US and Chinese "typhoon" could cut Hong Kong's exports by 7%: official

HONG KONG (Reuters) – Roughly 7 percent of Hong Kong's total exports could be affected if the US imposes a new set of trade tariffs on China, the city's secretary of commerce and economic development told Reuters on Wednesday. .

Edward Yau said Hong Kong, the world's seventh-largest merchandise exporter, was very exposed to what he termed the "biggest typhoon trade" between the United States and China.

The US administration plans to impose tariffs on an additional $ 267 billion of Chinese imports to the United States, in addition to the $ 200 billion already announced.

"We are the most open free economy in the world and we are also trading," Yau told Reuters. "Hong Kong will be the first to suffer from our vulnerability."

He said that this new tariff cycle, if implemented, would have an impact on 7% of Hong Kong's merchandise trade.

He declined to provide any clarification other than to say that there should be a drop in orders and deliveries in the fourth quarter and early next year.

Yau, however, said the official forecast of GDP growth for 2018 of 3 to 4% was "still manageable".

"The spin-offs could be huge," he said.

"We are talking about the world's biggest trading partners imposing sanctions, so if it's not the biggest commercial typhoon, what would it be?"

Despite this, Yau is confident that Hong Kong could resist the trade war, given its economic strength, its stable US peg, and its international stature.

The government has offered loans to small and medium-sized businesses and an export credit insurance program for companies in difficulty, but few have asked for help so far, Yau said.

Hong Kong's GDP growth in the second quarter slowed to 3.5 percent from the previous year, but was still buoyed by a strong consumer sentiment.

Trade and logistics remain one of the mainstays of Hong Kong's economy and account for almost a fifth of its GDP, which is higher than that of the financial sector. More than 700,000 people work in the trade and logistics sector.

The importance of the city as a shipping hub, however, has declined in recent decades with the construction of ports and airports throughout China's Guangdong Province.

Hong Kong Federation of Industries (FHKI) Vice President Daniel Yip said that for the 32,000 active factories in Hong Kong operating in the Pearl River Delta, the trade war forced many companies to consider uprooting in other countries in the region. , or to forge new markets.

"For any plant, they will have to make medium-term strategic decisions, such as relocating or changing their market strategy. The mindset of many factories is therefore that it is a turning point in the medium and long term, "Yip told Reuters.

The Hong Kong stock market, like other countries in the region, has been shaken by a variety of factors, including global economic uncertainty, diminishing capital flows from China and the trade war.

The benchmark Hang Seng Index .HSI lost about 12% this year and closed down 0.3% on Wednesday.