Trade war will deepen mainland-HK economic link

By Hu Weijia Source:Global Times Published: 2019/6/10 20:18:42

Vietnam is likely to be the biggest winner from the shift in supply chains caused by the trade war between China and the US. The reorganization of the Asian industrial chain provides Hong Kong with an opportunity to renew its role as a middleman to the Chinese mainland's economy.

Hong Kong's export-oriented economy has felt the pain of the trade war due to its negative effect on entrepot trade. As Hong Kong's role in intermediate trade between the Chinese mainland and the US declines, the city needs to find new potential and impetus for the region's development. Hong Kong's primary strategy is to promote economic development, which can serve as leverage to promote social stability.

There is no doubt that Hong Kong's economic links with the mainland will continue to be strengthened in the future. 

The trade war has prompted the city to give more attention to the Association of Southeast Asian Nations (ASEAN). Law Kin-wai, director-general of the Hong Kong Economic and Trade Office in Jakarta, was quoted by the Economic Daily as saying on Monday that there are many opportunities for cooperation among the mainland, Hong Kong and ASEAN countries including Indonesia.

In the first five months of 2019, China's total trade with ASEAN reached $240 billion, exceeding the total figure for China's trade with the US. There has been a steady rise in the relative share of China in ASEAN's merchandise trade, and the trade war has added new energy to economic exchanges, as those companies that plan to move production out of China to avoid US tariffs establish a supply chain between their new assembly plants in ASEAN countries and suppliers in the mainland. 

The trade war is likely to speed up internal reorganization of the Asian industrial chain, promoting trade growth in the region.

This offers Hong Kong new opportunities to engage in entrepot trade and expand financial services to ASEAN-based companies. 

The city can seize the chance to enhance its role as a pioneer and center for the yuan.

The trade war is forcing Hong Kong to shift its focus from the US to the rest of the world. We believe Hong Kong will win favor with ASEAN investors because what lies behind Hong Kong is the huge consumption potential of the mainland. 

As a springboard amid the trade war, Hong Kong will build stronger economic ties with the mainland.

The author is a reporter with the Global Times.


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