That’s because the multi-billion dollar trade deficit represents international sales opportunities for exports to Hong Kong since the country is a net spender on a specific set of goods highlighted below.
Drilling down from its overall negative balance, Hong Kong performed worst in its international trade with partners from Asia incurring a -$63.7 billion shortfall. Exporters in Asia also profited at Hong Kong’s expense, accounting for a -$17.7 billion trade deficit at Hong Kong’s expense. African exporters also satisfied demand as shown by a -$1.9 billion Hong Kong deficit.
Country-specific trade deficits indicate Hong Kong’s competitive disadvantages and areas which foreign businesses can and do exploit. Hong Kong accumulated the world’s seventh-biggest trade deficit during 2014.
Hong Kong’s trade deficit in 2014 grew by 88.2% since 2010 when its negative balance totaled -$40.7 billion.
International Sales Opportunities for Exports to Hong Kong
Top 10
The following list shows the top 10 general product categories under which Hong Kong racked up the severest trade deficits during 2014.
- Electronic equipment: -US$21.7 billion (24.5% of all product deficits)
- Gems, precious metals: -$16.3 billion (18.5%)
- Mineral fuels including oil: -$14.9 billion (16.9%)
- Meat: -$5 billion (5.7%)
- Vehicles : -$3.2 billion (3.6%)
- Fish: -$2.3 billion (2.7%)
- Dairy, eggs, honey: -$2.1 billion (2.3%)
- Fruits, nuts: -$2 billion (2.3%)
- Perfumes, cosmetics: -$2 billion (2.2%)
- Beverages, spirits, vinegar:-$1.5 billion (1.7%)
The above top 10 product categories represent 80.4% of Hong Kong’s overall product-category deficit subtotal which amounted to -$88.2 billion. For that subtotal, 72 of Hong Kong’s 97 general product categories incurred deficits in 2014 while the remaining 25 categories delivered surplus amounts.
Growth
Hong Kong deepened its trade deficit amounts at the greatest-pace during 2010 to 2014 under the product categories below.
- Clocks , watches including parts: Up 3,784% since 2010 (-US$516.3 million)
- Zinc: Up 892.7% (-$25.6 million)
- Cork , articles of cork: Up 854.5% (-$315,000)
- Gems, precious metals: Up 761.5% (-$16.3 billion)
- Arms and ammunition: Up 430.4% (-$3 million)
- Railways, streetcars:Up 405.8% (-$143.4 million)
- Other textiles, worn clothing: Up 304.4% (-$63.3 million)
- Salt, sulphur, stone, cement: Up 190.7% (-$468.4 million)
- Fertilizers: Up 181.2% (-$6.7 million)
- Paper yarn, woven fabric: Up 163.3% (-$29.2 million)
Detail
From the perspective of the more detailed 4-digit harmonized tariff system (HTS) level, below are 15 products that pushed Hong Kong into the most costly deficits versus its international trade partners.
- Integrated circuits/microassemblies: -US$20.7 billion
- Processed petroleum oils: -$12 billion
- Jewelry: -$6.5 billion
- Diamonds (unmounted/unset): -$5.8 billion
- Computers, optical readers: -$5 billion
- Gold (unwrought): -$5 billion
- Solar power diodes/semi-conductors: -$2.7 billion
- Wrist/pocket watches (precious metal case): -$2.2 billion
- Unrecorded sound media: -$2 billion
- Platinum (unwrought): -$1.9 billion
- Frozen beef: -$1.9 billion
- Cars: -$1.8 billion
- Beauty/makeup/skin care preparations: -$1.5 billion
- Petroleum gases: -$1.5 billion
- Liquid crystal/laser/optical tools: -$1.4 billion
Among these, computer and optical readers had the fastest-growing Hong Kong deficit accelerating by 539.2% since 2010. In second place was frozen beef up 412% while negative net exports for jewelry appreciated by 265.8%.
Major Product Demand by Hong Kong’s Supplying Countries
Top 10
The following list presents trade partners with which Hong Kong racked up the highest trade deficits in 2014.
- Taiwan: -US$28.4 billion (18.7% of Hong Kong country-specific deficits)
- Singapore: -$26.8 billion (17.6%)
- Japan: -$21.8 billion (14.3%)
- Switzerland: -$19.5 billion (12.8%)
- South Korea: -$14.9 billion (9.8%)
- Malaysia: -$9.3 billion (6.1%)
- Thailand: -$4.6 billion (3%)
- Philippines: -$4.2 billion (2.8%)
- South Africa: -$4 billion (2.6%)
- Australia: -$3.9 billion (2.6%)
The above 10 trade partners represent 89.7% of Hong Kong’s subtotal deficit of -$37.3 billion from the 38 geographic entities with which Hong Kong demonstrated strong import demand. That subtotal excludes the 158 geographic entities with which Hong Kong earned trade surpluses.
