Blog
Respond with Composure and Act on Opportunity
Last week, the United States (US) announced the imposition of so-called "reciprocal tariffs" on nearly all countries and regions worldwide. This bullying act constitutes a serious violation of the World Trade Organization rules and flagrantly undermines the multilateral trading system, which is the cornerstone of international trade. Unilateral actions will not only fail to resolve the issues faced by the US but also pose risks to global economic development and the stability of supply chains. We firmly oppose such measures. Following this announcement, several major economies around the world have proposed countermeasures, leading to a significant drop in the US stock market for two consecutive days, with an estimated loss of over US$6 trillion in market value. Financial institutions have since revised their forecasts for economic growth in the US and globally downward, with some predicting that the US may fall into recession, resulting in a worsening employment market and inflation situation — most adversely impacting grassroots citizens in the US.
As repeatedly emphasised by the Central Authorities, there are no winners in trade and tariff wars. There is no viable path for protectionism. We firmly believe that trade differences can be resolved only through consultations with all countries, including China, conducted equitably and with mutual respect and benefits.
The actions of the US have triggered widespread worries in the market that the era of a rules-based multilateral trading system is coming to an end; and that the global trade and economy will enter a more uncertain and turbulent period. Given the escalating risks of international trade conflicts, the global economy and trade are now under significant pressure, leading to an increasingly pessimistic market atmosphere. At this moment, we must remain vigilant and be fully prepared with a bottom-line mindset.
Openness and cooperation are the historical trend, and achieving mutual benefit is a common aspiration. We will continue to maintain our status as a free port, implement free trade policies, and ensure the free and convenient movement of goods, capital and information, all of which are safeguarded by the Basic Law.
While geopolitics poses challenges to the global trade outlook, Hong Kong, as an international trade centre, will inevitably be affected in the short term. The Hong Kong Special Administrative Region Government has been closely monitoring and assessing the relevant situation and developments, and will provide support to local enterprises on various fronts. They include (1) liquidity support, such as strengthening export credit insurance for trade companies through the Export Credit Insurance Corporation, while the Hong Kong Monetary Authority actively coordinates with the banking sector to assist small and medium-sized enterprises (SMEs) in meeting their funding needs; (2) market expansion, such as supporting Hong Kong enterprises in developing brands, upgrading and transforming business operations, and exploring new markets through the Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund); (3) digital transformation, such as assisting enterprises in accelerating their digital transformation and seizing opportunities in e-commerce through various funding schemes; and (4) market information, i.e. providing up-to-date information to help businesses better understand market conditions and manage risks.
In response to the rise of unilateralism in recent years, Hong Kong businesses have adjusted their export markets. Data shows that the market share of goods exported from Hong Kong to the US has decreased from 8.6% in 2018 to 6.5% last year. Meanwhile, the market shares of ASEAN and the Middle East have risen from 7.4% and 2% to 8.7% and 2.9% respectively. Since 2019, ASEAN has surpassed the US to become Hong Kong's second largest goods export market, following only the Mainland. Over the years, economic and industrial cooperation among the Mainland, Hong Kong and ASEAN has strengthened significantly.
Furthermore, in recent years, we have made significant strides to spur the development of innovation and technology (I&T) in Hong Kong. This includes accelerating the transformation of research outcomes into practical applications, and engaging in the synergistic development with the Guangdong-Hong Kong-Macao Greater Bay Area in I&T and high-end manufacturing. By doing so, we have expedited the creation of a new development momentum for Hong Kong, opened up new markets and enhanced the resilience of the city’s economy. Meanwhile, our country’s economy is steadily growing. Its promotion of consumption and pursuit of domestic circulation are providing immense opportunities for Hong Kong businesses, thereby reinforcing our confidence.
It is certain that despite the disruptions and uncertainties facing the global economy, industrial and supply chains will continue to cluster in regions with higher productivity and cost advantages. Moreover, capital will flow into markets and tech sectors with greater growth potential. Cooperation will be strengthened among economies that are willing to respect one another, establish mutual trust as well as maintain relatively stable economic, trade and diplomatic policies.
The industrial and supply chains established by China with ASEAN and other regions are an efficient and comprehensive industrial cooperation system. Our country possesses robust innovation capabilities, and has made significant breakthroughs in cutting-edge technologies such as artificial intelligence (AI) and robotics this year. As a result, international capital has increased its allocation to both the Mainland and Hong Kong markets. In the first quarter of this year, Hong Kong's stock market experienced a year-on-year increase of 15%, with an average daily turnover exceeding $240 billion, representing an increase of 140%. From the Third Plenary Session last year to the National Two Sessions in March, our country has emphasised its commitment to high-level opening up, to creating a friendly and predictable investment environment for international investors, and to forging reliable cooperative relationships. The recent China Development Forum saw a record number of multinational companies participating for the first time.
In this historical moment, marked by both challenges and opportunities, we must continue to strengthen our connections with traditional markets while increasing our engagement with emerging markets in the Global South. This approach aims to develop new channels and markets for Hong Kong and Mainland enterprises. Moreover, it will facilitate the deep integration and optimisation of the regional industrial and supply chains.
We must also enhance our efforts in attracting investments, encouraging enterprises from the Mainland and around the world to leverage Hong Kong as an international platform that connects domestic and international markets. We are a city where capital and talent converge, characterised by the free flow of information. It is a place where businesses can grow, manage their finances and explore new markets.
This Tuesday, we will announce the fourth batch of strategic enterprises, during which the Office for Attracting Strategic Enterprises will sign co-operation agreements with more than ten strategic enterprises. Among this new batch of enterprises is a firm engaged in high-precision AI. Its intelligent transport solutions have been adopted in over 50 cities across the country. Another enterprise which specialises in commercial service robots has exported its products to over 40 countries and regions. The batch also includes a medical technology enterprise producing surgical equipment that has successfully treated over 300,000 tumor cases globally. The company has filed more than 900 patents worldwide. The technologies, products and services of these strategic enterprises are highly competitive internationally.
Over the past two years, Hong Kong has successfully attracted more than 80 strategic enterprises, which are expected to bring about $50 billion in investment and create over 20,000 jobs for Hong Kong in the coming years. They will support Hong Kong’s progress in new industrialisation, creating new impetus for our economy.
April 6, 2025
