Decline in Hong Kong's Exports Affects the 2025 Economic Growth Target: Companies Seek New Markets Amid the US-China Trade War

Taiwan • Business • 04/20 15:05
Decline in Hong Kong's Exports Affects the 2025 Economic Growth Target: Companies Seek New Markets Amid the US-China Trade War

Amid US-China trade tensions, Hong Kong's export volume has declined, affecting the 2% economic growth target for 2025. Leung Siu Kee, a senior advisor at Hang Seng Bank, pointed out that SMEs are facing financial strain due to the disruption of US orders. Experts recommend that businesses explore new markets, and the government and business sector should provide support. Wong Ka Wo, Vice President of the Chinese Manufacturers' Association, stated that policy uncertainty is adding pressure on businesses, especially during the Christmas shopping season. Financial Secretary Paul Chan stressed the importance of maintaining Hong Kong's status as a free port to attract international capital.

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Decline in Hong Kong's Exports Affects the 2025 Economic Growth Target: Companies Seek New Markets Amid the US-China Trade War

Amid US-China trade tensions, Hong Kong's export volume has declined, affecting the 2% economic growth target for 2025. Leung Siu Kee, a senior advisor at Hang Seng Bank, pointed out that SMEs are facing financial strain due to the disruption of US orders. Experts recommend that businesses explore new markets, and the government and business sector should provide support. Wong Ka Wo, Vice President of the Chinese Manufacturers' Association, stated that policy uncertainty is adding pressure on businesses, especially during the Christmas shopping season. Financial Secretary Paul Chan stressed the importance of maintaining Hong Kong's status as a free port to attract international capital.

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Decline in Exports Poses Challenge to Economic Growth Target

According to earlier forecasts by the Hong Kong government, the GDP growth target for 2025 is set at 2% to 3%. However, on April 20, Hang Seng Bank Senior Advisor Leung Siu-kei noted in a radio interview that due to the near halt in China-US trade, Hong Kong's export volume has seen a "significant decline." He believes there's a strong likelihood that this year's economic growth target of 2% won't be achieved, describing the outlook as "not optimistic."

Leung pointed out that Hong Kong is an export-driven economy, with the total value of imports and exports accounting for about 300% of GDP, making fluctuations in external trade have a profound impact on the overall economy. Although Hong Kong's exports to the US have decreased from 8.6% in 2018 to 6.5% in 2024, some SMEs still rely on the US market, facing sudden order disruptions and increased cash flow pressure.

Near Halt in China-US Trade Pressures Businesses

Since President Trump took office again, the escalation of tariffs on Chinese goods has led to some rates reaching as high as 245%. Leung noted that this has caused China-US trade to "almost completely halt," affecting Hong Kong as a re-export trade hub. He stated that while the current situation is not as severe as during the COVID-19 pandemic, if tariff measures persist, the economic impact on Hong Kong in the second half of the year will further expand.

Wong Ka-wah, Vice President of the Chinese Manufacturers' Association, also pointed out that despite the decline in Hong Kong's export share to the US, some companies face order cancellations due to policy uncertainties, especially during the critical Christmas procurement season, exacerbating delivery cycle pressures and putting companies in a dilemma.

Tight Cash Flow for SMEs, Banks Step In to Support

Leung stated that some SMEs, with export markets concentrated in the US, are experiencing tight cash flow due to disruptions in local orders. He noted that the banking industry is considering providing trade financing and loan solutions based on companies' repayment capabilities to help them explore other markets to offset the reduction in US orders.

Lam Kwong-tak, President of the Hong Kong Footwear Association, revealed that due to drastic fluctuations in tariff policies, many companies' five batches of goods (already shipped, stuck at ports, completed production, semi-finished, and prepared materials) are facing cash freeze issues, leading to factory shutdowns and cash flow breaks. He bluntly stated, "Even relocating production lines to Southeast Asia doesn't guarantee an 'escape.'"

Finding New Markets Becomes Key for Business Breakthrough

Facing increased risks in the US market, Hong Kong companies are actively seeking alternative markets. Leung pointed out that since the initial tariff war in 2018, many companies have begun diversifying market risks, but SMEs have limited capabilities and still need government and business sector assistance. He suggested strengthening economic and trade cooperation with emerging markets like ASEAN and the Middle East, leveraging Hong Kong's advantage as a free port to play its professional role in supply chain management, trade financing, and ESG consulting.

Financial Secretary Paul Chan also stated in his blog that Hong Kong should maintain its free port status and common law system while continuously optimizing the business environment to attract international capital. He noted that many companies have shifted their focus to emerging Asian markets, particularly the ASEAN region, emphasizing that focusing on our strengths is the best strategy to face challenges.

Impact of Tariff War on Global Supply Chain and Industrial Structure

Leung cautioned that the tariff war is set to disrupt international industrial supply chains in the short term and may lead to industrial fragmentation, increased operating costs, and decreased economic efficiency in the long term. He expects the global economy to face a prolonged slowdown, with the US potentially experiencing high inflation and a wave of SME closures, shaking investor confidence.

In this context, the Hong Kong stock market is bound to experience short-term fluctuations. However, Leung believes that Hong Kong-listed companies have certain economic strength, especially with the strong growth potential of Chinese enterprises, and international funds still show interest in the Hong Kong market. As long as Hong Kong upholds its commitment to being a free port, it is still expected to attract foreign investment.

References

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