A recent update (from the Office for National Statistics) on trade between the UK and Hong Kong gives an exciting insight into the long-term relationship between the two parties. While Covid has impacted business, the latest report provides a fascinating insight into the balance of power. The combined value of trade between Hong Kong and the UK (including imports and exports) hit £28.5 billion in 2022.
Many will be surprised to learn that there is a significant balance in favour of the UK regarding trade with Hong Kong. The split is as follows:-
· UK exports to Hong Kong totalled £18.2 billion in 2022
· This was an increase of 40.4% or £5.2 billion compared to the previous year
· Hong Kong exports to the UK totalled £10.2 billion in 2022
· This was a reduction of 13% or £1.5 billion on the previous year
This makes Hong Kong the UK's 13th largest trading partner, accounting for 1.7% of total UK trade. However, this is dwarfed by the degree of foreign direct investment:-
· UK foreign direct investment in Hong Kong hit a staggering £77.6 billion (an increase of £142 million) in 2021, 4.4% of all outward UK foreign direct investment
· Hong Kong foreign direct investment in the UK was £16.3 billion (a decrease of £9.7 billion) in 2021, 0.8% of total UK inward foreign direct investment
We will now take a more detailed look at these figures and recent trends, split between goods and services.
As we touched on above, total trade between the UK and Hong Kong hit £28.5 billion in 2022, an overall increase of 15%. This was split as follows:-
· UK goods exported to Hong Kong, £12.6 billion
· UK services exported to Hong Kong, £5.6 billion
· Hong Kong goods exported to the UK, £6.1 billion
· Hong Kong services exported to the UK, £4.1 billion
In 2013 and 2014, the UK had a trade deficit with Hong Kong of £400 million and £500 million, respectively. From 2015 onwards, this switched to a trade balance, rising from £600 million to £8 billion in 2022.
The primary goods exported to Hong Kong by value include:-
· Mechanical power generators (£2.2 billion)
· Non-ferrous metals (£886.8 million)
· Miscellaneous electrical goods (£340.9 million)
· Jewellery (£290.2 million)
The leading services exported to Hong Kong were as follows:-
· Financial (£2.1 billion)
· Other business services (£1.6 billion)
· Travel (£693 million)
· Transportation (£558 million)
· Telecom, computing and information services (£387 million)
The equivalent figures for goods exported from Hong Kong were as follows:-
· Telecoms and sound equipment (£1.1 billion)
· Miscellaneous electrical goods (£815.8 million)
· Office machinery (£691.9 million)
· Other manufacturers (£449.8 million)
· Clothing (£299.3 million)
During 2022 the leading services exported from Hong Kong to the UK included:-
· Other business services (£2.4 billion)
· Financial (£991 million)
· Transportation (£276 million)
· Travel (£173 million)
· Telecom, computing and information services (£97 million)
Interestingly, the East Midlands (26.9%) and London (27.5%) account for the lion’s share of UK goods exported to Hong Kong. When importing goods from Hong Kong, the south-east (25.4%) and London (19.6%) lead the way.
There has been a staggering turnaround in the UK's trading position with Hong Kong over the last decade. Having initially reported a trading deficit as recently as 2013, the UK now has an £8 billion trading surplus.
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