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| Battle of the Giants. Biggest market vs Biggest exporter |
That's us in Hong Kong. The timid little mouse. Keeping our heads down and hoping for the best. As the two beasts, the US and China, go head-to-head in a renewed and rapidly worsening trade war. Where neither side is yet blinking. Where "trade war" may be not the best framing; which instead might be, from our side "the battle for fair trade".
The worst could be very bad for us. Trade grinding to a halt, fewer mainlander tourists, fewer mainlander investors, fewer foreign everything: from foreign investment to expats living here. In our personal case, that could impact income via rentals, and of course we're already majorly impacted by the US market plunges.
By the way, in recent years we've personally had quite a lot to do with mainlanders here in Hong Kong. A mainland family bought our yacht Xena, for cash. We have mainland tenants. In all cases our dealings have been straightforward and pleasant. They didn't haggle over the price of Xena, and paid promptly and in cash. We have some mainland tenants who do up the apartments, spend a lot of money, but don't bother to charge us. So, that's it for our business experience with them. All good.
But the other side of the coin is business within China. Where many, too many, foreigners have had bad experiences. Going way back to my time as a consultant on China business in the 1980s. From the blatant theft of Intellectual Property, to cancelling spoilable food imports when they near to port, to being banned from a wide range of activities in China that the US and the West allows China, to currency manipulation and dumping export products. The list is long.
American -- and sometimes others in the EU and Australia -- have complained about these practices, especially since China joined the WTO in 2001. Nothing meaningful has been done by China and there's been no penalty from the West.
So, now is penalty time.
But it's dangerous, there's no doubt about that. And we here in Hong Kong, a free-port since 1842, with a capitalist free market system, a convertible currency pegged to the $US, a legal system based on British common law, we are in the line of fire. Potentially from both sides, with the possibility of "friendly fire" ever present. The US could try to punish China by punishing us, for example, which has happened in the past. Not good.
We need to play a careful and canny game not to get trodden on by one or other of these battling beasts.
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| The Hong Kong mouse in a teacup, looking on anxiously at the tussling elephants |
- “How does Hong Kong fare during U.S. China trade war.” PKF Hong Kong
- “Impact of U.S. China trade war on Hong Kong”. EscapeArtist
