評論文章

Many people were taken aback by the ferocity of Xia Baolong’s speech on Hong Kong National Security Education Day. Beneath the director of the Hong Kong and Macau Affairs Office’s calm and resolute delivery, there was anger and frustration. The message is clear: this is war – not war in the literal sense but war nevertheless.

Does his speech signal the start of a chain reaction that will lead to total decoupling between the United States and China? If so, could Hong Kong be affected? While Hong Kong government officials are rumoured to have insisted this will not happen, few are comforted by such assurances. The question on the minds of many is: can Hong Kong survive without US trade?

Let’s take a look at the numbers. The US is Hong Kong’s third largest trading partner, according to data from the city’s Census and Statistics Department. In 2024, Hong Kong’s total exports to the US were worth HK$295.5 billion and imports from the country were worth HK$206 billion. Hong Kong total exports to and imports from the world were worth about HK$4.5 trillion and HK$4.9 trillion respectively. In other words, Hong Kong’s export and import figures to the US were 6.5 per cent and 4 per cent respectively of total global exports and imports. These figures include the transshipment of goods going to and coming from the mainland.

Transshipment might not contribute much to Hong Kong in real money terms, but we must bear in mind that the sector boosts Hong Kong’s status as a logistics hub, especially in the context of trade with the mainland. Any weakening of this position may translate into weakening the importance of the logistics sector in the eyes of Hong Kong’s other trading partners. This cannot be measured in real money terms.

 Another point to note is that Hong Kong is a free port and will continue to be one despite the imposition of unprecedentedly high US tariffs. This is dictated by Basic Law and is unlikely to be changed regardless of local sentiment in favour of retaliation.

So long as the US does not prohibit trade with Hong Kong altogether, imports to the city will not be affected. This will of course mean a skyrocketing trade deficit with the US but the impact will be relatively mild against the total picture – less than 6.5 per cent.

 Our exports to the US comprise mainly electronic goods and luxury goods such as watches as well as clothes and toys. It is still unclear if and what percentage of electronic goods will continue to be exempt from the so-called reciprocal tariffs but let us consider what happens if there is no exemption at all.

Most goods that we export – except for luxury goods like jewellery and works of art – can find their way to alternative markets in Southeast Asia, Europe and the Middle East. It would take time, and the process may be painful but with the right amount of help from the government, the shift in direction may not be impossible. Luxury goods with appropriate upgrades in standard may find alternative markets in more developed countries in Europe and the Middle East.

To sum up, even in the worst-case scenario where all trade between the US and Hong Kong is completely severed, it would not be the end of the world for the city. That said, we need to diversify, and there will be hard times ahead.

We must also remember that our economic fate goes beyond our city limits. Our financial situation is closely intertwined with that of the mainland and a lot depends on how the rest of China can weather the tariff storm. Let us not forget that over half of Hong Kong’s trade is with the mainland. If mainland China does not do well, there is little chance Hong Kong will.

Can China survive without US trade? We do not have sufficient data to form a meaningful view but the Chinese leadership is so far behaving as if it can. In one view, China has been preparing for this turn of events ever since Donald Trump’s first term as US president. China has long moved from the agricultural economy that it was in the 1950s to a consumer economy.

Its consumer market is broad-based. And there do not appear to be any serious cracks that need to be filled by US consumer goods. What China needs from the US is hi-tech goods. In recent years, Washington has restricted China’s access to such goods.

But where do we go from here? Any hope this conflict will soon be resolved amicably looks bleaker by the day. The US has singled out China, leaving it out of an apparent reprieve for dozens of countries targeted by his “reciprocal” tariff policy – regardless of the status of negotiations.

Moreover, compared with other countries, China faces the highest tariff of “up to 245 per cent”, according to the White House. In reading out a statement apparently dictated by Trump, White House Press Secretary Karoline Leavitt recently said that “the ball is in China’s court”. China has so far ignored such rhetoric.

It is hard to tell whether the current war cries from both the US and China are genuine, or if both are positioning towards an inevitable resolution. We can only hope that it is the latter and not the former.