Paul Chan: Hong Kong Will Maintain Its Status as a Free Port

[para. 1] Last week, the U.S. introduced "reciprocal tariffs" on nearly all global countries and regions, contravening World Trade Organization rules and challenging the multilateral trading system that underpins international trade. This unilateral measure is unlikely to solve the U.S.'s problem, but it risks global economic development and supply chain stability. As a result, several significant economies have proposed countermeasures, prompting a considerable drop in the U.S. stock market, losing over $6 trillion in value. Consequently, financial institutions have adjusted their economic growth forecasts for the U.S. and globally, with some predicting the U.S. could enter a recession, worsening employment and inflation, and hitting grassroots citizens hardest.

[para. 2][para. 3] As stated by central authorities, trade and tariff wars hold no victors; protectionism is not a sustainable path. Trade issues should be addressed through equitable and mutually beneficial consultations with all countries, including China. The actions by the U.S. have incited market concern over the potential end of a rules-based multilateral trading system and ushered in a turbulent era for global trade and economies, fostering a pessimistic market atmosphere. It's crucial to remain vigilant and adopt a bottom-line mentality.

[para. 4][para. 5] Emphasizing openness and cooperation, mutual benefit is universally desired. Hong Kong pledges to maintain its free port status, adopting free trade policies to facilitate the unrestricted flow of goods, capital, and information under the Basic Law. Despite geopolitical challenges affecting global trade, Hong Kong, an international trade center, is prepared. The local government supports businesses by providing liquidity support, market expansion opportunities, digital transformation assistance, and market information.

[para. 6] Responding to rising unilateralism, Hong Kong adjusted its export markets, with a decrease in goods exported to the U.S. from 8.6% in 2018 to 6.5% last year, and increased shares to ASEAN and the Middle East. Since 2019, ASEAN surpassed the U.S. as Hong Kong's second-largest goods export market after the Mainland, with strengthened economic ties among the Mainland, Hong Kong, and ASEAN.

[para. 7] Advances in innovation and technology (I&T) in Hong Kong have sped up the application of research and fostered development alongside the Guangdong-Hong Kong-Macao Greater Bay Area in I&T and high-end manufacturing. This progress opens new markets and bolsters Hong Kong's economic resilience while contributing to mainland China’s economic growth, which provides numerous opportunities for Hong Kong businesses.

[para. 8][para. 9] In light of global economic uncertainties, industrial and supply chains are expected to cluster in regions with higher productivity, leading to increased capital flow into high-growth markets and tech sectors. Economies respecting mutual trust and maintaining stable policies will thrive. China's extensive industrial collaboration system and robust innovation capability attracted increased international capital allocation to the Mainland and Hong Kong markets.

[para. 10][para. 11] Amid challenges and opportunities, forming connections with traditional and emerging markets is vital for Hong Kong and Mainland enterprises to develop new market channels. Hong Kong should draw investments worldwide, serving as a platform that connects domestic and international markets, allowing businesses to thrive.

[para. 12][para. 13] Upcoming announcements include Hong Kong's fourth batch of strategic enterprises, with cooperation agreements with over ten strategic enterprises. These competitive international firms span sectors like high-precision AI, commercial service robots, and medical technology, contributing significantly to Hong Kong's economy.

[para. 14][para. 15] Over two years, Hong Kong attracted more than 80 strategic enterprises, bringing $50 billion in investments and creating over 20,000 jobs, supporting industrial advancement and economic rejuvenation.

[para. 16] This summary is based on an article first published as a blog on the Hong Kong government website by Paul Chan, the financial secretary of the Hong Kong Special Administrative Region. The opinions expressed are those of the authors, not Caixin Media's editorial position.