WorldWay Comprehensive Report: With the global economic recovery, Hong Kong has signed an agreement with the Mainland to basically achieve the liberalization of trade in services and is actively conducting free trade negotiations with the Association of Southeast Asian Nations(ASEAN). As one of the four pillar industries of the Hong Kong economy, the trading industry performed steadily with an upward trend in 2014. In the first 11 months of 2014, the total value of external merchandise exports increased by 3.4% compared to the same period in 2013.
The latest figures released by the Census and Statistics Department of the Hong Kong SAR Government show that in the first 11 months of last year, the total value of merchandise exports and re-exports both increased by 3.4% compared to the same period in 2013, while the value of merchandise imports increased by 4.1%, resulting in a visible trade deficit of HK$487.3 billion.
Hong Kong's major export markets are Mainland China, the European Union, the United States, and ASEAN, with Mainland China accounting for 54% of Hong Kong's total export volume. A spokesperson for the SAR government stated that in terms of products, the import and export of electrical machinery, instruments, appliances, and parts saw the largest increases.
According to figures from the Hong Kong Trade Development Council (HKTDC), the value added by Hong Kong's trading and logistics industry in 2012 was equivalent to 24.6% of the GDP that year. Ma Yingde, an economist with the HKTDC Global Market Research Team, stated that Hong Kong is the second-largest destination for foreign direct investment in Asia, second only to Mainland China; Hong Kong is also the third-largest source of foreign direct investment in Asia, following Japan and Mainland China.
Economic and trade exchanges between Hong Kong, China and the Mainland were further upgraded in 2014, with Guangdong taking the lead in basically achieving the liberalization of trade in services with Hong Kong. The Hong Kong SAR Government and the Ministry of Commerce of China signed the "Agreement on Basic Realization of Liberalization of Trade in Services in Guangdong between the Mainland and Hong Kong" on December 18 last year. Starting this year, Guangdong has officially opened 153 service trade sectors to the Hong Kong service industry, accounting for 95.6% of all service trade sectors.
John Tsang, Financial Secretary of the Hong Kong SAR Government, stated that the depth and breadth of this agreement in various fields exceed the previous "pilot" measures in Guangdong, which will help Hong Kong businesses develop the Guangdong market in a wide range of service areas, deepen service trade cooperation between Guangdong and Hong Kong, and enhance the competitiveness of the service industries in both places.
A spokesperson for the Ministry of Commerce of China pointed out that the signing of the agreement accumulates experience for the basic realization of liberalization of trade in services between the Mainland and Hong Kong, will provide assistance for Hong Kong to consolidate its status as an international financial, trade, and shipping center and develop emerging modern service industries, and will also bring new vitality to the Mainland economy, which is conducive to comprehensively promoting the economic integration of the Mainland and Hong Kong.
As of June 2014, there were 102,000 import and export trading companies in Hong Kong, employing a total of 492,000 people. Yuan Shuyan, an economist with the HKTDC Asian and Emerging Markets Research Team, pointed out that Hong Kong's import and export trading industry mainly exports services in the form of offshore trading of goods. With the continuous expansion of Mainland China's foreign trade, Hong Kong possesses a geographical advantage due to its proximity to the Mainland and has great potential.
InvestHK of the Hong Kong SAR Government announced on January 7 that in 2014, it assisted 355 overseas and Mainland Chinese companies in setting up or expanding their businesses in Hong Kong, an increase of 5.4% over 2013, reaching a record high. Among them, Mainland China remains the largest source market, with a total of 75 projects.
Simon Galpin, Director-General of Investment Promotion at InvestHK, stated that the department will continue to seek investors interested in developing in Hong Kong from economies including Mainland China and ASEAN, and assist them in starting businesses in Hong Kong.
Galpin noted that although the global economy still faces various challenges, the number of overseas and Mainland companies with regional headquarters or offices in Hong Kong has reached a record high of 7,585, demonstrating Hong Kong's inherent business advantages and potential for new business opportunities. He is confident that he will assist 370 companies in establishing operations in Hong Kong this year.
In addition, ASEAN is Hong Kong's fourth-largest export market and second-largest trading partner. To promote bilateral trade, Hong Kong and ASEAN launched formal negotiations for a free trade agreement in July 2014. Yuan Shuyan stated that if the free trade agreement between Hong Kong and ASEAN is successfully completed, it will promote economic relations between Hong Kong and ASEAN, while further strengthening Hong Kong's role as a regional trade hub.
A report released by DBS Group Research at the end of 2014 stated that trade between Hong Kong and ASEAN will surge in the next 10 years. DBS predicts that the total trade flow between Hong Kong and ASEAN may reach US$143 billion by 2023.
Looking ahead to Hong Kong's future trade performance, Billy Wong, Principal Economist (Global Research) at the HKTDC, pointed out that although the WorldWay environment is full of challenges, Asia's production network is vast and consumer markets are gradually emerging. Overseas markets have strong demand for many types of Hong Kong products, supporting regional trade. It is expected that Hong Kong's export value will grow by 3% in 2015.
