Comprehensive report from WorldWay: With the global economy recovering, Hong Kong and the Mainland have signed an agreement to essentially realize the liberalization of service trade, and have actively launched free trade negotiations with the Association of Southeast Asian Nations (ASEAN). As one of the four major pillar industries of the Hong Kong economy, the trade sector showed a steady increase in 2014, with the total export value of merchandise trade in the first 11 months of 2014 rising by 3.4% compared to the same period in 2013.
The latest figures released by the Census and Statistics Department of the Hong Kong Special Administrative Region Government indicate that the overall merchandise exports and re-exports of Hong Kong for the first 11 months of last year increased by 3.4% compared to the same period in 2013, while the value of merchandise imports rose by 4.1%, resulting in a tangible 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 exports. A spokesperson for the Special Administrative Region Government indicated that in terms of products, the greatest increases in imports and exports were seen in electric machinery, instruments, tools, and parts.
According to figures from the Hong Kong Trade Development Council (HKTDC), the value added of Hong Kong's trade and logistics sector in 2012 accounted for 24.6% of that year's Gross Domestic Product. HKTDC's global market research team economist Ma Yingde stated that Hong Kong is the second largest destination for foreign direct investment in Asia, second only to Mainland China; it is also the third largest source of foreign direct investment in Asia, following Japan and Mainland China.
The economic and trade exchanges between Hong Kong and Mainland China further upgraded in 2014, with Guangdong taking the lead in essentially realizing service trade liberalization with Hong Kong. On December 18 of last year, the Hong Kong Special Administrative Region Government signed the "Agreement on the Basic Realization of Service Trade Liberalization between Guangdong and Hong Kong" with the Ministry of Commerce of China, with Guangdong officially opening 153 service trade sectors to the Hong Kong service industry this year, accounting for 95.6% of all service trade sectors.
The Financial Secretary of the Hong Kong Special Administrative Region Government, John Tsang, stated that this agreement's depth and breadth surpasses Guangdong's past measures of "trial first, implementation later," helping Hong Kong businesses to develop the Guangdong market in a wide range of service sectors, and deepening the cooperation in service trade between the two places, enhancing the competitiveness of the service industries in both locations.
A spokesperson from the Ministry of Commerce of China pointed out that the signing of the agreement accumulates experience for the preliminary trial of the basic realization of service trade liberalization between the Mainland and Hong Kong, which will help Hong Kong consolidate its position as an international financial, trade, and shipping center, develop emerging modern service industries, and bring new vitality to the Mainland economy, facilitating a comprehensive promotion of the integration of the economies of the Mainland and Hong Kong.
As of June 2014, Hong Kong had 102,000 import and export trading companies, employing 492,000 people. Economist Yuan Shuyuan from HKTDC's Asia and Emerging Markets Research team pointed out that Hong Kong's import and export trade sector primarily provides services in the form of offshore trading. With the continuous expansion of Mainland China's foreign trade, Hong Kong possesses a geographical advantage being close to the Mainland, presenting significant opportunities.
The Invest Hong Kong (InvestHK) announced on January 7 that it assisted 355 overseas and Mainland enterprises to open or expand their businesses in Hong Kong in 2014, an increase of 5.4% compared to 2013, setting a record high. Among them, Mainland China remains the largest source market, with 75 projects.
The Director-General of InvestHK, Mr. Goh Toh Leng, stated that the department will continue to seek investors interested in developing in Hong Kong, including from the Mainland and ASEAN economies, and assist them in starting business activities in Hong Kong.
Mr. Goh noted that although the global economy continues to face multiple challenges, the number of overseas and Mainland companies setting up regional headquarters or offices in Hong Kong has reached a record high of 7,585, reflecting Hong Kong's inherent business advantages and potential for new business opportunities. He is confident that this year, he will assist 370 companies in establishing businesses in Hong Kong.
Additionally, ASEAN is Hong Kong's fourth largest export market and second largest trading partner. To promote bilateral trade, Hong Kong and ASEAN formally initiated free trade agreement negotiations in July 2014. Yuan Shuyuan stated that if the Hong Kong-ASEAN free trade agreement is successfully completed, it will promote the economic relationship between Hong Kong and ASEAN while further strengthening Hong Kong's role as a regional trade hub.
A report released by the DBS Group Research at the end of 2014 stated that trade between Hong Kong and ASEAN is expected to surge in the next ten years. DBS predicted that the total trade volume between Hong Kong and ASEAN could reach USD 143 billion by 2023.
Looking ahead at Hong Kong's trade performance, Chief Economist of the HKTDC Global Markets, Paul Wong, pointed out that although the WorldWay environment is fraught with challenges, the large production networks in Asia and the gradually rising consumer markets are fostering strong demand for various Hong Kong products in overseas markets, supporting intra-regional trade. It is anticipated that Hong Kong's export value will increase by 3% in 2015.