarded as dangerous."22 From early November there was a queue of at least six ships waiting to run through the Nationalist guard ships at the mouth of the Yangzi River. Some returned to Hong Kong or were diverted to ports further north.23 In November only four vessels entered Shanghai and six were able to clear the port. The next month, no ships were able to enter and only one ship cleared.24 I n November, by contrast, 49 ships entered Tianjin and 28 entered Qingdao (of which 16 were from Hon g Kong) . In the same month 42 ships cleared Tianjin, an d 2 4 cleared Qingdao (of which 13 were destined for Hong Kong).25
Because th e world's trad e with China focused o n Hong Kon g fo r transhipment, the main impact for Hong Kong was the accumulation o f goods which had been imported for re-export to China. Through bills of lading were difficult t o contract which left goods in Hong Kong awaiting transport aboard charters willing to run the blockade. This built up to a critical congestion of merchandise and shipping through the second half of 1949 26 gy jujy1949 ^ 5Q QQQ i3aies of raw cotton were stored in Hong Kong awaiting export to Shanghai.27 The Hongkong Bank and other British banks operating i n China and Hong Kong were put under increasing pressure . Merchants incurred large losses, and letters of credit offered b y the banks to traders had to be extended.
After the fall of Canton to the communists in October, the nationalist blockade was extended. At first, motor junk traffic wit h the southern port of Shantou thrived on the shortages of goods in China. Junks charged an extra fee for running the blockade which amounted to about HK$20 per 100 catties of commodities so that a medium sized junk could earn HK$10 000 for each trip. The main commodities in this trade were evaporated milk and kerosene.28 Large r ships began to trade with Xiamen and Shantou in November 1949. At the beginning of the month, however, two British ships, the Sin King and the Cloverlock were bombed during daylight in Shantou so that ships in future loaded at night and were left unattended during the day.29
In the case of the Pearl River blockade, all but junk traffic was excluded by November 194 9 after KMT destroyers intercepted the SS Kwai Wah. 30 Junks were small enough to evade nationalist guards by negotiating shallow rivers but the traffic wa s irregular and subject to interception, claims fo r ransom, and confiscation of cargo. After the loss of Sam Chau Island, KMT naval vessels operated from Lin Tin Island and the rewards for blockade-running tempted more traffic int o the trade.31 The continued exchange of essential commodities prevente d shortage s an d kept prices from risin g excessively i n both Hon g Kon g an d Guangzhou . Th e mos t lucrativ e commodities wer e flour, industria l chemicals, dyestuffs, medicine s an d sugar.32 Figur e 12.1 shows that Guangzhou was the most important destination for Hong Kong products in 1947 but it lost its place to Macau in 1948 . Once the embargo was enforced, trad e with Macau dominate d Hong Kong's exports carried by junks. Macau was used increasingly as a transhipment point for trade with China.33
H Canton West Rive r
�E
Maca o
�E
Eas t Coast
�E
Wes t Coas t
1947 194 8
Figure 12.1 Ton s of Cargo in Junks leaving Hong Kong
Figures 12.2 and 12.3 show that the total value of trade between Hong Kong and China increased through 194 9 despite the blockade. This wa s particularly true for exports, which increased both in terms of value and also as a percentage of total Hong Kong exports. Part of this increase, of course, was due to rises in the market prices of traded goods due to shortages and because of the extra cost of shipping.34 In November 1949 it was reported in Qingdao, for example, that merchants were exporting cloth to Hong Kong at a loss of 20 percent but then bought goods in Hong Kong, which they sold at a profit of 40 percent.35 Give n the potential for profit, traders found ways to transport their goods through ports other than Shanghai and between July and mid-September an estimated 13 0 000 tons of cargo was shipped from Hon g Kon g to Chinese ports.36 The main commodities shipped to China were steel bars, chemicals, rubber tyres, petrol, kerosene, vehicles, copper wiring, medical supplies and bulk paper. On their return voyage the ships carried bean curd / cakes, and food items.
The overall impact o f the blockade o n the trade of Hong Kon g i s difficult to determine. The disruption tended to be short-term as new trade routes were found to Shanghai overland via Tianjin or by rail or air to south China and then to Hong Kong either directly or via Macau. The Pearl River
-m~ Export s to China -�E -Import s from China
* 150O0D00 O
monthly
Figure 12.2 Hon g Kong's trade with China 1949-55
-Export s to China -Imports from China
.<&
monthly
Figure 12.3 Hon g Kong's trade with China as a % of total trade
blockade was even more short-lived as the KMT forces were weakened by the time the embargo began. In the longer term, trade was distorted not only by the blockades but also by the uncertainty and administrative change s associated with the war with Japan since 1937, the civil war in China and then the establishment of the communist regime. The cumulative effect was to increase the importance o f Hong Kong' s trad e with North China as compared to south China. Hong Kong's exports to north China comprised only 8-9 percent of total exports to China in the late 1920s compared with 21 percent in 1947 and 42 percent in 1948. Conversely, 80 percent of Hong Kong's exports to China went to south China in the late 1920 s compared with 63 percent in 1947 and 37 percent in 1948.
Perhaps the most important conclusion is that the blockade tested the ingenuity of the Chinese merchants and their western partners in evading these obstacles. It should be noted in this context that traders in Hong Kong were generally optimisti c that the communist regime would eventuall y restore stability to the Chinese economy and so improve economic relations with Hong Kong. The blockades prolonged the disruptions of the civil war in China into the period in which the West instituted more formal (an d effective) trad e sanctions. The optimism among Hong Kong and British business about the stability promised by the unification of China under the communists proved to be unfounded in the longer term due to these later sanctions, bu t th e embargoe s lef t th e promis e o f th e communis t administration untested.
Western Embargoe s
In November 194 9 the USA imposed an embargo on exports of strategic goods to China. This was followed by a more general embargo on trade in December and a UN resolution imposing an embargo on trade with China in May 1951. The trade embargoes imposed by Western governments in the wake of the communist take-over are more deeply researched in the existing literature than the blockade or financial control s discussed in this paper. Given the importance for the future prospects of Hong Kong, however, there has been relatively little detailed research on the role of Hong Kong in the development o f the embargo policy . This section will first identif y th e importance of Hong Kong to the Anglo-American deliberations over trade restrictions, and then examine the impact of the embargo on Hong Kong's trade.
Development of the embargo policy
From the outset, the positions of the US and the UK on the approach to a new communist regime in China were very different. The British hoped to maintain the status quo as far as possible, and to encourage the continuation of political influence through commercial links. The importance of China to the prosperity of Hong Kong (now a strategically as well as economically important Britis h outpost) was of considerable influenc e i n this policy , which culminated in the recognition of the communist regime in January 1950. For the Americans, political rather than economic considerations were most influential, and the changeover in China fell into the Cold War ethos of American foreig n policy . The Americans wer e much more activ e in supporting the nationalist cause and more determined to resist the legitimacy of the communist regime.
