Hong Kong hits export slump and worst is yet to come warns top Bank of East Asia economist, as trade war shows no signs of ending
- City’s exports drop 2.4 per cent year on year for seventh month, while imports are down 4.3 per cent
- Tensions between Beijing and Washington remain as President Xi Jinping and President Donald Trump prepare for G20 meeting
The city’s exports dropped 2.4 per cent year on year for the seventh month, while imports were down 4.3 per cent for six months in a row, the Census and Statistics Department said on Tuesday.
Economists said the ongoing trade tensions between the two economic superpowers continued to trouble Hong Kong, with no good news on horizon even as the heads of the two nations prepare to hold high-stakes talks on the sidelines of the G20 summit in Japan this week.
“The worst is yet to come,” Bank of East Asia chief economist Paul Tang Sai-on told the Post. “Even American importers dare not place orders on untaxed Chinese exports, and there is no time table to end the trade war.”
President Donald Trump and his Chinese counterpart, Xi Jinping, are expected to meet in Osaka on Saturday for the on-and-off trade talks. Earlier last month, trade relations between Beijing and Washington abruptly soured to the extent both sides imposed tit-for-tat tariffs on each other.
Trump raised tariffs on US$200 billion worth of Chinese goods to 25 per cent from 10 per cent on May 10, while Xi hit back on June 1 with 25 per cent on most parts of US$60 billion worth of American goods.
The United States is holding public hearings on levying tariffs on US$300 billion of untaxed Chinese exports, which include consumer and electronic goods.
In the first five months of this year, exports declined 2.5 per cent from the same period last year and imports shrank 3.8 per cent. This left a trade deficit of HK$188.8 billion (US$24 billion).
“I will not be surprised to see a 5 to 10 per cent monthly drop in exports in coming months because of the high base for comparison last year, when traders rushed to ship goods overseas to minimise the impact of the tariffs,” Tang said.
He said the supply chain is so intertwined that some Asian countries are also being affected.
Singapore PM: near-term resolution to raging US-China trade war is unlikely
In May, Hong Kong’s exports to Asia were down 2.6 per cent, dragged down by Thailand (down 14 per cent), Malaysia (down 11.6 per cent) and Singapore (9.5 per cent lower).
Hong Kong’s exports to the United States was down 15 per cent.
Tang said it was difficult to forecast the full-year performance of exports on the back of abundant uncertainties surrounding the trade war.
A government spokesman said Hong Kong was among other Asian economies that recorded subdued exports in May.
“The near-term outlook for Hong Kong’s exports will continue to be clouded by various external uncertainties, including notably the evolution of US-China relations,” he said. “The government will stay vigilant.”
Exports to the US, and vice versa, through Hong Kong accounted for about 9 per cent of the city’s total exports in 2018. Trade and logistics is one of Hong Kong’s four pillar industries, employing more people than any other sector.
