Economic Insights
Trade and Turbulence in Times Past
Trade and Turbulence in Times Past <br/>昔日商貿發展與動盪

This 160th anniversary issue provides a good opportunity to take a look at what Hong Kong and the rest of the world looked like when the Chamber came into being in 1861. This was an interesting time for the city involving some significant historical milestones. 

The 1860s can be seen as the beginning of a transitionary period. The Crimean War, a major conflict between the Ottoman Empire – with Britain and France as allies – and the Russian Empire, ended in 1856. The victory by the Ottoman alliance rippled through the European continent paving the way for the creation of Germany and Italy as new nation states, a development that would lead to the first World War some 60 years later. 

While Britain remained the world’s largest trading nation, existing and emerging challengers in Europe and across the Atlantic were catching up quickly as they expanded and modernized their industrial capabilities. 

In the meantime, Hong Kong was experiencing an influx of Chinese immigrants fleeing the Taiping Rebellion, a civil war aimed at toppling the Qing dynasty. The uprising, which lasted from 1850 to 1864, contributed to a near four-fold increase in Hong Kong’s population to just over 120,000 by the end of the unrest. 

Unlike earlier Chinese immigrants, who were typically less educated and found employment in Hong Kong as coolies, many of those displaced by the civil conflict were affluent merchants. Because they possessed the financial means to do so, this wave of immigrants was able to bring their entire families along as they fled the Mainland. As a result, there was a rebalancing in the male-to-female population ratio from 5:1 in 1844 to 2.7:1 in 1869. At the same time, the number of family houses surged from 78 in 1845 to 1,775 in 1867. 

The population spike and the demographic change that Hong Kong underwent during this transitionary period seeded the beginnings of Hong Kong’s transformation into a major trading outpost of the British empire. Thanks to its free port status, which allowed goods to enter and leave without the imposition of tariffs, trading activities in Hong Kong flourished, elevating the territory into an important entrepot in the region. By 1867, 20% of imports to and 14% of exports from China were shipped through Hong Kong. 

The colonial government in Hong Kong, which had become less dependent on London and was increasingly concerned with addressing local economic and social issues, began to invest in infrastructure and the delivery of public services. Notable developments included the establishment of Hong Kong’s first public utility, the Hong Kong and China Gas Company, in 1862, and the completion of Pok Fu Lam Reservoir, the city’s first reservoir, a year later. 

These were instrumental in facilitating the rise, whether directly or indirectly, of trade and commerce with companies engaged in such trades as manufacturing, shipping, and finance springing up across the territory. In 1865, the Hong Kong and Shanghai Banking Corporation (HSBC) was established to finance the burgeoning trade and investment activities with markets in Europe, India and China.

Financial crises were also a part of life in the 1860s. In 1866, Overend, Gurney & Company, the largest discount house in the City of London, collapsed, sending shockwaves across the globe by pushing up the benchmark interest rate four times to 10% in the space of just 10 days. 

In Hong Kong, the episode resulted in the shuttering of Dent & Co, one of the largest and most powerful British merchant firms (or “hongs”) in the territory at the time. Several banks also went out of business, which provided the opportunity for HSBC to assume the sought-after mantle of being banker to the colonial government in 1872.

Since the Chamber’s establishment 160 years ago, the world has undergone many changes. At the same time, much has remained the same, such as ideological differences and geopolitical rivalry between nations. More often than not, these conflicts spill over into trade with markets being disrupted as protagonist nations engage in tit-for-tat spats. 

Similarly, Hong Kong has at different times in its history found itself caught in the crossfire between two rival great powers. Although the situation appears to be quite complex at the moment, we are hopeful of a resolution, and soon. As we have learned from Hong Kong’s history, it remains best for the territory not to depart from its traditional strength in serving as a bridge between East and West.

Wilson Chong, 


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