In early 1949, once the communists had gained control of parts of North China, the Americans began to plan a trade embargo. From the start, it was obvious that British co-operation in any embargo was essential because of the importance of Hong Kong as the pivot of China's international trade. The officia l America n positio n wa s tha t "Britis h co-operation , wit h particular reference to the entrepot centre of Hongkong, would be essential to the effectiveness o f US controls" over strategic exports to China.37
Groves, o f the British Embass y i n Washington, wa s calle d int o th e State Department in February 194 9 to be questioned about the possibility of imposing controls on Hong Kong's trade with China to prevent Chinese supplies reachin g th e USSR. 38 Grove s wa s non-committa l bu t wa s subsequently informed that the State Department had developed a scheme for control of trade in Hong Kong and he was invited to view it.39 Grove s initially demurre d but finally sa w the State Department plans a t the end of March. Groves insisted on what was to become the British line on such trade restrictions: that restricting the trade of Hong Kong alone would not suffice �X ports like Macau and Manila would need to be included to prevent the entrepot business merely shifting away from Hong Kong and to another centre.40 Export s from American-occupie d Japan would also have to be restricted to prevent materials reaching China. The American response was that Hong Kong was the only really active port in the area and was the only on e to be considered. They agreed , however, that their plan woul d require the co-operation o f the UK, SCA P and possibly othe r Europea n states.41
The UK was asked formally for their opinion on 21 April 1949.42 They stalled, unwilling to act against the interests of Hong Kong despite increased pressure from the State Department after the fall of Shanghai. Opinion was split between departments such as the Foreign Office, Treasury , Colonial Office and Board of Trade, but provisional views were finally given to the State Department at the end of May. Control of exports from th e UK to China posed no problem, although they could not guarantee the support of the rest of the OEEC. The problem was that Britain would also have to impose controls on exports to its colonies such as Hong Kong, Singapore and Malaya. Even these controls would be ineffective withou t restrictions on trade elsewhere in the Far East such as Japan and Manila. Otherwis e trade woul d merel y b e diverte d awa y fro m Britis h colonie s t o thei r detriment. In conclusion, the Foreign Offic e solicite d specifi c proposal s from the USA, which could be discussed at a technical level in London.43
American official s dul y arrived in London on 20 June 1949 . The American plan was to control exports to China of arms and strategic goods that were currently restricted in trade with Eastern Europe (known as 1A goods). In addition, however, they wished to add certain other items such as oil and petroleum products, mining and steel making equipment, transport and power generating equipment , whic h were important to the Chines e economy (know n as I B goods). 44 The y suggested that such an embargo should start with the UK, USA, Hong Kong and Singapore and that, once in place, efforts to attract other participants should be made.45 The British position was that new controls would be administratively an d politically difficult t o impose and they doubted the usefulness o f trade controls in general as a political tool. Furthermore, the embargo would threaten British interests i n China and, finally, ther e would be considerable damage to entrepots suc h as Singapore an d Hong Kon g if the embargo wer e no t geographically complete.46
The ministerial position was not established until the end of July 1949, at which time it was agreed that the UK would not extend existing control on transhipments in Hong Kong and Singapore until the Belgian, French and Dutch had agreed to do the same in their territories. Importantly fo r th e Americans, minister s als o insiste d tha t SCA P shoul d confor m t o th e embargo. Once these other parties had agreed, the UK would control the first category of goods, i.e. arms and strategic material, but they were not willing t o extend contro l t o the industria l product s suggeste d b y th e Americans. They suggested instead that British, American and Dutch oil companies should be asked not to sell oil to China in excess of China' s domestic civilian requirements.47
Not surprisingly, the Hong Kong governor was strongly opposed to any further contro l on transhipments in Hong Kong.48 H e re-iterated that this would merely divert trade elsewhere and also added the point that smuggling was rife in the waters around Hong Kong which would make such controls impossible to enforce. I f controls wer e to be imposed, they shoul d b e initiated at source rather than in Hong Kong. He also noted that three US oil companies were actively selling oil to China on barter terms; indeed a Caltex tanker had been sent to Shanghai as soon as the port was opened and was onl y stoppe d b y th e nationalist blockade . This smacke d o f som e disagreement between the American government an d US business. There was also a danger that China would react by cutting off essential food exports from Canton to Hong Kong.49 The Governor, therefore, supported British policy . Britis h representatives i n Nanjing als o warned tha t an y Chinese retaliation would be aimed at Hong Kong. Furthermore, an embargo on industrial goods would merely push China towards autarky, which would generate suffering for the Chinese people and UK business interests.50
At the beginning o f August the Americans formall y expresse d thei r disappointment in the British response, suggesting that this cast doubt about the possibility of a joint approach to communism in Asia. They insisted on the importance of an embargo on industrial goods and asked for talks with the UK to be resumed.51 Denin g expressed the British position (agreed in London by the Secretary of State):
At the moment we are concerned only with the survival of our business interests in China. If they do not survive, then we shall have lost the trading machinery with the aid of which we hope, in due course, to convince Mao Tse-tung and his boys that there is some advantage in playing with the West. We should also lose all our contacts with China, and the Communists would recede still further into the arms of Moscow.52
The response to the Americans was couched somewhat differently. I t was asserted that the basis of the disagreement was whether export control s would influence Chines e political policy, since communist government s tended not to link trade with politics. Secondarily, it was noted that the UK believed that a continued commercial presence in China was desirable to exert pressure and influence where possible.53
Towards the end of 1950, the British began to reconsider the possibility of joining th e US A i n a n economic embarg o o n China . Th e Britis h assessment included controls on financial transactions as well as commercial trade but the Bank of England was not optimistic about the effectiveness of such a policy. At the beginning of December Graffety-Smith advised that "My guess would be that any economic blockade would be fairly useless in view o f th e long coastline , the neighbouring countrie s an d the innat e qualities of smuggler which are present in every Chinese."54 Th e Bank's advice was that a trade blockade would have to be extended to Hong Kong, Indo-China, Burma and Siam, and would kill off Hong Kong's entrepo t trade and local industry if all leaks were closed.
On the financial side , there was the possibility that Chinese-owne d assets held in Hong Kong could be blocked or controlled. Exchange controls would be very difficult t o impose, however, sinc e it was difficult t o distinguish a Chinese resident from a Hong Kong resident. It was also noted that suc h control s woul d mak e Hon g Kong' s entrepo t busines s mor e difficult. Finally, since food imports from China were bought with HK$, it was impossible to prohibit the flow of HK$ to the Mainland without causing hardship in Hong Kong.55 Heasman concluded that "As long as Hong Kong continues on anything like the present basis it may be possible to stop some of the gaps but I am doubtful if all of them could ever be completely closed." Anyway, the integration the Hong Kong and Chinese economies was too entrenched to over-ride for political reasons.
In mid-January 1951 it was agreed that a joint Anglo-US group would study the sanctions question, and an inter-departmental Working Party on Economic Sanction s Against China was set up at the end of January to determine the British response.56 The advice of the working party was that existing controls on the export of strategic materials from the UK could be enhanced. A total embargo, however, would nee d t o be extended t o neighbouring state s (including Hong Kong and Malaya), and would als o need the co-operation o f India an d Pakistan, which was unlikely t o be forthcoming. Restrictions on shipping would need the co-operation of all UN members including India, Panama and South Africa, which might not join. Such a move would also hurt UK shipping interests . A naval blockade would be an extreme measure, which would invite retaliation and hostility from othe r member s o f th e Commonwealth suc h a s India. Financia l measures would not be sufficient on their own to stop trade and would bring sterling into disrepute.
Finally, the repercussions of an embargo on the UK and on Hong Kong were assessed . Th e trade loss to the UK was not expecte d t o be ver y significant. UK companies were already reducing their presence in China, although they might still be confiscated in retaliation, putting British citizens at risk. The embargo would als o threaten Commonwealth solidarity , especially with India and Pakistan. The repercussions for Hong Kong were, of course, more serious. There was a potential loss of 45 percent of exports, the loss of essential imports o f food an d raw materials, and a rise in unemployment. If Hong Kong was no longer an entrepot, its value to China would be reduced which paradoxically migh t encourage the Chinese to attack, generating a loss of British prestige in the East. If made effective, therefore, a total embargo could lead to the loss of Hong Kong to China.57 The working party concluded tha t a selective embargo could b e recommended but that shipping and financial controls should be used only if necessary to make such an embargo effective.
Despite British reluctance, on 18 May the UN accepted the Additional Measures Resolution to impose an embargo on trade with China. Among abstentions wer e the Commonwealth countrie s o f India, Pakistan, an d Burma, and the Asian state of Indonesia. The UK was swept along with the UN resolution and Hong Kong's trade with China was severely limited for the next decade.58
Impact of the embargo on Hong Kong's trade with China
Export controls were first imposed in Hong Kong in the second half of 1949 to conform t o the UK policy to restrict strategic goods reaching China . Export licences were also implemented (on petroleum exports, for example) to ensure that Dollar Area imports into Hong Kong generated US$ earnings for Hong Kong exporters to China. These early controls, however, did not affect trade significantly because of the narrow range of goods to which they were applied, and the relaxed attitude to licensing.59
Instead, in the months leading to the Korean War in the summer of 1950, Hong Kong benefited fro m China' s re-stockin g boo m when both prices and volumes of exports to China soared. Rationalization of China's trading policy and the resurrection of communications also revived trade. In terms of Chinese exports, the Hongkong Bank reported that in 1950, "the development of interior collecting centres through the Government Trading Organisations, better transport, and unification of the country, released larger quantities of export commodities than have been available for many years. Many smal l exporters droppe d out, but the larger and more experience d ones, both foreign and Chinese, had generally a successful year."60 In 1950, British liners made 31 voyages between the UK and China and 97 trips from the UK to Hong Kong compared to a total of 97 in all of 1948.61 The rise in Hong Kong's exports to China was even more dramatic than the rise in imports. Figure 12.3 shows that Hong Kong's exports to China soared from 15-20 percent of total exports in 1949 to 40-^15 percent in the first half of 1951.
