Quotas reimposition may not impact clothing re-exports

23 Aug '05

3 min read

3 downside risks

Mr Leung cautioned there remains certain downside risks.

"High oil prices pose a problem for Hong Kong exporters, as consumer confidence and business investment will suffer. The input costs of Hong Kong exporters will also rise further, especially for plastic raw materials and other petrochemical products," he said.

"The recent revaluation of the yuan, which is expected to raise average prices of the Mainland's outward processing exports by 0.6% to 1%, will imply a modest loss in Hong Kong's export competitiveness. Yet there still exists foreign exchange risks for traders. Further appreciation in the future will have a greater impact on Hong Kong exports.

Protectionism in overseas markets adds another element of uncertainty. TheEU's re-imposition of quotas on Mainland garments, and safeguard measures taken by the US, will drag down Hong Kong's clothing re-exports, but the overall impact will be partly offset by a better showing of domestic exports under outward processing arrangement.

"After all, Hong Kong's re-exports of textiles and clothing of Mainland origin to the US and EU constitute just 4% of Hong Kong's total exports, and hence the impact of quota re-imposition on Hong Kong exports as a whole should be rather contained."

Government of Hong Kong