Why Hong Kong must not overlook US economic opportunities
Kurt W. Tong says in tandem with Asia’s economic take-off, US trade is thriving and its edge in innovation and technology is indisputable, all of which are deserving of investors’ attention
Next month, I will lead a Hong Kong delegation to Washington to join the SelectUSA Summit, a major annual event promoting the United States as a place to do business. As we prepare for that, I thought it would be useful to share some thoughts about the US market.
Everyone knows that the United States and Hong Kong enjoy a long-standing and close economic relationship. But the world keeps changing, and that includes North America.
Certainly, there are many opportunities on the western rim of the Pacific. But let me bring you up to date on conditions on the other side of the “pond”.
In 2017, the US was once again the top trading nation in the world, exporting and importing more than US$5 trillion in goods and services, or roughly one-quarter of the total value of our economy. Our average applied tariff rate was just 1.6 per cent last year.
The size of our economy totalled more than US$19 trillion in 2017. That figure not only places the US in the top spot (depending on how one measures it), but it represents nearly a quarter of the global economy, even though it was produced by only 4 per cent of the world’s workers.
The US economy is still expanding and improving, recently growing at a brisk pace of about 3 per cent per year. Strong domestic growth means that America is continuing to make a big contribution to global growth, through import demand of course, but also through outward investment – another area where we lead the global rankings.
The US also attracts more inward investment than any other country. By the end of 2016, foreigners had invested an astounding US$3.7 trillion in our economy.
To be sure, the US has its share of domestic economic challenges, including ageing transport infrastructure in some regions. We also need to revamp our education system to meet the demands of rapid advances in information technology. But it is important to remember that the US continues to drive and energise global growth by being the most innovative economy in the world.
In fact, 49 of the 100 firms on the 2017 Forbes list of the world’s most innovative companies are from the US. American innovation touches every industry, and you can hear pretty much everywhere the common theme that US companies are the ones at the forefront of developing and deploying disruptive new technologies, even as they work to deliver more value to their customers. Many of these companies are involved in “smart cities” technology or areas like emerging biotechnology that I know are of intense interest to Hong Kong.
The US economy, I believe, achieved its strong economic position by liberating the creativity of our people, and that of our partners, by using transparent, fair and democratic processes to tackle problems, both large and small. That market-based creative process has worked well – from building our highway system, to cleaning our environment, to creating the world’s most productive agricultural system, to creating and then revolutionising global energy production, to developing the digital economy.
And we have shared our resulting prosperity with the rest of the world, through trade and investment.
And, of course, Hong Kong is an important partner. The US is this city’s largest trading partner beyond mainland China. Two-way trade in goods and services has now reached close to US$70 billion each year, and it is growing. And US firms have invested some US$65 billion in Hong Kong.
Hong Kong also remains an important entrepôt for merchandise flowing between the US and China. In 2016, some 9 per cent of mainland China’s exports to the US, and 7 per cent of the mainland’s imports from the US, passed through Hong Kong.
I urge the Hong Kong business community to take a fresh look at opportunities in the US.
Kurt W. Tong is consul general representing the United States to Hong Kong and Macau