Opinion | Some ways Hong Kong can help mainland China in its trade fight
Using its expertise as a yuan offshore centre to have more trade settled in the Chinese currency and helping boost productivity in China are two areas where Hong Kong can make a contribution
Following on from the 25 per cent tariffs on imports from China it imposed in July, the Trump administration kicked off a second round of tariffs on US$200 billion worth of Chinese goods on September 24. China immediately retaliated by slapping tariffs on American products worth US$60 billion, but US Secretary of State Mike Pompeo bragged in a TV interview that the United States would eventually win in this trade war with China.
The latest US tariffs signal a further escalation of the trade war between the world’s two largest economies. Analysts and economists around the globe have warned of dire consequences for the world economy.
Hong Kong, being an open economy and the world’s seventh-largest trading entity, and which serves as an entrepot in US-China trade, will feel the pain at the end of the day.
Given our close ties with China, any slowdown in Chinese exports to America will affect Hong Kong’s economy, particularly the logistics, shipping, trade financing and insurance industries, as well as small and medium-size companies that depend heavily on the re-export business.
Meanwhile, some pundits and think tank experts predict that the US-China trade conflict will drag on for years, because they believe that US tariff warfare is a disguised strategy to curb China’s rise on the global scene as well as its technological development. Given its status as a special administrative region within China, the possibility that Hong Kong might also be targeted by the Trump administration cannot be dismissed.
Recently, some on social media have called on people in Hong Kong to take action as an act of patriotism. They have urged the public to unload the US dollar and buy the yuan, which has faltered in value against the US currency since the trade war began. However, this is merely a drop in the ocean. Indeed, it would be a strategic advantage for China to have a weak currency to boost trade with other countries.
I have also heard some people argue that we could impose tariffs on imports from the US, since the United States is Hong Kong’s fifth-largest supplier of goods. According to the Census and Statistics Department, Hong Kong was the US’ third-largest wine market and sixth-largest beef market in 2017.