Hong Kong ranks second in Asia in economic resilience to US global tariff shocks

Hong Kong ranks second among five major Asian economies in resilience to US global tariff shocks, trailing only Singapore, thanks to its diversified trade, strong foreign exchange reserves and strict financial regulations, according to a study by a local think tank. The “Economic Resilience Index”, released by the POD Research Institute on Tuesday, also suggested that the city should continue diversifying its market and currency options and accelerate institutional reforms to address future uncertainties. The study was a response to the Trump administration’s remarks that China’s economy was collapsing in the face of US tariffs, said Ronny Tong Ka-wah, the head of the institute and a member of the government’s key decision-making Executive Council. Tong was referring to US President Donald Trump’s comments in May this year. “Surprisingly, we found Hong Kong and mainland China were doing well in the light of the US tariffs,” Tong said. Trump announced in April that a “baseline” of 10 per cent would apply to imports from all countries into the United States. In early October, he threatened to impose an additional 100 per cent tariff on Chinese goods from November 1, after Beijing said it would limit export controls on rare earths, which are essential for producing hi-tech goods such as electric vehicles, smartphones and spacecraft. The study assessed the economic resilience of five major Asian economies – Hong Kong, mainland China, Singapore, Japan and South Korea – after the US launched the global tariff blitz. Conducted between April and August, the index evaluated eight equally weighted economic indicators: trade performance, foreign exchange reserves, public debt, banking stability, private debt leverage, economic and price stability, financial system integrity and the ability to withstand the impact of the tariffs. The final rankings – on a scale of one to five, with five being the highest rating – were determined by total scores. Singapore ranked first with an “outstanding” rating of 4.75 points. Hong Kong was given a “strong” rating of 4.13 points, followed by the mainland, which received a “moderate” resilience level of 3.63 points. Japan and South Korea were also rated “moderate” but their points stood at 2.75 and 2.63, respectively, as the study found they were poor in trade, public debt and economic and price stability. “Hong Kong’s strong resilience is primarily attributed to three key pillars – its trade diversification, robust foreign exchange reserves and strict financial regulation,” said the institute’s principal researcher, Martin Cheung. He said Hong Kong’s trade shift to Asian markets had kept its export activities robust, while its foreign exchange reserves and stringent linked exchange rate system contributed to the city’s international credibility. Official data shows that Hong Kong’s exports rose by about 16 per cent year on year in September, driven by a significant increase in demand from Asian markets such as Vietnam and Malaysia, amid continuing uncertainties due to US trade policies. Meanwhile, the city’s adequate liquidity in the banking system had effectively isolated risks, Cheung added. He said Singapore’s top ranking was supported by its diversified export markets and product range, along with its close ties with members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership, which covered economies in South America and Asia, respectively. “Its clear and coherent policy messaging is also crucial for stabilising investor confidence,” Cheung said. The report was released after high-level US-China trade talks in Malaysia over the weekend, with Washington hinting the world’s two largest economies had found common ground on key issues ranging from tariffs to Beijing’s expanded rare earth export controls. To further address uncertainty brought by Trump’s administration, the think tank suggested Hong Kong should further diversify its market options and enhance “financial autonomy” by increasing non-US dollar settlements and use of the yuan. “As the established system of mutually beneficial free trade faces disruption, there may be greater opportunities for international collaboration, potentially marking a pivotal moment in the reorganisation of the global order,” Tong said.

Hong Kong ranks second in Asia in economic resilience to US global tariff shocks

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}POD Research Institute’s ‘Economic Resilience Index’ also suggests city should continue diversifying market and currency options

POD Research Institute’s ‘Economic Resilience Index’ also suggests city should continue diversifying market and currency options