City helps ensure regional stability
US hopes to make most of HK's role as conduit to the mainland, writes Nazvi Careem
Hong Kong has an important part to play in overall relations between the United States and the mainland, a role that not only has broad economic implications but is crucial to maintaining regional stability.
This is the view of Peter Levesque, chairman of the American Chamber of Commerce in Hong Kong, the largest international chamber in the city. "AmCham HK is bullish about the trade and economic relations between the United States and China," Levesque says. "The relations have developed to a commendable level of maturity and sophistication, and continue to be robust.
"The active collaboration between the two parties is not only essential for the well-being of the bilateral relations, but also paramount to the stability and prosperity of the Asia-Pacific region. Hong Kong, with its strategic position, solid foundation of rule of law and adherence to free-market principles, remains a critical conduit in the two-way investment traffic."
The mainland was the US' third-largest goods export market last year, according to the Office of the United States Trade Department. US goods exports to the mainland last year were worth US$122.1 billion, an increase of 10.4 per cent (US$11.5 billion) from 2012, and up 330 per cent from 2003.
Since China entered the WTO in 2001, exports from the US has risen 536 per cent. Exports to China account for 7.7 per cent of overall US goods leaving its shores last year.
China was the US' largest supplier last year, accounting for 19.4 per cent of the country's overall imports and valued at more than US$440 billion, a 3.5 per cent increase from 2012.
The five largest import categories last year were: electrical machinery (US$117.5 billion), machinery (US$100.4 billion), furniture and bedding (US$24.1 billion), toys and sports equipment (US$21.7 billion), and footwear (US$17 billion).
US foreign direct investment (FDI) in China, representing stock, was US$51.4 billion in 2012, which is the latest data compiled. Direct investment in China is led by the manufacturing, wholesale trade, banking and finance/insurance sectors.
China's FDI in US stock was US$5.2 billion in 2012, up 38.2 per cent from 2011.
The US is hoping that the Trans-Pacific Partnership (TPP), a burgeoning group of a dozen countries seeking closer economic and trade ties, can be its "pivot" in Asia. Hong Kong, as an independent customs port, is free to join the negotiations, with China seen as a key target.
"The TPP is relevant to Hong Kong given its predominant service economy," Levesque says. "Hong Kong will benefit substantially from the high standards of trade facilitation, harmonisation, and market entry facility under the trade agreement. [Hong Kong] will add value to China in the event it becomes interested in joining the TPP in the future."
The US is also hoping to make the most of Hong Kong's role as a conduit to the mainland through its SelectUSA programme, which is a federal agency within the US Department of Commerce.
Levesque says: "SelectUSA is tasked to showcase the country as the world's premier business destination to attract investments and create jobs. Hong Kong acts as an important springboard for Chinese investments to go into the United States."
AmCham HK is a key organisation in developing strong trade ties between the US, Hong Kong and the mainland. Since its establishment in 1969, AmCham HK has grown to around 1,700 multinational corporations and small- and medium-sized enterprises, providing a diverse range of products and services.
"Active engagement and collaboration with relevant global and regional government and business stakeholders together with its commitment to the core values - private enterprise, free trade, rule of law, ethical and responsible business practices, and transparency and the free flow of information - have enabled AmCham HK to be a key game-changer and an honest broker in building upon and strengthening the economic and trade ties in the region," Levesque says.
Last year, Hong Kong was the US' 18th-largest goods trading partner with US$48.1 billion worth of merchandise moving between the two borders. The city was the US' ninth-largest export market in 2013 at US$42.5 billion.
Goods imported into the US from Hong Kong totalled US$5.6 billion in 2013, with the US enjoying a goods trade surplus of US$36.8 billion. The top export categories to Hong Kong last year were: precious stones and metals (gold and diamonds, US$16.2 billion), electrical machinery (US$8.2 billion), aircraft (US$3.4 billion), machinery (US$2.4 billion) and edible fruit and nuts (US$1.5 billion).
US exports of agricultural products to Hong Kong totalled US$3.9 billion in 2013, the sixth-largest such market. Leading categories included: tree nuts (US$1.2 billion), beef and beef products (US$823 million), fresh fruit (US$357 million) and pork and pork products (US$200 million).
Hong Kong was the US' 44th-largest supplier of goods imports last year. The largest import categories for the year included precious stones and metals (US$747 million), electrical machinery (US$698 million), machinery (US$288 million) and plastic (US$108 million).