Pivot to ASEAN and RCEP for trade hub growth?
Re-export and producer services
Hong Kong serves as a major re-export hub in East Asia, primarily facilitating cross-border intermediate product movement between the mainland and other Asian economies.
Re-exports have accounted for the largest chunk of Hong Kong's total mercantile goods export, from 82.8 percent in 1995 to 98.8 percent in 2020. The total value of re-exports ballooned from $143 billion in 1995 to $498 billion in 2020.
Hong Kong Census and Statistics Department data recorded that intermediate goods in Hong Kong's re-exports grew more than fourfold from $63 billion in 1995 to $282 billion in 2016, while its share of Hong Kong re-exports increased from 43.8 percent to 61.7 percent in the same period. Intermediate products, such as computers, electronic components, motherboards, and optical products, contributed the bulk of Hong Kong's re-exports.
In 2020, the mainland was the largest source and destination country for Hong Kong's re-exports. Hong Kong has become the world's largest offshore trade center. The US and the mainland contribute the bulk of offshore trade income. In 2019, that amounted to HK$298 billion ($38.27 billion), according to the Hong Kong Census and Statistics Department data.
The growth of re-exports cements the transformation of Hong Kong as a hub economy with robust producer services value-add. Hong Kong has a larger producer services segment than Singapore.
The city now is a center of downstream and mid-stage manufacturing-related producer services, in banking, trade finance, insurance, accounting, marketing, intellectual property trading, certification, legal dispute arbitration, product design, and research and development, to support the manufacturing bases that have been migrated to the mainland.
A Federation of Hong Kong Industries report showed the percentage of producer services in Hong Kong's GDP has continuously increased, from 28.7 percent in 1980 to 42.2 percent in 2019.
