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Table 1 compares the economies of Hong Kong and New Zealand to place them in perspective. We are both small but active international traders and relatively wealthy.
Table 1: General Economic Indicators
| HONG KONG | NEW ZEALAND | |||||
|---|---|---|---|---|---|---|
| 1991 | 1995 | 1999 | 1991 | 1995 | 1999 | |
| GDP (NZ$ Billions) | 149,64 | 211,58 | 300,51 | 72.91 | 90.3 | 102.3 |
| GDP Growth % | 5.1 | 3.9 | 3.1 | -1.7 | 4 | 3.4 |
| GDP/PERCAP NZ$ | 25,752 | 34,124 | 44,849 | 21,123 | 24,659 | 26,762 |
| Inflation % | 12 | 9.1 | -4 | 0.9 | 2.9 | 0.5 |
| Population Mill | 5.8 | 6.2 | 6.7 | 3.45 | 3.67 | 3.82 |
| Unemployment % | 1.8 | 3.2 | 6.3 | 10.6 | 6.3 | 6.3 |
Source: APEC "Economic Outlook", various editions.
Under Article 116 of the Basic Law, the Hong Kong SAR remains a separate customs territory and is able to participate in relevant international organisations (eg WTO, WCO) and international trade agreements involving preferential trade arrangements (such as a CEP with New Zealand). Under Article 117, it is also permitted
Hong Kong's economy has bounced back strongly following the setback of the 1997 Asian financial crisis. The recovery was largely export-led. Driven by resurgence of demand in the East Asian markets and sustained import absorption in the USA and Europe, exports of services also showed growth of 14.3 percent in 2000. This was largely generated from inbound tourism and off-shore trading activities.
Table 2: Hong Kong: the General Trade Profile 1999
| HK$ billions | % change from 1998 | |
|---|---|---|
| Merchandise Exports | ||
| Total | 1353.1 | -0.3 |
| Domestic | 173.6 | -9.0 |
| Re-exports | 1179.4 | 1.2 |
| Merchandise Imports | ||
| Total | 1402.0 | -3.0 |
| Retained* | 222.6 | -21 |
| Service Exports | 270.4 | 3.6 |
| Service Imports | 189.7 | -2.3 |
Source: the WTO (Inc EU intra-trade). * Retained imports are those not re-exported.
Consumer spending increased 5.4 percent in real terms and inflation remained on a downward trend during 2000. Labour market conditions continued to improve, unemployment falling from 6.3 percent in 1999 to 4.4 percent of the market force. Hong Kong's external balance of payments situation is positive with a current account surplus of $19.2 billion (5.4 percent of GDP). The prospects for the economy remain positive in the medium term, and are further enhanced by robust growth in China.
Hong Kong is a major trading partner for New Zealand and is now our seventh largest export destination. This results in part from its special status as a duty-free entrepot serving as a commercial centre and an international gateway to China, but it is also an important destination in its own right. Table 2 examines the general trade profile of Hong Kong. Several points are apparent. First, Hong Kong is a major international trader with exports and imports in both merchandise goods and services significantly higher than might be expected for an economy with the population of only 6.8 million. Second, the amount of re-exports and trans-shipped imports (mostly to and from China) heavily influences that trade profile. Third, Hong Kong is one of the world's most
Table 3 looks at the composition of Hong Kong's merchandise trade. The data is sourced from the Hong Kong Census and Statistics Department and differs from the more general data set out in Table 2 which is sourced from the WTO. Exports are dominated by clothing and textile exports, with about another 15 percent of total exports being manufactures in the general form of electrical and light machinery goods. Consumer goods and raw materials and semi-manufactures for further processing make up two thirds of total imports.
