Hong Kong firms exporting to the United States face a drop in business of at least 25 per cent in the first quarter of 2019 due to the US-China trade war.
That was the prediction made on Saturday by Danny Lau Tat-pong, honorary chairman of the Hong Kong Small and Medium Enterprises Association.
His pessimistic forecast came a week after President Xi Jinping and his US counterpart Donald Trump agreed to hold back from applying extra tariffs in January to pave the way for a trade deal.
Lau said on a radio programme that when he learned about the 90-day truce he was relieved. But he felt the messages sent by the US were getting messy after Sabrina Meng Wanzhou, chief financial officer of Chinese telecommunications giant Huawei Technologies, was arrested in Canada at the behest of US authorities.
Trump’s shifting stance on the trade dispute also made signals confusing, Lau said.
Professor Francis Lui Ting-ming, adjunct professor at the Hong Kong University of Science and Technology, believed the US was aiming to deal a blow to Huawei with Meng’s arrest, because the company’s 5G technology, which he described as cheaper and better quality, posed a great threat to the American innovation sector.
US may use arrest of Huawei CFO Sabrina Meng Wanzhou to push China during Donald Trump and Xi Jinping’s trade war truce
“So it used petty tricks here and there to limit the economic expansion of Huawei … to slow its business down, so the Americans can catch up,” Lui said.
Meng was arrested at Vancouver International Airport on December 1 as she changed planes, and has been detained since.
She appeared at a bail hearing at the Supreme Court of British Columbia, where a Canadian government lawyer said the US sought Meng on “fraud offences” involving US and European Union sanctions against Iran.
Lui believed the US wanted to start a tech war with China.
Lau said the uncertainties had already resulted in a drop in the number of US orders received by Hong Kong and mainland Chinese exporters in the first three months of next year.
“It’s pessimistic. It’s just about how much it will drop,” he said. “I estimate the figure will fall 25 per cent at least.”
Relief measures so far passed by officials would have a limited effect, he added.
The Hong Kong government should help local businesses make connections with customers in other countries, he said.