Growth
Hong Kong grew its trade deficit amounts with the geographic entities below at the fastest-pace during 2010 to 2014, providing evidence of accelerating demand for exports from these international suppliers.
- South Africa: Up 1,916% since 2010 (-US$4 billion)
- Brazil: Up 1,128% (-$1.4 billion)
- Denmark: Up 486.2% (-$490.3 million)
- Italy: Up 344.7% (-$3.9 billion)
- Switzerland: Up 262.9% (-$19.5 billion)
- Guyana: Up 191.7% (-$15.6 million)
- Indonesia: Up 119.4% (-$482.2 million)
- Malta: Up 74.1% (-$382.9 million)
- Cuba: Up 63.2% (-$37.3 million)
- Iran: Up 54.6% (-$402.5 million)
From the above list, Hong Kong showed major product sales disadvantages versus this group of traders with comparatively small populations and for generally small deficit amounts. However, Hong Kong did generate billion-dollar negative trade balances with [African nations Kenya and Togo].
Taiwan
Below are the products that resulted in the greatest Hong Kong deficits in international trade with Taiwan.
- Integrated circuits/microassemblies: -US$20.7 billion (72.8% of Hong Kong’s deficit vs. Taiwan)
- Unrecorded sound media: -$1.3 billion (4.6%)
- Computer parts, accessories: -$1 billion (3.6%)
- Solar power diodes/semi-conductors: -$820 million (2.9%)
- Styrene polymers: -$739.3 million (2.6%)
- Phone system devices: -$661.9 million (2.3%)
- Processed petroleum oils: -$612.2 million (2.2%)
- Printed circuits: -$474.7 million (1.7%)
- TV/radio/radar device parts: -$473.7 million (1.7%)
- Electrical capacitators: -$287.6 million (1%)
TV, radio and radar device parts had the fastest-growing Hong Kong deficit with Taiwan accelerating by 47.4% from 2010 to 2014. In second place were Integrated circuits and microassemblies up 45.7% followed by electrical capacitators increasing by 43.6%.
Singapore
Below are the products that resulted in the greatest Hong Kong deficits in international trade with Singapore.
- Integrated circuits/microassemblies: -US$17.8 billion (66.2% of Hong Kong’s deficit vs. Singapore)
- Processed petroleum oils: -$3.2 billion (12%)
- Solar power diodes/semi-conductors: -$1.4 billion (5.3%)
- Gold (unwrought): -$735.5 million (2.7%)
- Computer parts, accessories: -$677.7 million (2.5%)
- Beauty/makeup/skin care preparations: -$384.1 million (1.4%)
- Computers, optical readers: -$353.1 million (1.3%)
- Printing machinery: -$276.1 million (1%)
- Phone system devices: -$245 million (0.9%)
- TV receiver/transmit/digital cameras: -$159.1 million (0.6%)
TV receivers, transmitters and digital cameras had the fastest-growing Hong Kong deficit with Singapore accelerating by 60.2% from 2010 to 2014. In second place was printing machinery up 29.9% followed by beauty, makeup and skin care preparations increasing by 29.8%.
Japan
Below are the products that resulted in the greatest Hong Kong deficits in international trade with Japan.
- Integrated circuits/microassemblies: US-$4.1 billion (19% of Hong Kong’s deficit vs. pan)
- Processed petroleum oils: -$2.7 billion (12.2%)
- Gold (unwrought): -$1.3 billion (6.2%)
- Solar power diodes/semi-conductors: -$1.2 billion (5.7%)
- Lower-voltage switches, fuses: -$1.2 billion (5.3%)
- Printing machinery: -$1 billion (4.7%)
- Electrical capacitators: -$983.2 million (4.5%)
- Cars: -$691.9 million (3.2%)
- Computer parts, accessories: -$662.9 million (3%)
- TV/radio/radar device parts: -$660 million (3%)
Among these, processed petroleum oils had the fastest-growing Hong Kong deficit with Japan accelerating by 50% from 2010 to 2014. In second place were cars up 1.5%.
Research Sources:
The World Factbook, Country Profiles, Central Intelligence Agency. Accessed on December 21, 2015
Trade Map, International Trade Centre. Accessed on December 21, 2015
Investopedia, Net Exports Definition. Accessed on December 21, 2015