Hong Kong Export Index Rebounds in 1st Quarter of 2013 HKTDC Research Shows Impact of World Economy and Politics

Hong Kong, Mar 19, 2013 – (ACN Newswire) – Hong Kong exporters grew significantly more confident about the future in the first quarter of 2013 according to the latest Hong Kong Trade Development Council (HKTDC) Export Index. The quarterly survey of business sentiment rebounded to 49.5 from 31.6 recorded in the fourth quarter of last year. The overall improvement was reflected across most major industries, according to HKTDC Director of Research Edward Leung. In a media conference today, he said indices for machinery, toys and electronics jumped some 20 points into expansionary territory. Export confidence posted across-the-board improvement in regards to major markets, with the indices for the Chinese mainland and the United States leaping over the watershed 50 mark. Procurement sentiment was also upbeat in most major industries, particularly among toys and machinery exporters who reporting the highest readings at above 60. Mr Leung added that about half of the companies surveyed experienced labour shortages first-hand or with their suppliers after the Chinese New Year holiday. Some 59 per cent of those responding said the labour shortage was more severe than it was over the same period last year, while another 39 per cent said the situation was more or less the same. Mainland Urbanisation Amid the upbeat export sentiment, Mr Leung said traders need to be alert to three major changes on the world stage, including the incoming Chinese leadership. He said the mainland government has listed urbanisation among of its “four new modernisations” and he anticipated the move could have impact on economic restructuring by unlocking growth in domestic consumer demand. In addition to plans for construction of 20 city clusters across the country, comprehensive support measures for urbanisation reform are to be introduced in 2013 covering land and household registration as well as social, healthcare and education services. Investments in infrastructure and housing required for urban development, as well as demand for consumer products and services in modern city life, are creating opportunities for Hong Kong traders across a broad spectrum, said Mr Leung, naming sectors such as household equipment, home appliances, retail, catering, transport, entertainment, education and medical services. Preliminary statistics for last year show per capita consumption for urban dwellers was about three times that of rural residents, but the average income of those living in the countryside also has accelerated. Mr Leung anticipated that efforts to promote urbanisation, which stood at 52.6 per cent last year, would further drive income levels and boost purchasing power. Sino-US trade Relationship Global trade including Hong Kong exports also remain profoundly influenced by diplomacy, and the closely watched Sino-US relationship in particular. Mr Leung said the balance of power in Washington was not altered markedly by the 2012 presidential and congressional elections, so the China-US trade relationship is unlikely to undergo any drastic changes during the next two years. “The US president appeared tough on China during his campaign,” noted Mr Leung, “but he is expected to continue to foster a pragmatic and collaborative relationship with Beijing.” Mr Leung also anticipated trade enforcement will remain a cornerstone of US trade policy. He cited the Obama administration’s active use of the World Trade Organisation (WTO) dispute settlement mechanism, with eight of 15 cases the US has pursued in the world body have targeting China since Beijing joined the WTO in 2001. In addition, the US remains a heavy user of trade remedies against Chinese products, although anti-dumping and countervailing duty activities moderated last year. “Looking ahead, Washington will continue to work bilaterally with Beijing to resolve outstanding economic and trade issues” Leung said. “But due to continued high US unemployment and the trade deficit, a forceful approach towards China is likely to remain in place.” Mr Leung also said he was not surprised to see friction spread to services, intellectual property rights and cyber security. Japan’s “Abenomics” A third change influencing sentiment came from Japan, under new Prime Minister Shinzo Abe. Mr Leung cautioned traders to be alert to the falling Yen as Mr Abe puts pressure on the Bank of Japan (BOJ) to pursue vigorous monetary easing. Diplomatic policy could also change Japan’s growing cross-border trade due to the increasingly vertically integrated nature of offshore production. In the three years ending 2012, Japan’s trade with ASEAN countries in machinery and electrical machinery (the latter of which comprises a wide range of electronic parts and components) expanded at an average annual rate of 10.6 per cent – far higher than that with the world which stood at 6.7 per cent. The trade figure also surpassed the 8.1 per cent for trade with Asia and 10.3 per cent with China. Mr Leung said ASEAN trade is likely to accelerate in the coming years. In terms of outward foreign direct investment, Japanese companies have become keen to reexamine their China-plus strategies in light of the region’s fast changing geopolitical and economic conditions. On the other hand, many Japanese companies have opted for greater risk-sharing in offshore production investment. Following floods in Thailand, firms are stepping up investment in places like Indonesia and Myanmar, but are maintaining Thai production bases. About HKTDC A statutory body established in 1966, the Hong Kong Trade Development Council (HKTDC) is the international marketing arm for Hong Kong-based traders, manufacturers and service providers. With more than 40 global offices, including 11 on the Chinese mainland, the HKTDC promotes Hong Kong as a platform for doing business with China and throughout Asia. The HKTDC also organises trade fairs and business missions to connect companies with opportunities in Hong Kong and on the mainland, while providing information via trade publications, research reports and online. For more information, please visit:www.hktdc.com . Follow us on Google+, Twitter @hktdc, LinkedIn. Google+: http://plus.google.com/+hktdc Twitter: http://www.twitter.com/hktdc LinkedIn: http://www.linkedin.com/company/hong-kong-trade-development-council Contact: HKTDC Corporate Communication Department Joe Kainz Tel: +852 2584 4216 Email: joe.kainz@hktdc.org ________________________________________