US’ threats won’t frighten firms
HK’s importance as financial center means US companies ‘will stay’
US President Donald Trump’s latest volley of threats at China’s Hong Kong Special Administrative Region (HKSAR) is unlikely to intimidate savvy businessmen into a withdrawal from the city, regional affairs watchers said.
Trump said last week that he would take “meaningful” action to eliminate Hong Kong’s trade privileges under US law. Although most market watchers believe Trump’s move is more bark than bite, his words suggest that Washington may consider imposing the same tariff rates on Hong Kong as in the Chinese mainland.
Results of a survey by the American Chamber of Commerce in Hong Kong showed Wednesday that nearly half of the respondents voiced pessimism about the city’s medium- to long-term outlook.
On a positive note, 70 percent of the respondents have no relocation plans. Those planning to move capital, assets or business operations are considering South America, Singapore, the US and other possible locations, according to the results.
Dong Shaopeng, a senior research fellow at the Changing Institute for Financial Studies at Renmin University of China, predicted that if the US canceled Hong Kong’s special trade status, it would only backfire on US companies, some of which may consider moving directly into the Chinese mainland where markets are opening in a gradual manner.
“Hong Kong is an entrepot. Most American firms open offices in Hong Kong to tap into the Chinese mainland as well as Southeast Asian markets. If they retreat from Hong Kong to Singapore or back to the US, that will incur millions of dollars in losses. They will also be cut off from the world’s fastestrising market,” Dong said.
For the US, Hong Kong is the thirdlargest wine export market, the fourthlargest beef product export market and the seventh-largest market for agricultural exports, according to media reports.
“In the past decade, the US trade surplus with Hong Kong has been the biggest among all its trading partners, with a merchandise trade surplus totaling $297 billion from 2009 to 2018.
“In 2019, that surplus dropped from $31.4 billion in the preceding year to $26.4 billion as a result of US-China trade tensions,” a spokesman for the HKSAR government said last week.
“Should any sanctions be contemplated in other areas like services and investment, the interests of the 1,300 US corporations based in Hong Kong will be shortcut,” the spokesman added.
China’s Ministry of Commerce (MOFCOM) on Thursday expressed steadfast support for Hong Kong’s push to maintain its status as a separate customs territory.