Hong Kong exports will grow at a slower rate next year because of risk factors affecting the mainland, the Trade Development Council said in its forecast for 2004 yesterday. Lower foreign investment and mainland export rebates, and more protectionism in the United States, were likely to result in slower growth in shipments of goods. The council, which is partly funded by the government and whose goal is to promote trade, said it expected merchandise exports to expand by 7 per cent next year, after growing an expected 10.5 per cent this year. After price changes caused by deflation are stripped out, it expected 12 per cent revenue growth this year and 7.5 per cent growth next year. From January to October, the value of Hong Kong's exports grew 11.5 per cent. November figures are expected to be released on December 29. Hong Kong's exports have shown strong growth this year thanks to a booming mainland economy, which is churning out goods for the world market and also gobbling up raw materials from other countries. About nine-tenths of Hong Kong's exports are re-exports, or shipments passing through the city to a final destination. Most of those re-exports originate in China. 'Global trade growth is poised to accelerate. This is undoubtedly good news for export-oriented economies like Hong Kong,' said Edward Leung, the council's chief economist, in the report. However, Mr Leung said foreign direct investment in the mainland was likely to decelerate next year. China was the world's second-biggest recipient of FDI last year, attracting US$52.7 billion. Foreign direct investment in the mainland had boosted Hong Kong's exports of electronic parts and components, Mr Leung said. But the council cited figures showing FDI to the mainland contracted 41 per cent in the third quarter and by a third in October both because of the delayed effects of Sars and Beijing's attempt to limit credit growth. A cut in export rebates next month will also curtail export growth. The central government announced earlier that rebates would be reduced by an average of three percentage points, raising exporters' costs. Finally, protectionist measures by the US such as the quotas it introduced on Chinese textiles would also hurt exports, Mr Leung said. China and the US were Hong Kong's two biggest export markets, accounting for 43 per cent and 19 per cent of shipments respectively.