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Economic impact on HK on revocation of China's MFN status
The Government has completed a broad assessment of the potential impact on Hong Kong's economy if China lost its Most Favoured Nation (MFN) trading status in the United States.
Should China's MFN status be revoked, Hong Kong might suffer a reduction by 31 to 45 per cent (or $66 to $96 billion) worth of re-exports from China to the US, the Secretary for Trade and Industry, Miss Denise Yue, revealed at a post-Budget press conference held today (Saturday).
Together with other related trade flows, there might be a reduction of six to eight per cent (or $161 to $234 billion) worth of Hong Kong's overall trade, a loss of around $23 to $34 billion in income and around 61,000 to 89,000 jobs.
Government's estimates also show that Hong Kong's GDP growth rate might be curtailed by 2.1 to three percentage points (or by around two-fifths to three-fifths from its trend rate of five per cent in real terms) in the year when the effect of loss of MFN is fully felt.
"There would be a further loss in income and jobs if China cut back on its imports from the US as a result," Miss Yue said.
"Manufacturing investments and other production arrangements by Hong Kong and foreign companies in China would also be adversely affected."
Miss Yue was also concerned that Hong Kong's role as a gateway to China would be undermined, thereby affecting longer term growth potential and business confidence in Hong Kong.
On the outlook of MFN renewal this year, Miss Yue envisaged that there would be a lively debate in the US Congress.
"The situation is more complex this year with the Presidential and Congressional elections coming up," Miss Yue said.
"The climate is also affected by overall Sino-US relations, but we shall argue strongly that the MFN issue should not be linked with non-trade issues."