The tit-for-tat tariffs between the Donald Trump administration and Beijing have gone beyond an economic battle and evolved into a political dispute. If the U.S.-China trade conflict persists, not only will it severely affect the economies of both countries concerned, but will also ripple through other economies worldwide. This will not do any good to anyone, but only harm. 

The SAR Government should grasp the situation and map out plans to help businesses expand their markets and diversify risks.  

As the Mainland and the United States are our major trading partners, Hong Kong is bound to be affected. Trump has urged American businesses to move their production lines back to the country. With higher wage costs in the U.S., some analyses indicate that such a move would put globalization into reverse, pushing up production costs and leading to a surge in product prices that would exacerbate inflation.

In fact, the Hong Kong business sector has expressed to me their concerns that a further escalation of the trade war will affect their orders and put them in a dilemma. Some Hong Kong businesses that have factories or that carry out processing works in the Mainland have made proactive plans – for example, relocating some of their production lines to other emerging markets. 

However, these measures are not applicable to all products. Furthermore, these local businesses have to deal with various labour appeals and the pressure of rising operating costs, which have all added to their already heavy burden.

With limited liquidity, SMEs may experience cash flow problems, in the case of banks tightening credit facilities due to the trade dispute. I welcome the government’s implementation of contingency measures, such as an increase in insurance cover by the Hong Kong Export Credit Insurance Corporation. Meanwhile, I hope that as such, the Government could relaunch the Special Loan Guarantee Scheme, under which the Government provides guarantees to help businesses meet their liquidity needs. 

If the trade war persists, manufacturers will cut down orders to avoid uncertainty and incapacity of payment. The SAR Government should therefore keep a close eye on developments and take heed of the export condition of local SMEs to better prepare. 

Meanwhile, Hong Kong should leverage on its natural advantage as an international financial centre and a free port to integrate itself into the national development. The Government should also help Hong Kong businesses integrate into the Greater Bay Area and to expand into emerging markets such as those along the Belt and Road, so as to explore business opportunities.