Hong Kong would need to be nimble and find a new role as the global supply chain realigns and manufacturing bases across the border move out amid the US-China trade war, industry leaders have said.
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At the Asia Financial Forum on Tuesday, Victor Fung Kwok-king, group chairman of international supply chain firm Fung Group, said a major change in trade patterns was afoot, and trade flows between the superpowers would be directed to other emerging markets.
“Hong Kong orchestrated the global supply chain about 20 years ago and facilitated China’s policy on market reform and opening up,” he said. “Its role would be to orchestrate the potential new global trade flow.”
Among roles the city could adopt in the new economic world order would be to adjust its services and focus on logistics and trade financing.
Hong Kong has played a key part in the global supply chain, with the city’s entrepreneurs investing in mainland factories.
But uncertainty is growing with Hong Kong caught between Washington and Beijing as both sides lob tariffs at each other. A 90-day truce from December 1 has yet to bring any sign of a deal being reached.
John Slosar, chairman of Hong Kong-United States Business Council (Hong Kong section) and the city’s flagship carrier Cathay Pacific Airways, said the redistribution of the global supply chain would take time, considering it took a generation to build.
Hong Kong was the world’s No 1 cargo hub with a global share of 40 per cent, and would continue to lead the market in the next 10 years, he said.
Describing the city as “nimble”, Slosar said he was confident it would respond quickly and adapt well to changes.
“For sure, there will be a change – factories moving out of China. But that is not going to be easy,” he said, adding that Hong Kong would have to redeploy resources and expertise.
Fung said the city’s 300,000 small and medium-sized enterprises had “plenty” to do amid the uncertainty.
“People talk a lot about the [“Belt and Road Initiative”], which is about building infrastructure. What happens after the infrastructure is built, which is going to happen fairly soon? Who is going to use it?
“There will be a mass migration of businesses and SMEs out of China into new areas to finish the manufacture of products, and new countries of origin along the belt and road. Hong Kong entrepreneurs will play a major role in this.”
The belt and road plan is China’s ambitious global trade strategy to form an alliance of more than 65 countries with trade corridors on land and sea.
When asked about a comparison between Hong Kong and Singapore amid the changes, Benjamin Hung Pi-cheng, regional CEO for Greater China and North Asia at Standard Chartered Bank, said Hong Kong could be positioned as a hub to settle growing investments in yuan assets, whereas the Lion City could leverage its proximity to Malaysia and Indonesia for trade.
Echoing views he had raised last year, Secretary for Commerce and Economic Development Edward Yau Tang-wah said Hong Kong could make use of the free trade pact with Asean, a 10-country bloc in Southeast Asia which is the city’s second-largest trade partner after China.