U.S.-China "trade typhoon" could impact 7 pct of HK exports - official
* Hong Kong highly exposed to U.S., China trade tensions
* Says a dip expected in orders, shipments in Q4 and early
* 2018 GDP growth forecast of 3-4 pct "still manageable"-Yau
(Adds details on trade war impact, ASEAN ties)
By James Pomfret and Anne Marie Roantree
HONG KONG, Sept 12 (Reuters) - Around 7 percent of Hong
Kong's total exports could be impacted if the United States
imposes a new round of trade tariffs on China, the city's
commerce and economic development secretary told Reuters on
Edward Yau said Hong Kong, as the world's seventh largest
exporter of merchandise trade, was highly exposed to what he
described as the "biggest trade typhoon" now raging between the
United Sates and China.
The U.S. administration is considering imposing tariffs on
a further $267 billion worth of Chinese imports to the United
States, on top of the $200 billion in imports primed for levies
"We are the most open, free economy in the world, and also
we live on trade," Yau told Reuters in an interview. "Hong Kong
will be the first to suffer because of our vulnerability."
He said this potential new round of tariffs, if realised,
would impact 7 percent of Hong Kong's trade in goods.
He declined to give specifics other than to say there is
expected to be a dip in orders and shipments in the fourth
quarter and early next year.
Yau, however, said the official 2018 GDP growth forecast of
3-4 percent was "still manageable".
"The spillover effects could be huge," he said.
"We're talking about the biggest trading partners in the
world imposing sanctions on each other, so if it's not the
biggest trade typhoon, what would it be?," he said in his office
with a sweeping view of Hong Kong's iconic harbour and skyline.
Despite this, Yau said he was confident Hong Kong could
stand up to the trade war given its economic strength, the
stability of its currency peg to the U.S. dollar and its
The government has offered loans to small and medium-sized
businesses and an export credit insurance plan to struggling
firms, but few have sought assistance so far, Yau said.
Hong Kong's second quarter economic growth slowed to 3.5
percent from a year earlier, but was still underpinned by solid
REDUCED SHIPPING ROLE
Trade and logistics remain one of the pillars of Hong Kong's
economy, and account for nearly one-fifth of its GDP, higher
than the financial sector. More than 700,000 people are employed
in the trade and logistics sector.
However, the city's importance as a shipping hub has
diminished in past decades with the construction of ports and
airports across China's Guangdong province.
The deputy chairman of the Federation of Hong Kong
Industries (FHKI), Daniel Yip, said for the 32,000 active Hong
Kong-invested factories operating in the Pearl River Delta, the
trade war was forcing many firms to consider uprooting to other
countries in the region, or to forge new markets.
"For any factories, they will need to make medium-term
strategy decisions like relocating, or changing their market
strategy. So the mentality of many factories is that this is a
medium to long term turning point," Yip told Reuters.
Yau said the trade war would merely accelerate a trend of
factories, especially those involved in low-end manufacturing,
shifting from China due to higher operating costs.
The 10-member Association of Southeast Asian Nations (ASEAN)
was now Hong Kong's second-largest trading partner, he added.
"They create a very strong demand for say, not just trade in
goods, but also trade in services," Yau said.
Hong Kong's stock market, like others in the region, has
been buffeted by factors including global economic uncertainty,
shrinking capital flows from China and the trade war.
The benchmark Hang Seng Index, which closed down 0.3
percent on Wednesday, has dropped around 12 percent this year.
(Reporting by James Pomfret and Anne Marie Roantree; Editing by
Simon Cameron-Moore and Richard Borsuk)
First Published: 2018-09-12 10:32:25
Updated 2018-09-12 12:19:52
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