America is like ‘a captain set to jump ship’ on global trade, says Hong Kong commerce chief, vowing to press Washington
Minister Edward Yau Tang-wah plans robust defence of city on official visit to US capital amid escalating trade war with China
Hong Kong’s commerce minister is planning to launch an all-out defence of the city’s case against the China-US trade war in an official visit to Washington, vowing to speak out about the United States behaving like “a captain getting ready to abandon ship” in global trade.
In an exclusive interview with the Post, Secretary for Commerce and Economic Development Edward Yau Tang-wah said he had noticed Hong Kong’s business leaders were worried about the unfolding trade war, as it was creating uncertainty and driving up the cost of business, especially for the import and export sector.
The trade spat was also casting a shadow over capital flow, currency exchanges and investment sentiment, he said, highlighting the city’s vulnerable status even though it has managed to avoid the full impact so far.
An impassioned Yau pledged to do right by businesses, saying the government would continue to monitor the situation, and roll out measures to support local firms when necessary.
He also promised that the city’s leadership would continue to adopt a multipronged strategy to safeguard Hong Kong’s status as an international trading hub.
“There is no winner in the trade war ... because somebody has to pick up these [extra] costs and there is no fixed equation on who is going to pay more,” Yau said.
Following tit-for-tat 25 per cent tariffs on US$34 billion worth of goods on July 6, Washington announced a 10 per cent levy on another US$200 billion worth of Chinese goods last week, pending congressional approval.
After meeting with major trade associations on Monday, Yau estimated that with the second round of tariffs proposed by Washington, about HK$130 billion worth of mainland Chinese exports to the US via Hong Kong – or nearly half of such exports passing through and about 3.5 per cent of the city’s total exports – would be affected.
The tariffs were also likely to directly cost about 0.1 to 0.2 per cent of the city’s GDP growth, although the long-term impact remained difficult to estimate at this stage, he added on Monday.
In his interview with the Post on Thursday, Yau revealed that to deal with the issue, Hong Kong had joined as a third party in several complaints lodged with the World Trade Organisation (WTO) regarding Washington’s latest trade moves, and the US was required to respond.
Other international platforms such as the Asia-Pacific Economic Cooperation (Apec) had also been helpful, he said.
“[The trade war] was initiated by the US … we cannot have a meaningful discussion [on improving the WTO] if any one of us behaves like a captain getting ready to abandon ship,” Yau said.
“Being on the same boat, the last thing you want is to see it being sunk or abandoned ... This is why Hong Kong is so vocal and worried about the trade war ... We live on free trade and are a living example.”
Asked whether he would be visiting the American capital soon to discuss the issue, Yau said: “I’m planning to do so ... But visiting Washington is not the only way; occasions such as Apec and WTO meetings [are also opportunities to lobby].”
Yau will be joining a list of top local officials who have travelled to the US since the current Hong Kong government took office in July last year.
Foreign business groups in the city, including the American Chamber of Commerce in Hong Kong, have warned of parties in the US who argue it is “no longer constructive to discern where the mainland ends and Hong Kong begins” on the issue of trade, meaning the city can be pulled into the centre of the dispute.
However, Yau said he was not worried about the trend, as he believed most American business leaders were still aware of Hong Kong’s unique strengths under the “one country, two systems” principle in which Beijing guaranteed the city a “high degree of autonomy” after it was returned from British to Chinese rule in 1997.
“It’s hard for me to say that in the future, Hong Kong will be considered equal to the mainland,” Yau said. “But no matter how [America sees the city, tariff measures] damage Hong Kong-US business interests.”
So far, Hong Kong has only been named once in the punitive tariffs on steel and aluminium products the US levied on the city and mainland China earlier this year, on grounds of protecting national security.
To counter the tariff measures, Yau said, two funds worth HK$2.5 billion catering to smaller firms were ready for applicants.
One of them was a HK$1.5 billion fund to help Hong Kong companies upgrade and restructure their business operations and market products in mainland China – it would be extended to the Association of Southeast Asian Nations (Asean) on August 1, Yau said.
The 10-nation trading bloc, comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, is Hong Kong’s second-largest trade partner after mainland China.
The Export Credit Insurance Corporation has also helped with extra coverage for exporters by increasing the number of buyers subject to free assessment of risks to six per Hong Kong exporter from three.
“We have other funding schemes ready for companies which may become cash strapped as a result,” Yau said. “There are umbrellas ready for the rainy days.”