The burgeoning trade war between the United States and Mainland China has further escalated after the U.S. released a proposed list of more than 6,000 Chinese goods, worth US$200 billion, to be levied with an additional 10% tariff last month. With the impact of such a dispute on Hong Kong surfacing gradually, the city cannot stand aloof and remain unscathed.
To help businesses cope with the trade war, I hope the Government will enhance the support measures previously introduced. These include extending the effective period of the special support measures and relaunching the Special Loan Guarantee Scheme.
As a small, open economy dependent on international trade and finance, Hong Kong is vulnerable to the spillover effects of the external environment. On top of that, the latest tariff list from the U.S. is different from the previous ones, covering almost all trade categories – from hundreds of kinds of food to textiles and industrial goods like chemical products. If the tariffs are to be imposed eventually, all sectors will suffer a blow.
As uncertainties continue to increase, during a meeting with the Chief Executive last month, I proposed an extension of the insurance coverage and a rise in the protection limit provided by the Hong Kong Export Credit Insurance Corporation (ECIC).
If U.S. buyers adjust their contract price or defer payment due to the additional tariffs, the ECIC can offer support for local SMEs to reduce possible losses. Since we cannot foresee how long the trade war will last, the effective period of the special support measures should also be extended.
On the other hand, in the case of banks tightening credit facilities, I suggest the Government should consider relaunching the Special Loan Guarantee Scheme, under which the Government provides loan guarantees to help creditworthy local SMEs secure loans faster to meet their short-term liquidity needs.
As Hong Kong proactively supports and advocates a free, open and stable multilateral trading system, we hope the trade order will be restored to normal as soon as possible.
In face of external economic pressure and uncertainties, the Government should gather the strengths of various sectors to jointly address trade risks. Meanwhile, I welcome opportunities to exchange views with Chamber members to learn more about the impact of the tariffs on their business, so that I can consolidate their ideas into policy proposals to relieve pressure on businesses.