How did Japan’s invasion in Hong Kong affect Hong Kong’s economy during WWII?

An Overview of Hong Kong’s Colonization Era

Hong Kong was ceded to Britain on August 29,1842, after the Treaty of Nanking was signed. This marked the beginning of Britain’s 150 years colonial rule in Hong Kong. However, everything changed when Japan decided to invade Hong Kong on December 8, 1941. Japan’s invasion of Hong Kong led to a series of economic instability, living hardship and trauma. 

Impacts of Japan’s Invasion on Hong Kong

After the British Army surrendered to the Japanese army on December 25, 1941, Hong Kong was handed to Japan, which started what was known as “the dark age of Japanese occupation” for 3 years and 8 months. 

Once Hong Kong was handed over to Japan, the Japanese Army occupied British-owned banks, such as Chartered Banks of India and HSBC. This action had limited people’s normal access to the bank. Additionally, the Japanese army issued a notice, forcing people to exchange Hong Kong dollars ($) into Military Currency in Japanese dollars (Yen). The exchange rate was determined by the Japanese army, which depreciated the value of Hong Kong dollars. In the span of a year, Hong Kong dollars’ exchange rate had depreciated from $2 HKD to $1 JPY, to $4 HKD to $1 JPY. Furthermore, Hong Kong Dollars ($) was even banned on June 30, 1943. Although Japan later surrendered in 1945, military currencies became invaluable. As most Hong Kong people had already exchanged all of their money into military currencies, a lot of people suffered financially and went into bankruptcy. 

Lam Yibun’s Story

Lam Yibun, who is now a senior in Hong Kong, recalled his life during Japanese’s occupation of Hong Kong. He vividly remembered queuing behind the Peninsula Hotel to exchange for money, after receiving them from his parents. His parents were forced to sell their small grocery business, in exchange for military notes (in yen). When Military notes were declared as no longer exchangeable by Japan’s finance ministry, Mr Lam was left with a total of 100000 yen. The Repairation Association of Hong Kong, an association advocating for compensation for victims affected by Japanese occupation, stated that some families had a total of 540 million yen, with one family worth more than 6 million military yen.

Conclusion

Although the Japanese army had surrendered 80 years ago, their ruling still had a lasting impact on citizens at that time. Their forcefulness of currency exchange left a lot of citizens bankrupt. Numerous individuals had to sacrifice their life-long businesses just to afford daily necessities. For Lam Yibun and others, it was not just a historic event, but a dark chapter they would never forget.

Liu, Juliana. “The Hong Kong Fight to Cash in Japanese Military Yen.” BBC News, BBC, 14 Aug. 2015, www.bbc.com/news/world-asia-china-33906603. 

“(4) Three Years and Eight Months of Japanese Occupation: Academy of Chinese Studies - the Splendid Chinese Culture.” Edited by Chi-Pang Lau, (4) Three Years and Eight Months of Japanese Occupation | Academy of Chinese Studies - The Splendid Chinese Culture, chiculture.org.hk/en/photo-story/3049. Accessed 20 Mar. 2025.