Gradually, the American trade restrictions began to affect Hong Kong's commerce. In April 1951, J. F. Nicoll, Colonial Secretary in Hong Kong, wrote to the Colonial Offic e t o complain that the US consulate wa s threatening non-US firms in Hong Kong with the loss of licences to import US branded goods if they happened to be exporters to China.62 The Colonial Office agreed that this was objectionable but that the US Consulate should not be challenged since the State Department appeared to believe that Hong Kong's trad e control s wer e ver y fir m whe n i n fac t the y wer e quit e ineffective. The policy was not to rock the boat. The Foreign Office minuted that "we had ourselves noticed elsewhere the State Department's optimism about Hong Kong's controls. The Colonial Office at any rate are apparently under no illusions."63
The UN embargo declared in May 195 1 threatened mor e seriou s consequences fo r Hon g Kong . From June, Hong Kon g impose d mor e widespread controls on trade with China, in particular on exports of cotton and rubber. Figures 12. 2 and 12. 3 show that the drop in exports in the second half of 1951 is sharp indeed, but in part represented a return to the levels that had prevailed in the late 1940s.64
The US State Department believed that the main impact of existin g controls by 1952 was to reduce business profits in Hong Kong rather than increase unemployment. 65 It was recognized, however, that any furthe r controls would affect employmen t adversely, and consumption standard s would fal l i f import s o f foo d fro m Chin a wer e stopped . Hon g Kon g imported about 80 percent of its meat from China and about one-half of its vegetables in amounts that were equivalent to about US$30 million pe r annum. Indeed , recorde d trad e o f mea t import s wa s believe d t o underestimate actua l import s b y abou t one-half , base d o n comparin g recorded imports with actual slaughters in 1950 and 1951.66 The prospects for increasing trade any further wit h other countries were not considered very bright, given the large efforts alread y made in this direction and the imminent return of Japan as a competitor in shipping and port facilities.
Most analyses o f the impact o f the embargoes ar e on the basis of recorded trade and ignore evasions of controls for which the Hong Kong market was renowned. Goods could be smuggled directly to mainland China or exported to Macau fo r re-shipment to China. Macau did not operat e effective control s on trade with China because of the nature of the local administration an d the vulnerability t o Chinese retaliation. Althoug h statistics ar e by definition impossibl e to collect, som e indication of th e volume of such trade is available.
From 1949 to the end of 1951, Hong Kong's recorded exports to Macau were very volatile. There was a substantial increase towards the end of 1949 and through the first few months of 1950, which then subsided until the first half of 1951 (after the tightening of the US embargo). In the wake of export restrictions in the second half of 1951, trade declined to a relatively stable level of HK$5-10 million per month through to the end of 1955 . Since almost all exports from Hong Kong to Macau were destined ultimately for communist China, this increases the value of exports bound for China by HK$60-120 million per year during the UN embargo. In October 1951 the State Department observed that
since th e impositio n o f embargoe s o n strategi c good s exporte d t o Communist China, the Chinese Communists have utilised Macau both as a transhipment point for the physical movement of strategic materials and as a place to contact and make deals with business agents from other countries who can operate in Macau with a minimum risk of government surveillance and interference.67
In addition to recorded trade, State Department intelligence indicated that "there is a substantial volume of exports of strategic goods from Maca u to Communist China which have been imported into Macau through various channels, such as smuggling from Hongkong. " In particular 2 000-2 500 tons of petroleum products were reportedly exported to China each month.68
Evidence on smuggling activities is necessarily patchy and anecdotal. In September 1951 , the Chief o f Naval Operations reported that the UN embargo "has had no apparent effect on the China trade" and that China's imports continued to be mainly strategic materials related to the war effort.69 Furthermore, "The main transhipping point continues to be HK, however, India and Burma are becoming increasingly importan t in this capacity. " Banks in Hong Kong were also reported to be involved i n financin g Burmese overland exports of rubber and cotton. The report concluded that "all evidence indicates that smuggling activities are increasing very rapidly ... smuggling is carried on chiefly between Hong Kong, Macao, Kowloon, and Canton; even shipments from Okinaw a have been noted. The largest volume of smuggling seems to be in petroleum products, but large quantities of pharmaceuticals, rubber, and tires also find their way into China by this means."
From 1952 to 1954 there was a short-lived attempt to compile balance of payment s statistic s fo r Hon g Kon g whic h include d estimate s fo r smuggling. These were compiled by "a competent Chinese official" whose appointment was prompted by a visit to Hong Kong by a representative of the Bank of England. 70 These put smuggled merchandise exports at �G6 million in 1952 and �G4 million in 1953, based on information about seizures which were believed to be a fairly consistent proportion of total trade.
It is important to recognize, therefore, that the embargoes did not sever the economic links between China and Hong Kong. Despite the controls on exports of cotton and rubber to China imposed in June 1951, Hong Kong remained one of China's most important non-communist sources of many imports. Cotton was imported from Pakista n an d Egypt and rubber wa s imported fro m Ceylon , but most other products came from Hon g Kon g either directly or via Macau. Together, these five territories comprised 90 percent of China's imports from non-communist countries in 1952.71 In this sense, Hong Kong became a more important trading partner for China after the embargo than it had been before. This was especially true for goods that could not be imported fro m th e Eastern Bloc including pharmaceutical s (antibiotics and sulpha drugs), machinery and dyes.
Although Hong Kong's recorded exports to China fell substantially both in absolute terms and as a percentage of Hong Kong's total trade after 1951, imports from Chin a remained a stable proportion of total imports. This generated a trade deficit with China, s o that Hong Kong remained a n important source of foreign exchang e for mainland China. Because Hong Kong currency was convertible to most other currencies through the fre e exchange markets in Hong Kong, China's revenue from these exports was particularly valuable.
It should also be remembered that Hong Kong's trade with China was affected by factors other than trade embargoes. Political campaigns in China, such as the Five-Anti Campaign of early 1952, disrupted economic activity and therefore trade. The move toward autarky was influenced not only by the western powers' obstructive trade policy but also by financial control s imposed at the end of 1950. These will be discussed in the next section.
US Dollar Freezing Order
The third blow to the recovery of Hong Kong's relations with China was the freezing orde r issued by the American government on 1 6 December 1950. This froze all Chinese-owned US$ assets an d had far-reachin g implications fo r th e banks stil l operating i n China . Hon g Kon g ban k accounts were not frozen but all transactions involving a Chinese name had to be vouched for to establish that there was no communist connection. 72 Hong Kong branches of Chinese companies were considered to be "tainted" and had their US$ assets frozen. 73 Mos t importantly, the freezing orde r encouraged the movement toward barter trade organised by Chinese official trading organisations.
As early as June 1949 , Reed, Manager of the National City Bank in Shanghai, suggeste d t o the Hongkong Ban k tha t the State Departmen t intended to freeze Chinese US$ assets.74 This prompted the Foreign Offic e to ask the US Treasury directly if this was their intention75 to which the US Treasury denied any such plans and suggested that this was a proposal from the National City Bank itself.76
Nevertheless, fro m th e beginning o f 195 0 th e Hongkong Ban k anticipated a freezing of Chinese dollar accounts. In mid-1950, Dunkley of the Tianjin branch enquired whether funds coul d be shifted fro m accoun t of the Bank of China to a special Hongkong Bank account to keep the funds from an y potential action by the USA. Raikes, of the New York branch replied that, due to increased hostility of the US government towards the communist regime, "it would be a dangerous policy for us to try in any way to cover up in our books funds held here which we know are an account of the (Bank of China)." He concluded that "should a freezing order be put in force there is no doubt that our books would be closely inspected and all funds held in Special Accounts for our China Agencies would have to be fully explained." 77 By 13 December, days before the freezing order, the Bank of China account in the New York branch of Hongkong Bank was closed, althoug h the New York branch's Tianji n accoun t held US$ fo r account of the Bank of China which were used to finance trade.78
The Chinese authorities also anticipated a freezing of US$ accounts. In January 1950 , the Shanghai manager of Hongkong Bank reported that, in anticipation of a freezing of Chinese assets, US$ credits of six banks had been transferred to Russian account in the USA.79 These were all banks that traded in foreign exchange for the Bank of China. The Chinese also shifted their US$ to Swiss bank accounts which they hoped to conceal from th e American Treasury. In March 1950 , HSBC and Chartered Bank received instructions to open accounts in their own names in New York for the Bank of China and to receive US$3 million each from the Chemical Bank Trust Co. The Bank of China then instructed them to transfer thes e funds les s US$100 000 in each case to the Swiss Banking Corporation New York for account of the Societe Banque de Suisse in Zurich.80 In the event, the US$ secreted in Switzerland proved difficult t o use and provoked a serious conflict between Hongkong Bank and the Bank of China in 1951. Because of the implications for British interests in China, it is worth going into some detail on this point.
On 9 December 1950, days before the freezing order was announced, the Hongkong Bank opened a Letter of Credit in favour of Jardine Matheson and Co. through the Swiss Bank Corporation in Zurich.81 Th e funds were transferred from the New York branch of the Hongkong Bank to the Swiss Bank (New York) for account of its Zurich office. A week later, these funds were frozen. The Hongkong Bank tried to get the funds released through the Swiss consul and Jardine Matheson applied to the US Treasury with no result. Eventually the part of the funds relate d to goods that had actuall y been shipped was released but US$986 616 remained frozen.
