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For decades now, Hong Kong has served as the quintessential bridge between the East and the West.
The SAR’s role as the world’s gateway into China has carried on even as the mainland began to plug itself more directly and deeply into the global economy.
But all of that may come undone, with China and the United States now locked in a trade war.
Since July, the US has slapped 10 per cent tariffs on US$200 billion worth of Chinese products – from steel and aluminium to fashion, food and fruit – over what US President Donald Trump has called unfair trade practices.
China, in return, has shot back with a 5 to 10 per cent levy on US$60 billion worth of American goods.
The two economic superpowers may have declared a 90-day truce on their tit-for-tat spat at the recent G20 summit, but risks continue to loom large for Hong Kong, which stands right in the line of fire.
The US is Hong Kong’s second largest trade partner, after China.
As a city where huge volumes of Chinese goods pass through en route to other locations, including the US, the knock-on effects would be significant.
Almost half of the Chinese goods shipped via Hong Kong to the US are expected to be hit by the tariffs.

This means that the trade war could affect as much as HK$350.7 billion worth of Hong Kong re-exports, accounting for up to 4.3 per cent of the city’s total trade volume, and 9.1 per cent of the total export value. 
Without an end in sight to the trade war, Hong Kong-owned businesses with operations in China, in particular, have much to lose. Many companies, as a result, have begun to look for new investment opportunities elsewhere.
Opening up new doors

Just earlier in November, Hong Kong and Australia inked a free trade agreement to boost bilateral trade and services flow.
It was the fifth signed by the current Hong Kong administration, following similar trade pacts with Georgia, the Maldives, Macau and the 10-member Asean or Association of Southeast Asian Nations economic bloc over the past year.
As businesses look for a way to stave off the fallout from the China-US trade war, many Hong Kong firms with operations in China – and even those from China itself – are finding a safe haven in Asean markets, in particular. The region comprises of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
For them, markets such as Vietnam and Malaysia, have come up as an attractive alternative or supplementary location for their production lines. It is also a boon that costs are low.
Beyond looking at new geographical markets, industrialists can also defend themselves from the trade war by adopting more innovative approaches. The use of advanced technology, such as artificial intelligence and robotics, can play a big role in cutting costs and ramp up productivity.
Put another way: there is light at the end of the tunnel.
The China-US trade war may have put Hong Kong’s economy on unsteady footing, but companies can use this as an opportunity to upgrade, transform and diversify their businesses, and better ride out the future.


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With no end to the trade war between China and the United States in sight, Hong Kong businesses are looking for new investment opportunities elsewhere to avoid being caught in the crossfire. 


China Conference: Hong Kong