A citizen wearing mask is seen on the shore of the Victoria Harbor in Hong Kong, south China, Aug. 24, 2020. The number of daily new COVID-19 cases in Hong Kong retreated on Monday to the single-digit for the first time since the third round of outbreak but a health official still warned that the epidemic has yet to be completely contained. Hong Kong's Center for Health Protection (CHP) reported nine new confirmed infections, including seven local cases, at a press conference on Monday afternoon, with the total tally standing at 4,691. (Xinhua/Li Gang)

The US government's further extension of a 45 day 'label rule' stipulating that Hong Kong SAR exporters must label their products to the US as being "made in Hong Kong" instead of "made in China" has only caused further confusion among Hong Kong businesspeople. 

Moreover, experts and business representatives said that despite the US' moves to create obstacles for Hong Kong's trading status as a member of the World Trade Organization (WTO), the label sanction will have a limited impact on the Hong Kong economy and its position as an international financial trade center.

Over the weekend, US authorities extended the order by 45 days, from September 25 to November 9, in a bid to give accounts and importers more time to prepare. The extension came after President Donald Trump's executive order stipulating that the city's exporters must re-label the products as "made in China" instead of "made in Hong Kong" in an attempt to end the city's special treatment under the Hong Kong Policy Act of 1992. Goods that fail to comply will face a punitive 10 percent duty at US ports, media reports.

However, such an attempt has caused further chaos among Hong Kong traders doing business with the US.

A Hong Kong businessman with the trading business surname Wong told the Global Times on Tuesday that he is still pondering whether to change the label or not in response to the US government's changing moves.

"Currently we are not able to package, advertise or deliver products for fear we may end up breaking the rules, which have become rather complicated in recent weeks," Wong said. 

Wong admitted that he does not want to lose the US market since he has been sending his goods there for more than five years. However he is even more concerned about the potential costs associated with rule breaking and the unpredictable risks associated with the new rule such as not being able to deliver his products to clients.

Wong's concerns echoed Willy Lin Sun-mo's, the Hong Kong Productivity Council chairman, who said that consumer rights authorities and importers in the US had questions about the new arrangement, which he said had caused a certain amount of confusion, the South China Morning Post reported on August 24.

"They are confused about whether they are breaching these trade-description rules," Lin said in the report. "Some of them have no idea how to advertise their Hong Kong products."

In addition to the US, Wong has considered diverting more of his goods to other markets such as Europe in order to alleviate the growing risks associated with tensions with the US.

The US' hostile approach on the label issue has also caused angered local authorities for its blatant attempts to break the rules of the WTO.

Edward Yau Tang-wah, commerce and economic development secretary of the Hong Kong SAR, said in an online meeting on Monday that the US order to re-label Hong Kong goods as "made-in-China" is unreasonable and uncivilized.

"This is a deliberate attempt to undermine Hong Kong's customs territory, which is a very important pillar for Hong Kong as an international trading center, a status that is well recognized by all WTO members," Yau said.

"I hope that the US will not try to create an exception as they are also a fellow member of the organization," Yau said at the meeting.

"To some, this latest delay by the US might be seen as showing leniency on the issue, but it is in fact a strategic readjustment aimed at maximizing the impact on Hong Kong while avoiding damage to American companies," Liang Haiming, a Hong Kong-based economist, told the Global Times on Tuesday. 

"It is for sure that the repeated blows to Hong Kong by the US will come one after another," Liang warned, calling on Hong Kong enterprises to give up on the fantasy that the US will change its mind. 

Experts believe the impact will nevertheless be limited.

At present, Hong Kong is much more significant as an entrepot than a direct trading hub. Unlike the 1970s and 1980s when Hong Kong was a manufacturing stronghold, now only one percent of goods shipped from Hong Kong are made in the city, which instead serves as a logistical gateway to the Chinese mainland for both goods made there and headed there, South China Morning post reported. 

In 2018, Around 8 percent ($37 billion) of the Chinese mainland's exports to the US and around 6 percent ($10 billion) of the mainland's imports from the US were routed through Hong Kong, according to Hong Kong's Trade and Industry Department. 

"Considering the volume and value of Hong Kong's export goods is relatively small in comparison to, for example, Hong Kong being a financial hub, this relabeling requirement by itself is not expected to have any significant impact to Hong Kong's economy," Edmund, a Hong Kong consultant, told the Global Times on condition of anonymity.

Moreover, Edmund noted that whatever impact the new rule may have this year, it would be alleviated by the recent influx of new listings of Chinese companies on the Hong Kong Stock Exchange.

Tu Xinquan, director of China Institute for WTO Studies at the University of International Business and Economics in Beijing, also told the Global Times that statistics showed the US' label requirement may not directly influence Hong Kong's exports. However, he was unsure whether the tariffs imposed on Beijing under a US list called Section 301 amid the trade war, which started in July 2018, would also be imposed on goods made in Hong Kong. 

Hong Kong's major export items to the US in 2018 included electrical machinery, telecommunications equipment, sound recording apparatus, jewellery, office machines and automatic data processing machines.

But jewellery does not appear on the Section 301 list, Tu noted, calling the US sanctions "arbitrary and unpredictable."

In addition, Tu said he had confidence in Hong Kong's upcoming complaint to the WTO regarding the US' new requirement, accusing the US of discriminating against Hong Kong by doing so. 

Hong Kong's Trade and Industry Department said the city remained a staunch supporter of the multilateral trading system and adheres to the WTO's principles of non‑discrimination and most‑favored‑nation treatment.

"I suggest Hong Kong enterprises increase investment and commercial intercourse with countries along the Belt and Road Initiative," notes Liang. "They should also grasp the opportunity for the development of the Guangdong-HK-Macao Greater Bay Area so as to capture the lucrative mainland market made up of 1.4 billion people," he said.