In December 1951, the Bank of China tried to force Hongkong Bank to make a deposit in the Hong Kong branch of the Bank of China equal to the HK$ equivalent o f the frozen US$ . Since this contravened th e freezin g order, Hongkon g Ban k refused . Th e Chines e authoritie s personall y threatened th e manager o f the Hongkong Ban k in Shanghai wit h cour t action. In a telegram from th e Hong Kong office, Yoxall (manager i n Shanghai) was reminded that "you must realise that any action of ours that could be construed a s getting round the American Freezing Order would lead to most serious consequences to our New York Office and to the Bank as a whole. We would receive no sympathy from the British Authorities."82 Yoxall tried to find a way around the impasse by suggesting that the frozen funds in the Swiss account might be freed to finance Japanese imports to China but the New York office refused. 83 Under considerable personal pressure, Yoxall urged that the Bank of China's wishes be complied with. At the end of December, he wrote to Adamson in Hong Kong that "I can only urge you to use all your influence with the Authorities to effect release of funds, availabl e to the Bank o f China, fo r the equivalent o f th e outstanding balance of this L/C (letter of credit)."84
The dispute was dropped during the San-fan an d Wu-fan movement s but was raised again by the Bank of China in June 195 2 after Hongkon g Bank decided to close its Shanghai operations.85 A s one of the conditions for allowing the Shanghai branch to close, the Chinese insisted on being reimbursed fo r thes e froze n dollars . In December, Yoxal l blame d th e hardening of the Chinese attitude to the closure of branches on the ill will caused by the frozen Swis s bank credit. 86 This episode shows how the freezing order generated suspicion and ill-feeling on the part of the Chinese toward foreign business.
As well as these banking difficulties, the freezing order encouraged the Chinese to require that all trade be on a strict barter basis. In February 1951, Russell of Arnhold Trading Company called on Yao Laian, chief buyer of the Chinese National Import Corporation and was told that the CNIC would conduct business almost entirely on a barter basis due to fears of furthe r freezing orders. If trade on this basis was not forthcoming, then the Chinese were willing to look to become self-sufficient. 87
New export regulations required that no goods were to leave China until imports of an equal value (or foreign exchange) had arrived in China.88 This would avoid outstanding contracts, which might be captured by futur e freezing orders. In March, a Barter Exchange was established in Shanghai to connect importers and exporters and applicants for foreign exchange. 89 Since most foreign traders and banks could not accept the shipment of goods without payment in advance, or tying the sale of their goods to sales of Chinese products elsewhere, trade with China through private foreig n interests was drastically reduced. Hong Kong retained some business by virtue of the speed of the turnover of trade through the port (essential in barter trade), but the onerous conditions also reduced trade for Hong Kong.
The US$ was not the only exchange control imposed on Chinese trade. In August 1949 the British imposed controls on debits from Chinese sterling account. Shao has suggested that this "secret government action" was on a par with the American freezing order of December 1950.90 He further asserts that "little evidence is available to reveal the circumstances" in which this decision was taken by th e British. 91 In fact ther e i s a wealth o f correspondence in Foreign Office, Treasur y and Bank of England papers, which reveal that this move was not commensurate with the later American policy.92
The UK measures were not aimed at restricting China's legitimate trade but at stopping "cheap sterling" transactions through Chinese accounts. The problem was that sterling area goods were ostensibly consigned to China but were diverted to the USA and paid for in Chinese account sterling. UK exchange control required that all US imports of sterling area goods were paid for in US$. In August 1949, it was decided to impose controls on debits from China's sterling accounts in order to ensure that such payments were related to legitimate imports from the sterling area. These restrictions did not, therefore, constrain trade more generally in the way that the US freezing order did.
Concluding Remark s
This chapter has addressed the genesis and impact of three major shocks to economic relations between Hong Kong and mainland China in the period 1949-55. The trade embargoes are widely discussed in existing literature but less attention has been paid to the importance of the nationalist blockade of 1949 / 50 and the freezing of Chinese-owned US$ balances at the end of 1950. These two measures had important implications for Sino-Hong Kong relations that aggravated th e impact of the western trade embargo. Th e blockade prolonged the disruption o f trade caused by the changeover of administrative control and the attempt to stabilise the Chinese economy after three years of inflation an d civil war. The freezing orde r was arguably as important a s the embargoes i n encouraging the move to autarky by th e Chinese government, because it destroyed confidence in the use of foreign exchange, driving transactions to low level barter. When examining th e relationship between Hong Kong and mainland China in these critical years, this chapter has shown that all three external shocks need to be considered together to explain the changing trade patterns of the region.
Notes
Introduction History of Hong Kong and History of Modern China: Unravelling the Relationship
1.
A n excellent article by Sung Yun-wing on the history of The University of Hong Kong fully illustrate d how Hong Kong Chinese elites contributed t o China in history, see Sung Yun-wing, Wei Zhongguo erli: Gangda de huigu [A British university in Hong Kong for China: a retrospect], inXueyuan: a Biweekly of the Student Union of the University of Hong Kong, No . 12 (September 1970) , pp. 1-2.
2.
Cha n La u Kit-ching , From Nothing to Nothing: the Chinese Communist Movement and Hong Kong, 1921-1936 (New York: St. Martin' Press, 1999), pp. 7-9.
3.
Se e Anthony Neoh, "Regulation and development of the financial markets," in Wang Gungw u an d Wong Siu-lu n (eds.) , Towards A New Millenium: Building on Hong Kong's Strengths (Hon g Kong: Centre of Asian Studies, The University of Hong Kong, 1999), pp. 29-61; "Corporate Governance in Mainland China: Where Do We Go from Here?" in Peter K. Cornelius and Bruce Kogut (eds.), Corporate Governance and Capital Flows in a Global Economy (Ne w York: Oxford University Press, 2003), pp. 431^-43.
4.
Se e Michael Yahuda, "Hong Kong: A New Beginning for China?" in Judith
M. Brown and Rosemary Foot (eds.), Hong Kong's Transitions, 1842-1997 (New York: St. Martin Press, 1997), pp. 192-210.
Chapter 1 The Common People in Hong Kong History: Their Livelihood and Aspirations Until the 1930s
1. G.B . Endacott, A History of Hong Kong (London: Oxford University Press, 1958); James Hayes, The Hong Kong Region, 1850-1911: Institutions and Leadership in Town and Countryside (Hamden : Archon Books, 1977) and The Rural Communities of Hong Kong: Studies and Themes (Hon g Kong :
Oxford University Press, 1983); Elizabeth Sinn, Power and Charity: the Early
History of the Tung Wah Hospital, Hong Kong (Hon g Kong : Oxfor d
University Press, 1989); Carl Smith, Chinese Christians: Elites, Middlemen,
and the Church in Hong Kong (Hong Kong: Oxford University Press, 1985);
Ming K. Chan, Labor and Empire: the Chinese Labor Movement in the Canton
Delta, 1895-1927, Ph.D . thesis, Stanford University, 1975; and Tsai Jung-
fang, Hong Kong in Chinese History: Community and Social Unrest in the
British Colony, 1842-1913 (N.Y. : Columbia University Press, 1993).
2.Mr Chadwick's Report on the Sanitary Condition of Hong Kong, Novembe r 1882, Colonial Office, Easter n No. 38, CO 882/4 Public Record Office , London. A n extract of thi s report ma y be found i n David Faur e (ed.) ,A Documentary History of Hong Kong: Society (Hon g Kong: Hong Kong University Press, 1997), pp. 29^8.
3.
Mr Chadwick's Report on the Sanitary Condition of Hong Kong. p. 11.
4.
ibid. p. 12.
5.
ibid. p. 18.
6.
ibid.pAl.
7.
G . H. Choa,The Life and Times of Sir Kai Ho Kai, Hong Kong (Hon g Kong: Chinese University Press , 1981) ; Carl Smith, "A sens e of history, " Journal of the Hong Kong Branch of the Royal Asiatic Society, vol. 26 (1986), pp. 144-264 and vol. 27 (1987), pp. 117-253 ; Elizabeth Sinn ,Power and Charity.
8.
Henness y to Carnarvon, 27 September 1877, in Papers Relating to Restrictions upon Chinese at Hong Kong, British Parliamentary Papers, China No. 27, Hong Kong 1862-1881 (Iris h University Press, 1971), p. 2.
9.
Surveyo r General to Colonial Secretary, 8 May 1877 inRestrictions upon Chinese, pp. 3-4, quotations from p. 4.
10.
Enclosure 1 in No. 23, Hennessy to Earl of Kimberley, 15 July 1880 , in Restrictions upon Chinese, pp . 47-49.
11.
No . 3 Earl of Kimberley to Hennessy 14 May 1880, No. 18 Hennessy to Earl of Kimberley, telegraphic, received 1 8 July 1880 , and No. 1 9 Hennessy t o Earl of Kimberley, 8 July 1880 in Restrictions upon Chinese, pp . 6-9, an d 17-22.
12.
