Trade drops for fifth month as Hong Kong's local exports at 38-year low
Hong Kong's local exports continued their decade-long slump last month, as domestic goods sent overseas dropped to a 38-year low.
Overall, total exports dropped for the fifth month in a row in September, including those originating outside Hong Kong, which fell by 4.5 per cent year on year to HK$313 billion.
However, domestic exports from Hong Kong dropped to a historic low of just HK$3.58 billion, the worst September total since 1977.
Compared to the same period in 2005, local exports have shrunk to just a quarter of what they were, down from HK$14.3 billion.
Economists said the drop could leave Hong Kong vulnerable if mainland China liberalises its ports, but a spokesman for Financial Secretary John Tsang Chun-wah said the drop had been anticipated.
While imports in September were at their highest all year, reaching HK$353 billion, they still declined year on year by 7.6 per cent, completing a gloomy economic picture for the city.
Domestic exports now total just 1 per cent of total exports from Hong Kong, down from 7 per cent in 2005 and 50 per cent in the 1980s.
The spokesman said the numbers reflected the economy's shift towards services as well as a change in trade structure.
"Despite the decline in domestic exports, the ratio of total exports of goods … and services to GDP rose from 195 per cent in 2005 to 220 per cent in 2014," he said. "All these structural changes are largely driven by market forces, as the market facilitates more effective use of resources in Hong Kong."
But City University Department of Economics and Finance associate professor Li Kui-wai said low domestic exports could leave Hong Kong vulnerable if trading at China's ports became easier.
"In the long term, when the ports in China have improved, particularly in the areas of tax and administration, they may take away the re-exports as well," he said. "The one advantage we have in Hong Kong is the efficiency compared to the mainland - we may lose that in the long run as well."
Li said although he did not expect domestic exports to bounce back anytime soon, he believed it was a gap in Hong Kong's economy which could be filled with the right investment.