Hong Kong protests could threaten city’s status as an international shipping hub, analysts say

China could move to grant further autonomy to mainland ports managing in and outbound shipments, in order to accelerate economic integration with Hong Kong

Shanghai has already upgraded and expanded free-trade zone with focus on shipping, with analysts expecting further relaxation of rules throughout China

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The logistics industry contributed 3.2 per cent of Hong Kong’s gross domestic product and 180,600 jobs in 2017. Photo: Roy Issa

Published: 8:15am, 16 Aug 2019Updated: 11:00pm, 16 Aug 2019

Hong Kong’s status as an international shipping hub could be under threat, should China fast-track plans for economic integration due to the ongoing anti-government protests, analysts said.

While Beijing has never spoken publicly about the economic consequences of the escalating protests over the past two months, a widely shared view within China is that the central government should reduce its reliance on Hong Kong as its key financial and logistics gateway to the rest of the world.

This could result in mainland ports having greater autonomy in managing the shipment of goods into and out of China, analysts said.

China this month upgraded and expanded a free-trade zone in Shanghai, which covers an area about the Hong Kong Island and Kowloon combined, with the ambitious goal of becoming “China’s bridgehead integrating into a globalised economy by 2035”.

According to the plan, Shanghai free-trade zone will conduct trials on international ship registration and opening up new international maritime routes. In addition, it will allow foreign ships to use Yangshan port as a transit hub for containers shipping.

The new relaxations build on a move in 2016, when China eased cabotage rules – that is, the right to operate transport services – in Shanghai to allow foreign-flagged vessels to engage in domestic shipping, and pave the way for Shanghai to become China’s free port.

Dr Collin Wong Wai-hung, associate dean of the School of Decision Sciences at the Hang Seng University of Hong Kong, estimated Hong Kong could lose all transshipment rights in the non-Pearl River Delta region, which could translate into a loss of 2.4 million container twenty food-equivalent units (TEU) – a measurement of standard container sizes. Should China fully relax cabotage rules in other parts, this could dent Hong Kong’s annual container throughput (the cargo passing through the port) by 14 per cent.