Enclosur e 6 in No. 19 in Restrictions upon Chinese, pp. 31-33. For Ho Kai's comments, see G. H. Choa, Life and Times, pp. 78-86.
13.
No . 41 Hennessy to Earl of Kimberley, 29 April 1881, in Restrictions upon Chinese, pp. 65-66.
14.
Enclosur e 2 in No. 41, Restrictions upon Chinese, pp. 71-74.
15.
Journal of the Hong Kong Institute of Social Research, vol . 1, 1965, cited in David Faure, ed. A Documentary History of Hong Kong: Society (Hong Kong: Hong Kong University Press 1997), p. 257.
16.
No . 45 J.M. Price to Colonial Office, 1 5 August 1881 , Restrictions upon Chinese, pp. 90-91.
17.
ibid. p. 93.
NOTES TO PAGES 19-2 8 22
18.
No . 34 War Office to Colonial Office, 2 May 1881, Restrictions upon Chinese, pp. 62-63.
19.
No . 47 Earl of Kimberley to Hennessy, 20 August 1881, Restrictions upon Chinese, pp . 113-115.
20.
Enclosur e 2 in No. 42, Statement of HE Governor Sir John Pope Hennessy KCMG on the Census Returns and the Progress of the Colony, Restrictions upon Chinese, pp . 76-86. The 188 1 census lists the occupations o f 69 220 persons and makes fascinating reading for a cross-section of Hong Kong life at the time. Aside from the figures listed in the text here, the census reports 16 428 servants, 6 473 coolies, 980 chair coolies, 1 315 brothel keepers and inmates, 1 439 stone cutters, 1 083 rice pounders, 200 portrait painters, 13 match makers all living in the villages, 55 mid wives only one of whom lived in the villages. The report may be found in Sessional Papers 1881.
21.
Repor t on the Census of the Colony for 1911, Sessional Papers 1923 , p. 103.
22.
Repor t on the Census of the Colony for 1921, Sessional Papers 1921 , p. 163.
23.
Report from the Hong Kong Commission of 1886-1887 on the History of the Sale, Tenure and Occupation of the Crown Lands of the Colony, 1887 , pp. 33-34.
24.
ibid. p. 35.
25.
Elizabet h Sinn, "A history of regional associations in pre-war Hong Kong," in Elizabeth Sinn, ed. Between East and West, Aspects of Social and Political Development in Hong Kong (Hong Kong: Centre of Asian Studies, University of Hong Kong, 1990), pp. 159-186.
26.
A . E. Wood,Report on the Chinese Guilds of Hong Kong, Hong Kong, 1912.
27.Cf . Fung Chi-ming, "History at the Grassroots: Rickshaw Pullers in the Pearl River Delta of South China, 1874-1992," Ph.D. thesis, Hong Kong University, 1996.
28. "Informatio n concerning the guilds of masons, bricklayers, shipbuilders , carpenters and contractors," in Clementi Papers, Miscellaneous Papers 1902-1911, ff 49-78, Rhodes House, Oxford.
29.Mr. Chadwick's Report, p. 12.
30.
"Informatio n concerning the guilds, etc." p. 52.
31.
ibid. p. 14.
32.
ibid. p. 14.
33.
ibid. p. 52.
34.
ibid. p. 5.
35.
Ouyang zaibie tang jiapu 1919 , p. 22b.
36.
Repor t of the Census of the Colony of Hong Kong, 1931, Sessional Papers 1931, p. 134 . Including the boat population and New Territories villagers , the Chinese population amounted to 817 000 people.
37.
Economi c Resources Committee (Hong Kong), Factory and Home and Cottage Industries Sub-committee , The Report with Minutes of Proceedings, Appendices and Illustrated Memo on Sericulture, Pig-breeding, Tobacco, Cotton, Fruit and Vegetable Growing, 1920 .
38.
ibid. pp. 5-6.
39.
Repor t of the Housing Commission, Sessional Papers 1923 , p. 111.
40.
ibid. p. 125.
41.
Report , Housing Commission 1935, in Sessional Papers 1938.
42.
ibid. p. 16; this particular principle was left out of the recommendations of the commission as well.
43.
ibid. p. 17.
44.
R.H . Butters, Report on Labour and Labour Conditions in Hong Kong , Sessional Papers, 1939.
45.
ibid. p. 157.
46.
ibid. pp. 161-162.
47.
ibid. p. 162. 48. ibid. pp. 158, 162, 163.
49.
ibid. p. 135.
50.
Da i Dongpei, Gangqiao xuzhi, Hon g Kong: Yongying guanggao she, 1933, pp. 117-128.
Chapter 2 Religion in Hong Kong History
1. Fo r more details on the varieties of organized religion in Hong Kong, see B.
H. K. Luk, "Religion and custom," in T. L. Tsim and B. H. K. Luk (eds.), The Other Hong Kong Report (Hong Kong: Chinese University Press, 1989), pp. 317-332.
2.
Xianggan g Tianzhujiao shehuiquanbuochu (compilers), Xianggang di zongjiao (Hong Kong: Holy Spirit Study Centre, 1988), pp. 6-9.
3.
Ibid. , pp. 12-53.
4.
B . H. K. Luk, "Religion and custom," inThe Other Hong Kong Report 1990 (Hong Kong: Chinese University Press, 1990), pp. 573-575.
5.
Xianggan g Tianzhujiao shehuiquanbuoch u (compilers) , op.cit, pp. 60-64; Yongming, Xianggang Fojiao yu Fosi (Buddhism and Monasteries in Hong Kong) (Hong Kong: Po Lin Monastery, 1993), pp. 127-129.
6.
Xianggan g Tianzhujiao shehuiquanbuoch u (compilers) , op. cit., pp. 70-72. Huang Zhaohan and Zheng Weiming, Xianggang yuAomen zhi Daojiao (Taoist Religion in Hong Kon g and Macau) (Hon g Kong : Calvarden Ltd., 1993), pp. 10-45.
7.
Fo r example, the Buddhist nun Liao Fengming is a very popular presenter of Buddhist ideas in both print and video media.
8.
Yongming , op. cit, pp. 110-115; Huang and Zheng, op. cit, p. 16.
9.
Yongming , pp. 53-55; Huang and Zheng, pp. 22-26.
10.
Elizabet h Sinn ,Power and Charity: the Early History of the Tung Wah Hospital, Hong Kong (Hon g Kong: Oxford University Press, 1989). Carl T. Smith, Chinese Christians: Elites, Middlemen and the Church in Hong Kong (Hong Kong, Oxford University Press, 1985).
NOTES TO PAGES 42-55 22
11.
K e Dawei, Lu Hongji an d Wu-Lun Nixia , Xianggang Beiming Huibian (Historical Inscription s o f Hong Kong), 3 volumes (Hong Kong: Urba n Council, 1986).
12.
Sinn , op. cit., pp. 12-17.
13.
A . E. Sweeting comp., Education in Hong Kong Pre-1841-1941: Fact and Opinion. Materials for a History of Education in Hong Kong (Hon g Kong: Hong Kong University Press, 1990), pp. 25-30; 36-39.
14.
Smith , op. cit, chapters 6 and 7.
15.
Fo r the concept of littoral culture, see Paul A. Cohen, Bewteen Tradition and Modernity: Wang Tao and Reform in Late Ch'ing China (Cambridge MA: Harvard University Press, 1974).
16.
Lu o Xianglin, Xianggang yu Zhong-Xi Wenhua zhi Jiaoliu (Hon g Kong : Institute of Chinese Culture, 1961), pp. 43-75. Cf. Cohen, ibid.
17.
Sweeting , op. cit., pp. 35; 228-231.
18.
Yongming , op. cit., pp. 49-50.
19.
Ibid. , p. 71.
20.
Ibid. , p. 70.
21.
Ibid. , pp. 117-129.
22.
Graem e Lang & Lars Ragvald, The Rise of A Rrefugee God: Hong Kong's Wong Tai Sin (Hong Kong: Oxford University Press, 1993).
23.
B . H. K. Luk, "The emergence of a civil society in Hong Kong," in A. Acharya (eds.), Human Rights and Democracy in Asia (forthcoming) .
24.
B . H. K. Luk, "Religion and custom," in Tsim and Luk (eds.), op. cit., pp. 328-332.
25.
Tia n Yingjie (Ticozzi), Xianggang Tianzhujiao Zhanggu (Hon g Kong: Holy Spirit Study Centre, 1983), pp. 1-4 .
26.
Fo r details, see Luo Guang,J looting yu Zhongguo shijieshi (Taichung : Kuangchi Press, 1961).
27.
Fo r details, see Thomas Ryan, SJ, The Story of a Hundred Years: the Pontifical Institute of Foreign Missions (PIME) in Hong Kong, 1858-1958 (Hon g Kong: Catholic Truth Society, 1959).
28.
Sweeting , op. cit., p. 35.
29.
Ryan , op. cit.
