If HK sneezes, US will feel the impact: Hong Kong finance secretary

Paul Chan, financial secretary of the Hong Kong Special Administrative Region, said that Hong Kong is the world’s third-largest foreign exchange center for the US dollar, and if Hong Kong sneezes, it will affect the US’ interests. The city has the strength to deal with any impact, Chan said.

The comments came after US President Donald Trump threatened to end the city’s special trade and customs status and limit its right to freely trade the US dollar.

There has been no capital outflow and the city is seeing stronger capital inflows than outflows, Chan said in a TV interview Saturday, despite media reports that there is a rise in the number of local people who have inquired about opening offshore accounts, following the national security legislation for HKSAR.

He said that although the US could restrict trade in the US dollar in Hong Kong, such a move would definitely harm the interests of the US itself, as US companies and investment banks make huge profits in Hong Kong.

“Hong Kong is the third-largest place in the world for trading in US dollar, and it’s closely connected with other global financial hubs. US financial institutions and investment funds have huge interests here. If we sneeze, it will affect US as well,” Chan said.

There are fears that, if US moves to restrict US dollar trade in Hong Kong, it would raise foreign exchange risks and costs for more than 1,300 US companies operating in the city, said Lin Jiang, a professor of economics at Lingnan University College at Sun Yat-sen University.

“These US companies that earn profits in the local currency in the city will be facing high forex risks if they cannot exchange the local currency into US dollars,” Lin said.