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2 Chinese Revolutionaries, Colonial Reformers In the years between the two world wars, a new China emerged - and a very different Hong Kong. This was a time ofpolitical turmoil and economic crisis on the Mainland. Yet, inspired by a surging sense of Chinese nationalism, a reform process gathered momentum, propelled by a nationwide desire for unified government and the radical reconstruction of China's social and economic institutions, ranging from marriage to the tax system. The growth of large-scale industries and the creation of modern financial institutions offered the prospect of rapid economic development.1 This national revival was even more powerful politically. It was dramatically evident in the failure of foreign powers to maintain their grasp on the country. The UK could not withstand the mounting resentment of its presence in China, and it was forced to start the retreat from its ‘informal' empire on the Mainland. More striking still was the failu閃 of ] apan to bri時 China to its knees, either through undeclared war up to 1937 or the launch of full-scale hostilities thereafter. ]apanese forces seized territory, bombed cities and cal脫d economic havoc. But]apan did not capture the Mainland, destroy the economy or bri峙的 a halt the appetite for reform and development. China, for all its political conflicts and economic backwardness, was no longer in the parlous state that had made it unable to defY foreign powers in the final period of Ma肛hu rule. As China changed, so did Hong Kong. Still a British colon弘 the community was, at this time, more closely integrated socially and economically into the Mainland, than it would be again until the resumption of Chinese sovereignty in 1997, and it could not be isolated from the nationwide dr甘e for reform and development. The nature of colonial rule was also changing. Within the UK itself and throughout the British Empire, there was a growing tide of reform that questioned the foundations on which colonial rule was based. Unlike the Indian Empire, democratic reforms were never on the agenda for Hong Kong. 是t，的 senior officials briefly became less wedded to colonial 38 Profits, Politics and Panics traditions than they would be again until the 1980s. A readiness to retreat from laisser faire and to promote industry went hand in hand with a willingness to raise taxes and expand welfare. Colonialism, it seemed, no longer involved an unconditional commitment to what later decades labelled 'noninterventionism ', either in economic or in social affairs. The period demonstrates what reforms the colonial administration could have achieved if the ]apanese war against China and the occupation of Hong Kong had not halted the momentum of economic and social innovation. These years mark a crucial period 扭曲e history ofHong Kong's economic development, laying the foundations for the manufacturing take-off in the second half of the century. At the same time, however, the relationship with the Mainland became so close between the wars, and economic integration was so visible, that a sense of dependence on the Mainland and on the China trade dominated Hong Kong's economic outlook. As a result, officials and business leaders in the early post-war decades found it almost impossible to see that the foundations for industrial growth laid before the war were more than adequate to make up for the Mainland business that Hong King lost after 1949. The inter-war period was also important in Hong Kong's tinancial history. Between the wars, ba叫d時 became the first m斗jor i吋ustry for which the colonial administration recognised, though without enthusiasm, that government direction was necessary. Banking policy after World War 11 was to follow very close行 the attitudes towards bank regulation that had grown up in the inter-war period, despite the very different economic environment. This chapter will explore how political and economic trends on the Mainland affected Hong Kong and why the colonial administration developed a new sense of responsibility for social and economic progress. It will show that the colonial administration sought to maximise its freedom from London's control in order to protect a financial system unique among colonial territories for its autonomy and sophistication (whose remarkable characteristics are analysed in Chapter 11,‘The Exceptional Colony'). The present chapter will also focus on how the official attitudes towards banking and financial affairs that evolved during the inter-war years created a cultural legacy that resisted the regulation of banking and financial markets and which [3.19.56.45] Project MUSE (2024...

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