Commentary: US election influence to HK economy

Up to now (8/11/2020), the US presidential election doesn’t have a final projection yet. Democrat candidate Joe Biden won most of the swing states and more than 270 electoral votes. Republican candidate Donald Trump (the present president) doesn’t agree to lose and about to appeal to the Supreme Court. It is likely that another case after 2000 election between Bush and Gore will happen. Since the presidency of Trump in 2016, the US often shows cards to China. For instance, the trade war in 2018 and sanctions due to Hong Kong human right and democracy issue. The bilateral relation between the US and China hits bottom in decades. People in China as well as Hong Kong have certain expectation to the election. The pro-government camp hopes the Sino-US relation improve if Biden wins the election as of Clinton’s period. The pro-democracy camp hopes the US diplomacy continue if Trump succeeds.

Review: Legco election postponed, an economic storm for HK firms

US won’t change its China policy a lot

Nevertheless, the candidates are not the only factor in the situation. Though the US president is very powerful in military and politics, he or she is still under limitation by the entire political system. For instance, Trump’s surprising acts were often limited by the congress and judiciary. If Biden is after all the president, he has to face the challenge of Trump supporters which is about half of the population. He also needs to resolve home affairs such as epidemic and racial conflicts. Trump’s foreign policy is “America First” isolationism, and this was his key of success in 2016 election. Biden cannot get majority support if he turns the US back to the “global police” again.

Moreover, Trump’s hawkish China policy is the consensus of the two parties. For example, the Hong Kong Human Rights and Democracy Act passed almost unanimously in both the Senate and the House. We don’t believe that Biden will be friendly to China immediately and even cancel the measures against Hong Kong.

HK economy looks dim

In early time, we determine that the external economy of Hong Kong became unstable after the national security law in force. The government fund tends to be necessary welfare. No matter who the US president is, the Sino-US relation will not change immediately. In addition, the COVID-19 pandemic upsets global economy and we see no favour in China export. Chinese Yuan vs the Dollar hikes to record high in 2 years. We can interpret this in own way but the impact to China export must be significant. The only solution of China economy is the “internal economic circulation” proposed this year. That is the self-sufficiency from supply to demand. Hong Kong, as a Chinese special administrative region and an international financial centre, is very passive.

Further reading: Hong Kong is no longer a business-friendly place

Go China or ASEAN with BUD Fund

Fortunately, the prolonged BUD Fund with Mainland Programme and FTA Programme can support HK businesses to expand in mainland China and Free Trade Agreement regions (incl. ASEAN). We should manage the risk proactively by moving to China (resonating with government policy), or Southeast Asia which epidemic is under control. The economy of ASEAN grows fast in recent years especially in e-commerce (please refer to “Kuala Lumpur consumer behavior research“). BizMagnet consultancy provides BUD Fund consultation service, and welcome to requests.

Additional: TVP consultant: think carefully for application

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