Hong Kong will lose billions if MFN denied
HONG Kong would lose as much as $101.3 billion in re-exports if China's MFN (most favoured nation) trading status was revoked by the United States, says the territory's China Resources (Holdings).
China Resources, Beijing's largest overseas trading corporation, said the territory would suffer heavy losses in re-exports.
More than 20 per cent of Hong Kong's re-exports were produced on the mainland, with the US as the main destination, it said.
''In addition, the majority of Hong Kong manufacturers have totally or partly relocated their production facilities to China,'' the corporation said in a research report.
Re-exports of Chinese products to the US amounted to $168.3 billion last year.
China Resources said that should MFN status be revoked, mainland products in the US market would be subject to much bigger tariffs, ranging from twice to as much as 10 times current levels.
''Re-exports of Chinese products to the US through Hong Kong would fall by 33 to 44 per cent, and the amount of the losses would reach $55.5 billion to $74 billion,'' it said.
''At the same time, re-exports of raw materials and semi-processed products to China by other sources through Hong Kong would drop by $13.4 billion to $17.9 billion.'' As a result, the territory would lose between $68.9 billion and $91.9 billion from re-exports related to China; as a source and market of its re-exports.
Moreover, if the mainland took corresponding measures against the US in reaction to the denial of MFN status, and reduced its imports from the US, Hong Kong would suffer further losses of $6.9 billion to $9.4 billion.
Taking the three categories of re-exports into account, China Resources predicts Hong Kong's losses in re-exports will total $75.8 billion to $101.3 billion.
This would be from nine to 12 per cent of the territory's total re-exports.
The Hong Kong Government earlier predicted that the territory's gross domestic product would be 2.2 to 3.1 per cent points lower if China lost its MFN status.
Beijing has recently stepped up its efforts in pursuing the renewal.
Minister for Foreign Trade and Economic Co-operation Wu Yi is heading a high-level delegation in the US, with a shopping list of industrial and infrastructure projects for foreign participation.
Vice-Premier Zou Jiahua is set to make a trip to Washington next month in a last-ditch attempt to influence President Bill Clinton's decision.