30.
Smith , op. cit., chapters 8 and 9.
31.
Ryan , op. cit., Ticozzi, op. cit.,
32.
Lu o Guang, op. cit., Ticozzi, pp. 215-220.
33.
Davi d M. Paton, R. O.,The Life and Times of Bishop Ronald Hall of Hong Kong (Hon g Kong, [Anglican] Diocese of Hong Kong and Macao and the Hong Kong Diocesan Association, 1985), pp. 125-148.
34.
Ibid. , 188 . A. E. Sweeting, A Phoenix Transformed: the Reconstruction of Education in Postwar Hong Kong (Hon g Kong : Oxford Universit y Press , 1993), pp. 197-199.
Chapter 3 The Sunday Rest Issue in Nineteenth Century Hong Kong
1.
I t was calculated i n November 1997 that the total salary of Hong Kong employees for one day amounts to 700 million dollars. See Ming Pao Daily (19 November 1997).
2.
Se e Montreal Gazette (1 9 November 1994) ;Winnipeg Free Press ( 3 April 1993; 5 August 1993) ; Financial Post Daily (2 2 July 1993) . See also A. H. Lewis, Critical History Of Sunday Legislation From 321 To 1888 A. D. (New York: D. Appleton and Co., 1888; Reprint, William S. Hein & Co., Inc., 1997).
3.
I n 1875, all Sundays with five more days were prescribed as public holidays. In 1912 , the law was amended to include all Sundays and 1 2 other days as holidays. The number of days further increased to 16 days apart from Sundays. At present, the public holidays include all Sundays and 1 7 other days. See Hong Kong Ordinance, No. 6 of 1875 , No. 5 of 1912 , No. 1 of 1947 and No. 9 of 1950.
4.Friend of China (24 April 1844).
5.Friend of China (4 May 1844) . Please also refer to Appendix I.
6.
Friend of China (15 June 1844).
7.
Norton-Kyshe , The History of the Laws and Courts of Hong Kong, reissue d in 1971, (Hong Kong Vetch and Lee, 1898), Vol. 1, p. 53.
8.
Norton-Kyshe , op. cit. , Vol. 11, p. 105.
9.
Norton-Kyshe , op. cit. , Vol. 1, p. 407.
10.
China Mail (25 October 1856).
11.
J . C. Whyte, graduated from Trinity College, Dublin, was called to the Bar of Ireland in 1847, appointed second police magistrate in 1862, acting judge of the court of summary jurisdiction in 1863, 1866, 1869, and a provisional member of the legislative council in 1866, died in 1871. See Norton-Kyshe, op. cit. , Vol. 11, p. 39, 51, 81, 172, 174, 177.
12.
Daily Press (14 October 1867). Please also refer to Appendix III.
13.
China Mail (23 January 1867).
14.
Hong Kong Mercury (1 4 June 1866).
15.
Daily Press (14 October 1867).
16.
China Mail (1 May 1879) . See also Norton-Kyshe, op. cit., Vol. 11, p. 284.
17.
Ibid.
18.
Norton-Kyshe , op. cit. , Vol. 11, pp. 511-512.
19.
China Mail (2 May 1879).
20.
China Mail (1 May 1879).
21.
Historical and statistical abstract of the Colony of Hong Kong, 1841-1930 (Hong Kong: Noronha & Co., 1932).
22.China Mail (18 June 1888).
23. Th e petition to the governor (9 November 1888) . Great Britain, Colonial Office, Original Correspondence: Hong Kong, 1841-1951, Series 129
(hereafter CO 129) /250 p. 149.
24.China Mail (18 April 1889).
25.
Accordin g to the 1964 edition of the Hong Kong Law Book, the Sunday Cargo Working Ordinance wa s still valid, although with some amendments made in 1829, 1934 and 1939.
26.
Times (London) (25 July 1890).
27.
Annua l Report of the British Mercantile Marine Officers' Association, 1890. CO 129/250 p. 169.
28.
Daily Press (1 8 October 1890) . Also see Norton-Kyshe, op. cit., Vo l 11, p. 423.
29.
China Mail (19 November 1890).
30.
Dawso n (secretary of the Missions to Seamen) to Lord Knutsford (Secretary of State for the Colonies) (8 September 1890). CO 129/1248, p. 785.
31.
F . Henderson (General Chamber of Commerce, Hong Kong) to W.M. Deane (acting Colonial Secretary) (15 December 1890). CO 129/250, pp. 176-178.
32.
Machintos h (Chairman of the Chamber of Commerce) to S. Ashton (President of the British Mercantile Marine Officers' Association ) (31 October 1890) . CO 129/250 p. 156.
33.
Memorandu m by J.J. Keswick (1 April 1891). CO 129/250 pp. 180-182. Also see Daily Press (1 8 October 1890).
34.
Se e Daily Press (21, 22, 23, 28 October 1890). China Mail (18 October; 18, 20 November 1890). Hong Kong Telegraph (18 , 21 November 1890).
35.
Norton-Kyshe , op. cit. , Vol. 11, p. 420.
36.
Telegraph (London ) (October 1890).
37.Daily Press (29 January 1891).
38. Norton-Kyshe , op. cit., Vol. 11, p. 433.
39.Daily Press (1 August 1891).
40.
Se e Hong Kong Blue Book, 1892.
41.
Se e Hong Kong Blue Book, 1892, 1893, 1894, 1895.
42.
Norton-Kyshe , op. cit. , Vol. 11, p. 455.
43.
Th e newspapers are the Friend of China (1842-1859), the China Mail (fro m 1845), the Daily Press (from 1857) , the Hong Kong Mercury (1866 ) and the Hong Kong Times (1873, 1876).
44.
China Mail (1 May 1879).
45.
Friend of China (1 and 2 May 1844).
46.
Daily Press (14 October 1867).
47.
Norton-Kyshe , op. cit. Vol. 2, p. 474.
48.
A n Ordinance to amend the Regulation of Chinese Ordinance was passed in 1897. See the Hong Kong Government Gazette ( 8 May 1897).
Chapter 4 Governorships of Lugard and May: Fears of Double Allegiance and Perceived Disloyalty
1.
Notabl e example s include : Jung-fan g Tsai , "Th e Predicamen t o f th e Compradore Ideologists: He Qi (Ho Kai, 1859-1914) and Hu Li-yuan (1847-1916)," Modern China, Vol. 7, No.2 (1981), pp. 191-225; Pauline Chow Lo-sai, "Ho Kai and Lim Boon keng: A Comparative Study of Tripartit e Loyalty of Colonial Chinese Elite, 1895-1912 " (M.A. thesis, University of Hong Kong, 1987); Chan Kwong-tak, "Local Chinese Elites in Hong Kong and the Problem of Divided Loyalties: The 1905 Anti-American Boycott and The 190 8 Anti-Japanese Boycott" (B.A. thesis, University o f Hong Kong , 1987).
2.
Th e term "Chinese Unofficials"is used here to include unofficials o f both "Chinese" and "Eurasian" descents, as it was the case, that half-Chinese Elites like Chan Kai-ming and Ho Fook, born and brought up in Hong Kong,self-addressed themselve s a s "Chinese gentleme n an d merchants " (zhonghua s henshang). The term zhonghua shenshang wa s embroidered on a satin scroll presented on 28 April 1912 as a souvenir from the local Chinese elites to Sir Frederick Lugard. Owned by Lugard's descendents , this satin scroll is put on deposit at the University Museum and Art Gallery, HKU.
3.
Som e examples of the expanding research efforts in this field are: Norman Miners, Hong Kong Under Imperial Rule, 1912-1941 (Hon g Kong: Oxford University Press, 1987); Steve Y. S. Tsang, Democracy Shelved: Great Britain, China, and Attempts at Constitutional Reform in Hong Kong, 1945-1952 (Hong Kong: Oxford Universit y Press, 1988) ; Chan Lau Kit-ching,China, Britain and Hong Kong, 1895-1945 (Hon g Kong: Chinese University Press, 1990);K. C. Fok, Lectures on Hong Kong History: Hong Kong's Role in Modern Chinese History (Hon g Kong: Commercial Press, 1990); Edmund S.
K. Fung, The Diplomacy of Imperial Retreat: Britain's South China Policy (Hong Kong: Oxford University Press, 1991); Ming K. Chan (ed.),Precarious Balance: Hong Kong Between China and Britain, 1842-1992 (Hon g Kong: Hong Kong University Press, 1994); James T. H. Tang, "From Empire Defence to Imperial Retreat: Britain's Postwar China Policy and the Decolonization of Hong Kong," Modern Asian Studies, Vol. 28, No. 2 (1994), pp. 317-337; Li Hongxi, Zhou Bing & Liu Xihai (eds.), Xianggang miyue: rijiang hetan midang (Secre t diplomacy regarding Hong Kong: confidential archive s of Japan-Jiang Jieshi peace talks) (Hong Kong: Lee Man Publication, 1995).
