The coronavirus pandemic hammered Hong Kong’s trade and logistics sector in 2020, driving exports down 1.5 per cent year on year, but industry groups are optimistic a rebound is in store as the city leverages growing domestic consumption in mainland China.
Hong Kong exports shrank to HK$3.927 trillion in 2020 from HK$3.988 trillion the year before, while total imports decreased 3.3 per cent to HK$4.269 trillion, according to data published by the Census and Statistics Department on Tuesday.
That left a trade deficit of HK$342.2 billion, equivalent to 8 per cent of the total value of imports for the year. The deficit for 2020 narrowed nearly 20 per cent compared to the net trade deficit of HK$426.8 billion recorded in 2019, and both exports and imports continued an upwards trend in December.
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Exports rose 11.7 per cent to HK$392.2 billion in December over a year ago, after a year-on-year increase of 5.6 per cent in November. Similarly, imports went up 14.1 per cent to $437.9 billion in December 2020, following a 5.1 per cent uptick in November 2020.
A government spokesman pointed out that exports to mainland China accelerated notably, and those to the United States and Europe also saw faster growth.
“Looking ahead, while the mainland economy is expected to strengthen further and render support to Hong Kong’s exports, the prospects of other major markets will depend on how the pandemic situation evolves,” he said.
The Hong Kong government would also pay close attention to evolving US-China relations under the new American administration and post-Brexit developments from Britain, he said.
Last month, the Hong Kong Trade Development Council predicted that the city, a re-export hub for products made in China, would see a rebound in 2021 on the back of the mainland’s so-called dual circulation policy, which aims to encourage domestic consumption without pivoting away from the international market.
The council also said the city could stand to benefit from a less aggressive US approach under President Joe Biden.
The double whammy of the coronavirus pandemic and the trade war between the US and China has presented Hong Kong with a particularly challenging environment.
But even so, in December, the council revised its forecast for 2020 upwards, predicting an overall contraction of just 3 per cent, a marked improvement from the foreboding 10 per cent decline estimated around the middle of last year.
Iris Pang, Greater China economist at ING Bank, estimated that international trade would grow at a rate of 12 per cent this year, as global economies climb from a low base after a year battered by disruptions because of the pandemic.
“Trade may [outpace] the negative growth in 2020 rather than really a rebound,” Pang said, noting trade may see more meaningful growth in 2022 after wider use of the Covid-19 vaccines.
The trading and logistics sector is the second largest pillar of Hong Kong’s economy, representing about 19.8 per cent of the city’s total GDP in 2019. The financial services sector is the largest, accounting for 21.9 per cent of gross domestic product that year.
Separately, the Federation of Hong Kong Industries pointed out that the government‘s official trade statistics failed to reflect the contributions of the city’s Made-in-Hong Kong manufacturing sector.
“The importance of manufacturing to Hong Kong’s economy and employment has been rather underestimated,” Yip said, adding the city could focus on developing its capacity for manufacturing in food safety, Chinese medicines, environmental production, and electronics.
In an interim research report published by the federation on Tuesday, nearly 27 per cent of 231 businesses polled said they already had production lines in Hong Kong. In addition, 10 per cent were interested in relocating other parts of their production into the city, the survey conducted between November and December last year found.
This article Coronavirus impact left Hong Kong with trade deficit of HK$342.2 billion last year as exports dropped 1.5 per cent and imports 3.3 per cent, new figures show first appeared on South China Morning Post