Table 3: The composition of HK's Trade (HK$ billionS)
| 1996 | 1999 | 2000 | |
|---|---|---|---|
| Part (a) Domestic Exports | |||
| Apparel & Clothing | 69.4 | 74.3 | 77.4 |
| Electrical Equip & Machinery | 30.4 | 23.8 | 28.5 |
| Textile yarn & fabric | 13.7 | 9.5 | 9.2 |
| Office machinery | 10.2 | 6.3 | 5.8 |
| Watches and clocks | 12.0 | 5.0 | 5.7 |
| Grand Total | 212.2 | 170.6 | 181 |
| Part (b) Imports | |||
| Consumer goods | 573.0 | 508.4 | 566.9 |
| Raw mat & semi-manufactures | 540.9 | 471.9 | 580.2 |
| Capital goods | 324.0 | 327.9 | 417 |
| Foodstuffs | 65.2 | 57.2 | 59.8 |
| Fuels | 32.5 | 27.4 | 34 |
| Grand Total | 1,536 | 1,393 | 1572.7 |
Source: Hong Kong Census and Statistics Department
Hong Kong's worldwide exports are dominated by clothing and textiles which at NZ$17 billion in 2000 (i.e HK$77.4 billion) made up just under 45 percent of its total exports. The next most significant sector was electrical and light machinery goods which accounted for about 15 percent of total exports. Consumer goods and raw materials and semi-manufactures for further processing make up two thirds of total imports.
In relation to tradeflows, China is Hong Kong's most significant trading partner, with Hong Kong exporting NZ$14.1 billion to China and importing NZ$170.6 billion in goods in 2000. In common with most Asian markets, the US remains a major final destination for exports.
New Zealand is a small island economy that relies heavily on trade with the outside world to maintain its standard of living, a standard of living that, for a variety of reasons, has been slipping relative to other developed and newly emerging nations over recent decades. One of the main reasons is that New Zealand's competitive advantage lies in the natural resource products of agriculture, horticulture, forestry, fishing and the marketing of this natural resource base for tourism. Most of these products face barriers in our markets. These barriers range from prohibitive tariff levels to quotas, and include competition from subsidised products in many agricultural markets. The problem of "tariff escalation" whereby tariffs increase as value is added to the primary resource also has a major negative impact
While overall New Zealand's trade is only a small percentage of total world merchandise trade (0.23 percent of world exports and 0.24 percent of world imports), there are several important areas where New Zealand is a major player. These include dairy produce and sheepmeats as well as several smaller niche markets of specialist products. Recognising the importance of trade to New Zealand (merchandise exports are equivalent to 25.5 percent of our GDP) trade policy has focussed on obtaining better access to overseas markets for our traders. This is primarily through the multilateral WTO track, but regional tracks such as the CER agreement with Australia and the CEP with Singapore are also crucial to our obtaining more secure and open access to export markets. The composition of New Zealand's trade is detailed in Table 4.
Hong Kong and New Zealand have very different trade profiles. While New Zealand's major goods exports are primarily agriculture based, Hong Kong's are almost entirely based on manufactured products. Hong Kong and New Zealand therefore have largely complementary economies, with a CEP agreement giving each country an opportunity to increase trade in area where it holds a competitive advantage.
Table 4: The Composition of New Zealand's Trade (NZ$ BillionS, December Years)
| 1998 | 1999 | 2000 | |
|---|---|---|---|
| Part (a) Exports | |||
| Dairy Produce | 3.95 | 3.78 | 4.67 |
| Meat and edible offal | 2.89 | 2.98 | 3.69 |
| Forest products | 1.36 | 1.73 | 2.17 |
| Fish, molluscs and crustacean | 1.17 | 1.21 | 1.28 |
| Aluminium | 0.99 | 0.97 | 1.24 |
| Starch | 0.90 | 0.86 | 1.22 |
| Grand Total | 21.79 | 22.55 | 27.98 |
| Part (b) Imports | |||
| Machinery and mechanical app. | 3.47 | 3.64 | 4.07 |
| Vehicles | 2.61 | 3.37 | 3.56 |
| Electrical machinery and equip. | 2.36 | 2.76 | 3.37 |
| Mineral fuels, oils and products | 1.40 | 1.67 | 3.2 |
| Plastics and articles of plastic | 0.99 | 1.10 | 1.28 |
| Grand Total | 23.35 | 27.11 | 30.75 |
Source: Economist Intelligence Unit
