The U.N. embargo administered the _coup de grâce_ to the crown colony trade with Communist China, but it was only the last of a series of trade restrictions arising from the Korean war. The United States embargoed all its trade with Red China when the conflict broke out in June, 1950, and at first included Hong Kong in the ban. The colony voluntarily stopped its trade with North Korea in the same month and banned a list of strategic exports to Red China in August, 1950. In December, 1950, and March, 1951, the colony increased its list of strategic items banned for export to China. The cumulative effect of these restrictions, which were critically important in checking Chinese Communist aggression, was to push Hong Kong to the edge of economic disaster. With the loss of the China trade, the colony lost half its export market and about one quarter of its imports. This was the trade which had always been the main reason for the colony’s existence. Prospects for reviving the China trade when the Korean war was over did not look encouraging. Long before the embargoes and restrictions had gone into effect, the Chinese had begun to shift their trade from Hong Kong to Soviet Russia and Europe. Hong Kong had grown and prospered on its ability to receive, process and reship the products of others, but its own productive capacity was insignificant. With a few minor exceptions, its industries—chiefly the building, repairing and supplying of ships—existed to serve its trade. Its banks and insurance companies, too, lived almost entirely on the colony’s trade. Accordingly, when trade collapsed toward the end of 1951, the whole economy of the colony came crashing down with it. In the aftermath of the 1951 debacle, there was at first no thought of substituting industry for trade. For a variety of reasons, industry in the colony had never been developed independently of trade. Certainly Great Britain had not established the colony to produce goods which would compete with English manufacturers. The Hong Kong market was too small and its people generally too poor to support its own industries. There was no tariff wall to protect the colony’s goods from outside competition, and this factor alone had stifled several early attempts to launch local industries. Many natural handicaps combined to make the colony a most unlikely place for industry. Its mineral resources were few and limited in quantity. It had no local source of power to run a plant. Its water supply was chronically short of ordinary needs and suitable land for factories was scarce and expensive. The colony could not raise enough food nor provide enough housing to take care of its potential factory workers. And if anyone were imprudent enough to invest his money in an expensive industrial establishment, how could he be sure that the Reds would not move in and take it over, just as they had grabbed the mills and plants of Shanghai?