ABSTRACT
This chapter explains the inconvertibility of China's currency and the economic sanctions imposed on China did not eliminate its close financial relationship with Hong Kong. It addresses the foundation of Hong Kong's special monetary status in the 1930s and 1950s and the implications of this for its relations with China and the rest of the world. The continued presence of Hong Kong in the sterling area during the 1950s had profound implications for its relations with Britain, its relations with China, and its importance in the international monetary system. The Shanghai manager of the HSBC remarked that the Bank of China (Shanghai) seemed very reluctant to deal with its own Hong Kong office. Unlike the usual account of the PRC's economic policy, this chapter argues that in the 1950s the inconvertibility of China's currency and the economic sanctions imposed on China did no. eliminate its close financial relationship with Hong Kong.