4.
Quote d from CO 129/187, enclosure 4 in Hennessy to Beach, 19 January 1880, 51, in which Sir J. P. Hennessy, Governor of Hong Kong in 1877-82, tried to justify his decision to appoint the first Chinese to the Legislative Council.
5.
Th e names of the Chinese who were appointed as Unofficial Members of the Legislative Council up to 1941, together with the years they served on the council, are listed as follows: Ng Choy (1880-82, alias Wu Ting-fang), Wong
NOTES TO PAGES 71-75 22
Shing (1884-90), Ho Kai (1890-1914), Wei Yuk (1896-1914), Lau Chu-pak (1913-22), Ho Fook (1917-21), Chan Kai-ming (1918), Chau Siu-ki (1921, 1923-24), Chow Shou-son (1921, 1922-31), Ng Hon-tsz (1922-23), Tso Seen-wan (1929-37) , Cha u Tsun-ni n (1931-39) , Lo Man-kam (1935-41) , Li Shu-fan (1937-41), Li Tse-fong (1939).
6.
G . B. Endacott,Government and People in Hong Kong, 1841-1962: A Constitutional History (Hong Kong: Oxford University Press, 1964), pp. 97-108.
7.
Demand s for a greater measure of popular representation were made by British residents to the Secretary of State for the Colonies in 1916 and again in 1919, both times unsuccessfully .
8.
Hon g Kong's population was overwhelmingly Chinese who formed 94 percent of the total in 1848 and over 97 percent in 1855. See the Census Returns in Hong Kong Government Gazette, 5 April 1856, p. 2.
9.
J . W. Norton-Kyshe, The History of The Laws and Courts of Hong Kong (Hong Kong: Vetch & Lee Ltd., 1971), pp. 1; 4-6.
10.
O n the subject of the legal nationality of the people in Hong Kong, see Robin
M. White, "Hong Kong's Nationality and the British Empire," Hong Kong Law Journal, Vol. 9, No. 1 (1989), pp. 10-42; Chiu Wai-fu, "Nationality and Identities of Hong Kong People in Transition to 1997" (M.A. thesis, Leicester University in association with University of Hong Kong, 1994), pp. 8-18.
11.
Fo r a discussion of the interaction of class, kinship, dialect and national loyalties, see Fung Chi Ming, "History at the Grassroots: Rickshaw Puller s in the Pearl River Delta of South China" (Ph.D. thesis, University of Hong Kong, 1996), chaps. 1-3.
12.China Mail, 23 October 1911.
13.
Wah Tsz Yat Po (Chinese Mail), Hong Kong Daily Press, 1 November 1911.
14.
C O 129/381, Lugard to Harcourt, desp., conf., 23 November 1911, pp. 196-197.
15.
Ibid. , p. 197.
16.
C O 129/381, enclosure 5 in Lugard to Harcourt, 20 November 1911, p. 212.
17.
South China Morning Post, 27 October 1911.
18.
C O 129/381, enclosure 2 in Lugard to Colonial Office, telegrams, 9 November 1911, p. 204.
19.
C O 129/381, Lugard to Harcourt, desp., conf., 23 November 1911, p. 197.
20.
Rhode s House Library, Oxford, Lugard Papers: soldier, administrator and author, including correspondence & papers as Governor of Hong Kong, 1907-12, p. 45.
21.
C O 129/381, Lugard to Harcourt, desp., conf., 23 November 1911, p. 197.
22.
C O 129/381, enclosure 5 in Lugard to Colonial Office, 20 November 1911, p. 216.
23.
Bor n in Hong Kong, Ho Kai was the fourth son of the Rev. Ho Fuk-tong (1817-1871) of the London Missionary Society. Ho Kai held qualification s in both law (Lincoln's Inn) and medicine (University of Aberdeen). Back to
Hong Kong, he played an important part in the founding of the Hong Kong College of Medicine (1887) , the Alice Memorial Hospital (1887) , and the Kwong Wah Hospital (1911).
24.
Bo m the son of the head comprador of the Chartered Mercantile Bank of India, London and China, Wei Yuk was educated through the medium of English in his birthplace Hong Kong, England and Scotland. Back to Hong Kong, he married the daughter of Wong Shing (1825-1902), who was among the first few Chinese sent to study in the United States, as well as the second Chinese to serve on the Legislative Council.
25.
C O 129/381, Lugard to Harcourt, desp., conf., 23 November 1911, p. 198.
26.
South China Morning Post, 1 4 November 1911.
27.
C O 129/381, Lugard to Harcourt, desp., conf., 23 November, 1911, pp. 198-199.
28.
C O 129/381, enclosure 7 in Lugard to Colonial Office, 21 November 1911, p. 218.
29.
Befor e his appointment as Unofficial Member of the Legislative Council in 1914, Lau Chu-pak had served as chairman of the Po Leung Kuk, director of the Kwong Wah Hospital, and chairman of the Tung Wah Hospital board of directors. His son, Lau Tak-po (1887-1955) , was founder an d managing director of the Hong Kong & Yaumatei Ferry Co., Ltd.
30.
Fathe r of Chau Tsun-nin (1893-1971), an Oxford graduate who practised as barrister-in-law in Hong Kong. Like his father, Chau Tsun-nin successfull y embarked on a wide variety of commercial undertakings and held important posts in different Governmen t boards and public-welfare institutions.
31.
Unofficia l Membe r of the Legislative Council in 1922-23 and compradore of She wan Tomes & Co. Ng Hon-tsz served, at various times, on the District Watch Forc e Committee , th e Sanitary Board , th e Tung Wa h Hospita l Committee, th e Tsan Yu k Hospital Committee , an d the Council o f the University of Hong Kong.
32.
Actin g Legislative Councillor in the year 1918. Chan Kai-ming took part in matters of public interest and, together with Ho Kai, Wei Yuk, Lau Chu-pak and Chau Siu-ki, founded the Kwong Wah Hospital. He was a generous donor in support of the activities of the Queen's College, his old school, and the University of Hong Kong.
33.
Brothe r of Robert Ho Tung (1862-1956), father of Ho Shai-chuen (1891-1938), one-time president of the Hong Kong Chinese Medical Association, and grandfather of Stanley Ho Hung-sun, a prominent businessman in Hong Kong and Macau. Ho Fook founded, with others, the Chinese Merchants Union (the forerunner of the Chinese Chamber of Commerce).
34.
C O 129/381, enclosure 5 in Lugard to Colonial Office, 20 November 1911, pp. 212-216.
35.
Ibid. , pp. 213-216.
36.
Ibid. , p. 213.
37.
Ibid. , pp. 212-213.
NOTES TO PAGES 78-84 22
38.
Ibid. , p. 214.
39.
C O 129/381, enclosure 5 in Lugard to Colonial Office, 20 November 1911, pp. 215-216.
40.
Ibid. , p. 216.
41.
C O 129/381, Lugard to Harcourt, desp., conf., 23 November 1911, p. 200.
42.
China Mail, 1 8 October 1911; South China Morning Post, 22 November 1911.
43.
Th e quote is from Lugard's speech in the Legislative Council introducing the amending bill. See Hong Kong Hansard, 3 0 November 1911, p. 244.
44.
Letter , Lugard to his brother Edward, dated 23 December 1911. Quoted in Margery Perham , Lugard: The Years of Authority, 1898-1945 (London : Collins 1956), pp. 360-361.
45.
Hong Kong Government Gazette, 1 9 April 1912, p. 265.
46.Hong Kong Government Gazette, 1 8 October 1912, p. 528.
47.Hong Kong Government Gazette, 5 September 1913, p. 372.
48.
Hong Kong Government Gazette, 2 4 April 1914, p. 134.
49.
Th e quote is from May's speech in the Legislative Council announcing the retirement of Ho Kai. See Hong Kong Hansard, 2 6 February 1914, p. 28.
50.China Mail, 2 7 February 1914 .
51.
Hong Kong Hansard, 2 6 February 1914, p. 29.
52.
Hong Kong Hansard, 3 0 July 1914, p. 79.
53.
C O 129/401, May to Harcourt, desp. conf., 16 June 1913, p. 360.
54.
C O 129/403, May to Harcourt, desp., conf., 18 August 1913, pp. 124-129.
55.
R . Griffin's minute, 2 October 1913, Ibid., pp. 122-123.
56.G . B. Endacott, A History of Hong Kong (Hon g Kong: Oxford Universit y Press, 1958), p. 269.
57.
Privat e letter, Lugard to his brother Edward. Quoted from Margery Perham, Lugard: The Years of Authority, 1898-1945. p . 283.
58.
Bernar d Mellor, Lugard in Hong Kong: Empires, Education and a Governor at Work, 1907-1912 (Hon g Kong : Hon g Kon g Universit y Press , 1992) , p. 16.
