[Commentary] With Hong Kong’s national security legislation “stuck”, the US side immediately threatened to impose so-called “sanctions” through unilateral changes to Hong Kong’s trade policy. Lei Dingming, a former professor in the Department of Economics of the Hong Kong University of Science and Technology, said in an exclusive interview with a reporter from China News Service in Hong Kong that the United States "sanctions" Hong Kong, in fact, there are not many "economic cards" that can be played, whether it is from tariffs, finance or exchange rate. The impact of US “sanctions” is very small.
[Same period] Lei Dingming, former professor of the Department of Economics, Hong Kong University of Science and Technology
Trump must have had little understanding of the economic relationship between Hong Kong and the United States at first. Why does he use such tough language? The reason is simple, he knows that he can't do anything at all, he has no cards to play.
[Commentary] Lei Dingming pointed out that in the past three decades, Hong Kong has gradually changed from industry-based to service-oriented. In 2019, the total export of Hong Kong’s domestic products to the US has fallen to less than US$500 million, which is approximately equal to Hong Kong’s local production 0.13% of the total value, which is far from Hong Kong's exports to the United States in the 1980s. Therefore, even if the United States cancels Hong Kong's independent customs zone, the impact on Hong Kong is very small.
[Same period] Lei Dingming, former professor of the Department of Economics, Hong Kong University of Science and Technology
Even if the United States cancels the so-called independent customs zone, the additional tariffs will have little effect on Hong Kong. The total export volume is 440 million US dollars, which cannot be felt for Hong Kong's GDP of more than 300 billion US dollars.
[Explanation] Regarding the trade of goods between Hong Kong and the United States, Lei Dingming believes that the United States "can't do anything at all"; and in terms of financial services, he pointed out that the United States has great interests in Hong Kong. Is actually cracking down on US companies in Hong Kong.
[Same period] Lei Dingming, former professor of the Department of Economics, Hong Kong University of Science and Technology
I believe that many US companies (enterprises), especially banks, will never listen to Trump. Why do they come to Hong Kong? They came to Hong Kong mainly because they were interested in the Chinese market.
[Commentary] Lei Dingming believes that the main reason American companies choose to develop in Hong Kong is to expect to enter the mainland market through Hong Kong. If the US side imposes “sanctions” on US-funded enterprises in Hong Kong, it will affect the self-interest of US-funded enterprises. Talking about whether the United States will withdraw from Hong Kong, Lei Dingming said that there are two possibilities. One is that the United States reduces or withdraws direct investment in Hong Kong. The other is that hot money flows out or sells financial assets in Hong Kong. Hong Kong will have no impact.
[Same period] Lei Dingming, former professor of the Department of Economics, Hong Kong University of Science and Technology
The so-called direct investment from the United States to Hong Kong is about 12 billion Hong Kong dollars, not US dollars but Hong Kong dollars. It only accounted for 1.39% of the direct investment from outside Hong Kong that year, so this proportion is very low. Direct investment from mainland China to Hong Kong in that year far exceeded that of overseas investment in Hong Kong by more than half. So as long as the mainland invests a little bit more, it will already be able to withstand.
[Explanation] Regarding the implementation of the linked exchange rate in Hong Kong, Lei Dingming pointed out that at the end of March this year, Hong Kong’s official foreign exchange reserve assets were close to 440 billion US dollars. With such a huge reserve, there is basically no need to worry about the Hong Kong dollar collapse. Moreover, the adoption of linked exchange rates in Hong Kong is more beneficial to the United States.
[Same period] Lei Dingming, former professor of the Department of Economics, Hong Kong University of Science and Technology
Because the use of linked exchange rates in Hong Kong is very beneficial to the United States, it is not that (the United States) threatens Hong Kong with linked exchange rates, but (should) be that Hong Kong threatens him. As long as you are in trouble, I will decouple you.
[Commentary] Lei Dingming said that although it is not in the interest of the US to crack down on Hong Kong’s linked exchange rate, the Hong Kong SAR Government and the Hong Kong Monetary Authority must still have “bottom line thinking” and prepare for “two-handed preparation” in the face of possible crisis Better safeguard Hong Kong's economic interests. At the same time, he believes that the most important thing for Hong Kong to do a good job in the economy is to solve social problems.
Reporter Li Yue Chen Haonan reports from Hong Kong
Editor in charge: [Li Ji]