Trade War Clouds Hong Kong’s Future as China’s Global Gateway

The ongoing U.S.-China trade conflict has raised concerns about Hong Kong's role as a gateway for Chinese mainland tech firms looking to expand internationally. Historically, Hong Kong has leveraged its free-port status and business-friendly environment to act as a springboard for Chinese startups venturing abroad. However, recent U.S. tariff hikes—affecting both mainland Chinese goods and imports from Hong Kong—now challenge the city’s position as a global tech hub [para. 1][para. 2].

This tension was exemplified during a speech by Xia Baolong, director of the State Council’s Hong Kong and Macao Affairs Office, who criticized the U.S.’s 145% tariffs on Hong Kong imports as unreasonably aggressive and arrogant. Such measures directly impact Chinese companies with global ambitions, forcing firms like Leapstack, a health insurance tech company, to grapple with new challenges in international expansion [para. 3][para. 4]. Leapstack, headquartered in the Hong Kong Science Park, had aimed to enable Chinese pharmaceutical capacity exports, but shifting global trade policies have hampered these efforts [para. 4].

Similarly, RHT Industries Ltd., which focuses on air purification technology, has experienced difficulties due to rising sea freight costs during the pandemic and elevated tariffs in the North American market. This has led the company to pivot its focus toward less saturated but high-growth regions like Southeast Asia and the Middle East, though uncertainties remain [para. 5][para. 6]. Companies like Leapstack and RHT Industries often use Hong Kong Science Park as a resource hub, benefiting from its support in market research, regulator connectivity, and cost reduction [para. 8].

Hong Kong competes directly with other hubs like Singapore in providing favorable conditions for tech firms. For example, SleekFlow, an AI-powered customer service platform operating in both Hong Kong and Singapore, highlights the similarities between the two cities. While Hong Kong remains the company’s global headquarters due to its development and management resources, its Singapore office focuses on the ASEAN market [para. 11]. Hong Kong authorities, led by organizations such as InvestHK, continue to enhance mechanisms to attract mainland Chinese firms to establish international operations in the city. A new initiative launched by the Hong Kong Productivity Council in April provides support tailored for small and medium-sized enterprises (SMEs) to tap into global opportunities [para. 13][para. 14].

In addition to institutional backing, Hong Kong offers several advantages for businesses, including extensive free trade agreements across Southeast Asia, tax incentives under the Corporate Treasury Centre regime, and a competitive corporate tax rate of 8.25% for initial profits and 16.5% thereafter. This taxation policy is significantly lower than the global average corporate tax rate of 23.51% in 2022 [para. 14][para. 15]. Moreover, the Hong Kong government has invested in promoting technology exports through collaborations with countries such as Thailand, Malaysia, Saudi Arabia, and the U.K., targeting areas like AI, smart mobility, and digital innovation [para. 16].

By fostering partnerships and offering incentives, Hong Kong aims to preserve its status as a tech and international business leader amidst evolving global dynamics [para. 17]. However, uncertainties from the U.S.-China trade dispute remain significant hurdles for companies reliant on the city as their gateway to global markets [para. 3][para. 7][para. 13].