59.
Fo r a discussion of the style of British colonial administration in Africa, see
A. A. Thomson & Dorothy Middieton, Lugard in Africa (London : R. Hale, 1959), pp. 70-71; L. H. Gann & Peter Duignan, The Rulers of British Africa, 1870-1914 (London : Croom Helm, 1978), p. 212; Jeremy J. White, Central Administration in Nigeria, 1914-1948 (Dublin : Iris Academic Press, 1981), p. 13.
60.
Th e quote is from Lugard's speech in the Legislative Council introducing the amended Peac e Preservatio n Ordinance . Se e Hong Kong Hansard, 30 November 1911, p. 243.
61.
Marger y Perha m (ed.) ,The Diaries of Lord Lugard, Volume Three, East Africa, January 1892 to August 1892 (London: Collins, 1959), p. 190.
62.
C O 129/381, enclosure 5 in Lugard to Colonial Office, 20 November 1911, p. 213.
63.
G . R. Sayer, Hong Kong, 1862-1919: Years of Discretion (Hon g Kong: Hong Kong University Press, 1975), p. 111. This book was published posthumously.
64.
C O 129/399, May to Harcourt, desp., conf., 31 January 1913, p. 355.
65.
Hong Kong Telegraph, 5 Jul y 1912 . Th e reason s fo r th e attempte d assassination of Sir Francis Henry May are not fully understood .
66.
Leader s of the Chinese community chose very different career paths. To give a few examples : Ng Choy (1842-1922) , the first Chines e to serve on th e Legislative Council, resigned before the expiry of the tenure of his seat, leaving Hong Kong so as to join the Chinese Imperial Service as Legal Advisor and Interpreter. Li Yuk-tong (1851-1936), another prominent figure, contributed his talents and abilities towards his fellow countrymen in various aspects and, notably, he distinguished himself as Treasurer of the Kwangtung Provincia l Government after th e establishment o f the Chinese Republic in 1912 . Wei Yuk, on the other hand, continued to serve the community o f Hong Kon g after the retirement of his fellow legislator Ho Kai, being awarded the C.M.G. in 1918 and knighted in 1919.
Chapter 5 The Making of a Market Town in Rural Hong Kong: The Luen Wo Market
1.
I n this essay, Hong Kong place names are spelt according to A Gazetteer of Place Names in Hong Kong, Kowloon and the New Territories (Hon g Kong: Government Printer, 1960). Names of places in China are romanized inpinyin. For the names of persons and ancestral estates, I have followed the common usage.
2.
Se e William Skinner, "Marketing an d Social Structure in Rural China, " Journal of Asian Studies, Vol. 24 (1964), pp. 1^3 .
3.
Se e Fei Xiaotong, Xiangtu Zhongguo [Earthboun d China ] (Shanghai : Th e Shanghai Asociation of Observation, 1947), p.30.
4.
Se e Maurice Freedman,Chinese Lineage and Society: Fukien and Kwantung (London: Athlone Press, 1966), pp. 91-96.
5.
Se e Hugh Baker, A Chinese Lineage Village: Sheung Shui (Stanford: Stanfor d University Press, 1968); Cheng Sui-kwan, "Yuen Long New Market: Its Origin and Development," South China Studies, Vol. 1, pp. 124-133; Robert Groves, "The Origins of Two Market Towns in the New Territories," in The Hong Kong Branch of the Royal Asiatic Society (ed.), Aspect of Social Organization in the New Territories (Hong Kong: Ye Olde Printerie Limited, 1964), pp. 16-20; Michael Palmer, "Lineage and Urban Development in a New Territories Market Town," in Hugh Baker and Stephen Feuchtwang (eds.), Old State in New Settings (Oxford : JASO, 1991), pp. 70-106; Rubie Watson, Inequality Among Brothers: Class and Kinship in South China. (Cambridge: Cambridge University Press, 1985), pp. 72-77.
6.
Se e Hugh Baker, A Chinese Lineage Village: Sheung Shui, pp . 190-193 ; Cheng Sui-kwan, "Yuen Long New Market: Its Origin and Development, "
NOTES TO PAGES 90-92 23
pp. 124-133; Michael Palmer, "Lineage and Urban Development in a New Territories Market Town," pp. 70-106.
7.
Fo r details, see discussion below.
8.
Th e chairman is elected by the Heung Yee Kuk members, and is the chairman of the Rural Committee consisting of village representatives.
9.
Se e The Oral History Project, The Chinese University of Hong Kong. North District Interview Reports.
10.
Se e Nicol e Constable , Christian Souls and Chinese Spirits: A Hakka Community in Hong Kong (California: University of California Press, 1994), pp. 175-177.
11.
Al l figures concerning the market are collected from the company documents of the Luen Wo Market Land Investment Company Limited. The documents are kept in Hong Kong Government Business Registry.
12.
Hug h Baker 1968: 17.
13.
I t is an advisory body established throughout the New Territories. It serves as a channel of communication between the government and the villagers. Members of this committee consist of village representatives who are elected by local householders.
14.
Se e Hugh Baker, A Chinese Lineage Village: Sheung Shui, pp. 190-193 and Michael Palmer, "Lineage and Urban Development i n a New Territorie s Market Town," pp. 70-106.
15.
Se e Nicol e Constable , Christian Souls and Chinese Spirits: A Hakka Community in Hong Kong, p. 177.
16.
Rober t Groves, "The Origins of Two Market Towns in the New Territories," p. 19.
17.
Edwar d Szczepanik estimates that the population of Hong Kong in 1954 was about two million. There was yet another influx o f an estimated 14 0 000 immigrants fro m Chin a durin g 1955-56 . Se e Edwar d Szczepanik , The Economic Growth of Hong Kong (London: Oxford University Press, 1958), pp. 25-27.
18.
Se e Jack Potter,Capitalism and The Chinese Peasant: Social and Economic Change in a Hong Kong Village (Berkeley : University of California Press , 1968), p. 59; C.K. Yang, A Chinese Village in Early Communist Transition (Cambridge: Harvard University Press, 1959), p. 31.
19.
C . T. Wong, "Uses of Agricultural Land: Some Changes in New Territories Farming Patterns," in The Hong Kong Branch of Royal Asiatic Society (ed.), The Changing Face of Hong Kong (Hong Kong: Olde Printerie Ltd., 1971),
p. 17. The government also estimated that more than 40 percent of two-crop paddy land was used for growing additional crops of vegetables during the winter season. See The New Territories Administration (NTA), 1960 Annual Report (Hon g Kong: Government Printer, 1960), p. 21.
20.
C.T . Wong, "Uses of Agricultural Land: Some Changes in New Territories Fanning Patterns," p. 17.
21.
Th e New Territories Administration (NTA), 1960 Annual Report, p . 21.
22.
Ibid .
23.
Se e Lin Dao-yang, Report of a Trial Survey of the Economic Conditions of Sixty Families in the New Territories of Hong Kong (Hong Kong: Chung Chi College, 1957), p. 21.
24.
Fo r the study o f the emigration o f the indigenous villager s i n the Ne w Territories, see James Watson, Emigration and the Chinese Lineage: The Mans in Hong Kong and London (Berkeley : University of California Press, 1975).
25.
Th e aim of this organisation was to ensure fair and steady returns to vegetables producers an d reasonabl e sellin g price s t o consumers . Se e Hon g Kon g Government (HKG) , 1951 Hong Kong Annual Report (Hon g Kong : Government Printer, 1951), p. 55.
26.
Se e also Jack Potter,Capitalism and The Chinese Peasant: Social and Economic Change in a Hong Kong Village, pp . 91-94 and Goran Aijimer , Economic Man in Sha Tin: Vegetable Gardeners in a Hong Kong Village
(London: Curzon, 1979), pp. 78-79.
27.
Hon g Kong Government (HKG), 7970 Hong Kong Annual Report (Hon g Kong: Government Printer, 1970), p. 63.
28.
Se e The New Territories Administration (NTA), 1946 Annual Report (Hon g Kong: Government Printer, 1946), p. 3.
29.
Persona l communications with Dr. Patrick Hase, the ex-district officer of the New Territories.
30.
Se e The New Territories Administration (NTA), 1947 Annual Report (Hon g Kong: Government Printer, 1947), p. 4.
31.
Woo n Yuen Fong, Social Organization in South China, 1911-1949: The Case of the Kuan Lineage of Kai-Ping County (An n Arbor: Center fo r Chines e Studies, University of Michigan, 1984), pp. 66-67.
32.
Rober t Groves, "Militia, Market and Lineage: Chinese Resistance to the Occupation of Hong Kong's New Territories," p. 39; Robert Groves, "Th e Origins of Two Market Towns in the New Territories."
33.
Thoug h in the shareholder's name list in 1957 and 1977 I found two Lius who together subscribed to a total of ten shares, they were not from Sheung Shui.
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