Hongkong's shrinking trade with China has, therefore, been accounted for by Japan's extension of military. operations to South China and specially by her subsequent refusal to re-open the Pearl River to non Japanese shipping. Hongkong's trade with South China which had always: ranked frst among the Colony's trad-Ing countries, is unlikely to recover #0 Jong as the Pearl River remains closed, and may even suffer further Aeterloration if Aghting spreads. into, the Interiox.
For over a year before the fall of Canton, "Hongkong was the trading centre of China as the bulk of North fand Central China's exports and imports was diverted from their prewar channels to. Hongkong through the Hankow-Canton-Kowloon Railway. Typleal of the diverted trafic via Hongkong was China tea, of which uring last year the Colony imported H.K.$16,026,051 and exported H.K.S16.- 080,814, about, H.K$0.000.000 of which went to Russia via Vladivostok, The Interruption of trafic on the Hankow-Canton Railway following the fall of the two terminal cities has militated against Hongkong's. im= portance as an intermediary in China's trade with foreign countries, So far the Colony's trade with North and Central China is stil on a. high Jove, but a gradual decline is likely. and "for two, Important reasons, Firstly, owing to the Japanese blockade of the China coast, the for-coign trade of independent China tends {to flow in increasing volume through the Kunming-Haiphong route and the newly opened Burma-Yunnan Highway. Secondly, Japan's stranglehold on North and Central China has been tightened through currency man qeuvres, foreign exchange control and trade restrictions, all of which have the effect of severing their economic ties with Hongkong.
Text read from the printed page and cleaned; old type leaves the occasional error.