Hong Kong’s exports and imports rebounded in the first quarter of this year after a significant year-on-year decline in the same period of last year.

The logistics hub saw its exports rise 11.9% to HK$1.06 trillion (US$135 billion) in the first three months of this year from a year ago, according to the Census and Statistics Department. Its imports surged 8% to HK$1.14 trillion for the same period. 

Neither figure has yet returned to the levels of 2021 and 2022 as the city’s exports and imports fell 17.7% and 12.7%, respectively, in the first quarter of last year.

A spokesperson of the Hong Kong government said an increase in exports to mainland China contributed to the rebound in overall exports while exports to the United States and Europe remained on downward trends. 

He said high geopolitical tensions in the world and tight liquidity in the financial market will continue to affect Hong Kong’s exports negatively, although external demand has improved. 

Michael Li, vice-president of the Hong Kong Chinese Importers’ & Exporters’ Association, said the negative factors seen in the first half of 2023, including the Ukrainian-Russian war, the US-China political fight and the US rate hike, are fading out.

He said Hong Kong’s exports have gotten back on the right track during the first quarter of this year and probably will grow by 8-to-12% for the whole year from 2023, unless some new negative factors emerge. 

He said the West’s plan to push forward the so-called de-Sinization in the global supply chain is unsuccessful. He said many foreign buyers have shown up in this year’s Canton Fair, an annual trade exhibition in Guangzhou. 

Chinese media said there were more foreign buyers at the Canton Fair this year, especially those from Russia, Middle East and South America. 

They said some foreign importers are attracted by the low prices of Chinese electronic products and electric vehicles while some US importers want to buy now as they fear that US-China trade relations will deteriorate ahead of the US presidential elections in November.

Ryan Lam, head of research at Shanghai Commercial Bank, said many manufacturers have their expansion plans in China on hold as Republican candidate Donald Trump threatens to raise tariffs for Chinese goods. But Lam still expected the city’s exports to grow by 8-to-9% this year from 2023 due to the strong demand for smartphones and electronic parts in foreign countries. 

Trade with Russia 

Hong Kong’s shipment of western chips and electronic products to Russia has been a growing concern for the US and the European Union.

Nikkei said in a report in April 2023 that shipments of chips made by Intel and Advanced Micro Devices from Hong Kong to Russia amounted to at least US$740 million between February 24, 2022 and the end of the same year. It said the figure was only US$51 million in 2021. 

Last December, the Washington-based investigative non-profit organization C4ADS said shipments of high-end chips to Russia surged in the first half of 2023, many of them moving through Hong Kong. It said Hong Kong has already become the largest trade transit country for chips going to Russia.  

Over the past two years, the US Commerce Department has already launched several rounds of sanctions against some Hong Kong and Chinese companies that had shipped US high-end chips and equipment to Russia. 

A research report published by the Hong Kong Trade Development Council showed that Hong Kong’s exports to Russia grew 11.2% to US$2.66 billion last year from 2022, representing about 2% of the city’s total exports.   

The exported products include telecommunications equipment and parts, computers, semiconductors, electronic valves and tubes. 

For the same period, Hong Kong’s imports from Russia surged 118% to US$3.06 billion, 96% of which were imports of silver and platinum products, pearls and precious and semi-precious stones. 

‘Financial nuclear bombs’

In a meeting with Chinese President Xi Jinping in Beijing on Friday, US Secretary of State Antony Blinken raised concerns about China’s support for Russia’s military. 

He said China was supplying different products, including microelectronics, chemicals for munitions and rocket propellants and “dual-use items that Moscow is using to ramp up its defense industrial base.”

Chinese officials have said that as long as China does not provide any weapons to Russia, normal trade between the two nations should not be interrupted or restricted.

On April 8, US Treasury Secretary Janet Yellen told Beijing officials that Chinese banks that facilitate support for Russia amid its war in Ukraine could face US sanctions. Such curbs are dubbed by the media as “financial nuclear bombs” as they can heavily hit the sanctioned banks. 

On April 12, the Russian state newspaper Izvestia reported that Chinese banks including Bank of China and Great Wall West China Bank have recently begun blocking payments from Russia, particularly for critical electronic components needed for servers, storage systems and laptops. 

A US official told Reuters on April 22 that the US has no immediate plan to sanction Chinese banks.

New economic world order

A Chinese columnist surnamed Hong writes in an article published last month that as most banks in mainland China and Hong Kong now refuse to accept payments from Russian buyers, Chinese exporters can only receive payment in renminbi from Russia through either underground banks or a cross-border payment firm called Multilines Corp.

He says Multilines is a legitimate company that can handle payments involving sanctioned Russian firms. 

According to Multilines’ website, the company offers full-fledged services that cover the buying, selling, importing, exporting and hedging of precious metals. It has offices in China’s Chongqing and Hong Kong. 

Ali Hussnain, chairman and chief executive of Multilines, studied marketing at the Lahore University of Management Sciences in Pakistan. He is also the chairman of the Economic & Business Advisory Council of the Pakistan House, a think tank based in Islamabad and Bronshoj, Denmark. 

In a plenary session of the Valdai International Discussion Club in Moscow last October, Pakistan House’s Founder Muhammad Athar Javed asked Russian President Vladimir Putin whether Russia can create a new economic world order with its natural resources. 

Putin said the Russia-led Eurasian Economic Community and China’s Belt and Road Initiative can work together to break the domination of the US dollar in the international system. 

Read: Blinken to China to fuss about support for Russia

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