Carrie Lam says she is not optimistic any trade deal between the US and China will last
- Speaking at Davos, Hong Kong’s chief executive says more fundamental problems could be undermining relations between the two countries
- Lam also expects 2019 to be a difficult year for the global economy
Hong Kong leader Carrie Lam Cheng Yuet-ngor has said that she is not optimistic that any trade deal between the United States and China will be a lasting one.
Speaking on the sidelines of the World Economic Forum annual meeting in Davos, Switzerland, the chief executive also voiced concern that Hong Kong would continue to be affected by the trade tensions between the two countries.
China and the US are more than halfway through a 90-day trade war truce. Washington has said it will go ahead with a threat to increase duties if an agreement is not reached by March 1.
In an interview with Bloomberg, Lam was asked whether she is optimistic that the two governments can strike a lasting deal.
“I am a bit prudent and conservative. I think and I hope something positive would come up in the latest round … But I am not too optimistic about a lasting deal,” she said.
Lam explained that in recent interactions with US officials and businessmen, she has had a general feeling that the problem was not one that recently surfaced because of trade deficits.
“There are fundamental problems that have yet to be addressed. I doubt very much those fundamental problems could be addressed within a short period. So, let’s wait and see,” she added.
Separately, in a forum on emerging markets with several businessmen and officials from Asia and South America, Lam elaborated on the point about those fundamental problems.
She said she was concerned that beyond the “temporary phenomenon” of US-China trade disputes, there is perhaps a deeper question of whether countries are still sticking to a rule-based multilateral free trade system.
“If we are not, and we are going to shake up this system, then I am afraid that we are seeing more issues and more tensions that could not be resolved by trade and tariffs,” she warned.
Lam said Hong Kong, as a founding member of the World Trade Organisation, has prospered over the years on the basis of free and open trade.
“If that is no longer the mainstream and certain economies are sort of running away from the rule-based system then we could be in trouble,” she added.
Lam also said that as an externally oriented economy and one of the strongest supporters of free trade, Hong Kong will continue to be affected by all kinds of externalities, especially those surrounding the US-China relationship.
On the outlook of the global economy, Lam said she expected this year to be a difficult one.
She also said while her government forecast 3.2 per cent in real growth last year, “making 3 per cent in 2019 will be a challenge”.
Hong Kong recorded a moderation in economic growth in the third quarter of last year; Lam was worried worse might be to come.
Lam said Financial Secretary Paul Chan Mo-po would project the latest forecast when he unveils the annual budget next month.
Chan was also in Davos. On Tuesday, he attended two forums to discuss the readiness of cities for artificial intelligence and the opportunities under the Greater Bay Area plan, Beijing’s project to turn Hong Kong, Macau and nine mainland cities into a financial and innovation hub to rival Silicon Valley.
Chan also met the senior management of a Swiss reinsurance company.