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 was the blockade of Shanghai and the Pearl River by retreating 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 of US$ assets owned by Chinese, which was imposed by the Americans in December 1950. Together, these constraints on China's foreign trade are widely credited with ending Hong Kong's traditional entrepot role and encouraging instead the manufacturing sector 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 successive shocks to Hong Kong's economic relations with China. New evidence will be presented from the archives of the Hongkong Bank (HSBC), Foreign Office, Treasury, Bank of England and the US State Department. © Hong Kong University Press 2005. All rights reserved.
