Those Hong Kong export figures that are not quite what they seem
Exports may enjoy high single digit growth this year because of better than expected deliveries of electronic goods and smart phone accessories ahead of Christmas, according to the Federation of Hong Kong Industries.
South China Morning Post, October 31
Question: How much more growth do you get with a high single digit percentage of nothing than you do with a low single digit percentage of nothing?
Okay, I cannot really say that our domestic exports amount to nothing. As the first chart shows, they may have declined from the equivalent of 50 per cent of gross domestic product to only 2.6 per cent at present but that still amounts to about HK$55 billion a year, which isn't nothing.
Now let's work with this number. In the first place, it is not the raw export figure that counts. We need first to subtract the cost of required imports, which, in Hong Kong's case, is virtually everything of which the export is made. Only the value added has any impact on GDP. Let's reduce that 2.6 per cent figure to 1.3 per cent. It's probably less.
But this is not all. The second chart highlights a common anomaly in these domestic export figures. It purports to tell you that exports of office and automatic data processing machines, which were running at HK$400 million a month in 2004, suddenly shot up fivefold to HK$2 billion a month by 2006 and then just as suddenly collapsed again.
Does this suggest that Hong Kong suddenly came up with a new idea in computers, that we somehow had the idle production capacity and idle skilled workers at hand to meet the worldwide demand for this advanced device and that, unfortunately, all was suddenly and inexplicably nullified again?
I very much doubt it. I think it far more likely that a customs ruling in Europe or America suddenly made it tax convenient to declare Hong Kong, instead of China, a point of origin for certain digital hardware. The customs officials then twigged to what the shippers were doing, amended their rulings further and suddenly these goods came from China again. Bogus declarations of origin for garments, for instance, long accounted for at least half of our domestic exports.
I also have trouble believing the made-in-Hong Kong jewellery export story. Are we really saying that hundreds of permanent Hong Kong residents, bent over workbenches in dimly lit sweatshops, are ruining their eyesight and postures in making trinkets at India-level wages? Are we really saying they can find nothing better to do when joblessness in this town is virtually zero? I say this is just an in-and-out trade in gold, no real export at all.
So maybe these domestic exports are not quite nothing, but they are still a good deal less than they seem to be and as close to nothing as makes any difference.
Which leaves the question of why have a Trade Development Council subsidised with HK$384 million a year of public money to promote a trade that doesn't really exist. Do the words "long past its sell by date" strike a chord here?