1938: Hong Kong

During 1938 the fate of this important British colony was bound up more closely than ever with that of the embattled Chinese Republic at whose gateway it stands. The long-standing fear that Japan might carry its war into South China and thus cut off Hong Kong's access to the interior was finally realized. For many months the Japanese discommoded, but did not disrupt communications with the interior, by mercilessly bombing the important city of Canton and the railways linking Kowloon (the mainland portion of the Hong Kong colony) with Canton and Hankow. But in October an expeditionary force captured Canton and cut the railways; and one month later Japanese forces were operating on the very borders of Hong Kong itself.

Under the circumstances it was inevitable that the British should intensify the fortification of Hong Kong, which became legitimate on the expiration of the Washington Naval Treaty at the end of 1936. A $25,000,000 defense program has been enlarged and rushed toward completion. Artillery and machine-gun emplacements have been strengthened and concealed hangars built, while civilians have been recruited for volunteer military and first-aid work which will supplement that of the regular forces. Military roads, trenches and concealed munitions dumps have been constructed; a new anti-aircraft defense system evolved; and a force of six battalions of troops and 300 first-line planes established in the territory. Yet despite these measures. Hong Kong is no longer considered an important strategic outpost of the Empire. In case of a world war in which Britain and Japan were involved, it is generally agreed that the imperial defense line would be withdrawn to Singapore, and that Hong Kong's military importance would be limited to delaying action against an enemy advance. Hence the future of the colony, which contains nearly $100,000,000 in British investments, is far from secure. Even without a war, these investments would be ruined if the Japanese were permanently to cut off Hong Kong's intercourse with the Chinese hinterland.

For the first ten months of the year, however, the Sino-Japanese war brought great benefits to Hong Kong traders. A trend of several decades toward greater use of Shanghai as a Chinese foreign trade center was suddenly reversed when that city fell to the Japanese after severe fighting late in 1937. For 1937 the total visible trade of Hong Kong, excluding gold and silver, was 35 per cent greater in value than in 1936; and in the first half of 1938 there was another increase of 21 per cent over the corresponding period of 1937 (including treasure). Needless to say, a considerable proportion of Hong Kong's trade involved oil, trucks, airplanes and munitions for the Chinese Government forces, shipped to the colony to avoid the Japanese blockade of the Chinese coast. When this trade boom ended as a result of the Japanese occupation of Canton, Hong Kong faced a serious refugee problem. To the 250,000 fugitives who sought shelter under the British flag in the first year of the war, were added scores of thousands of Cantonese. Large expenditures of public funds were made to feed and shelter the overwhelming majority of the refugees who were penniless, but the influx still continued as the year drew to a close.