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This is better understood in the context of Hong Kong's trade relating to China. HK import volume 2018: USD $627 billion [1] HK export volume 2018: USD $568 b

by ww520 6y ago

This is better understood in the context of Hong Kong's trade relating to China. HK import volume 2018: USD $627 billion [1] HK export volume 2018: USD $568 billion [2] The top 2 imports are: (see [3]) 1. Electrical machinery, equipment: US$307.7 billion (53.2% of total imports) 2. Machinery including computers: US$66.4 billion (11.5%) HK has only 7 million people. There's no way it can consume that much import nor produce that much export, especially not consuming $307 billion worth of machine equipment. Hong Kong is China's 2nd top trading partner [4]; China is basically using Hong Kong as a trading proxy to evade sanction. Most of the imports are purchased by China because it cannot buy them legally and has to use HK's "autonomous" status to import. Most of the exports are routed by China to take advantage of its tax free zone status. Not to mention 70% of the foreign money going into China every year is via Hong Kong. Killing Hong Kong's "autonomous" status is the stupidest move done by China in the recent years. It allows the outside world to plug the last gateway into China. [1] https://www.tid.gov.hk/english/aboutus/publications/tradestat/wmtimp.html https://www.tid.gov.hk/english/aboutus/publications/tradesta... [2] https://www.tid.gov.hk/english/aboutus/publications/tradestat/wmtexp.html https://www.tid.gov.hk/english/aboutus/publications/tradesta... [3] http://www.worldstopexports.com/hong-kongs-top-10-imports/ http://www.worldstopexports.com/hong-kongs-top-10-imports/ [4] http://www.worldstopexports.com/chinas-top-import-partners/ http://www.worldstopexports.com/chinas-top-import-partners/

blackrock 6y ago
Plugging up the China gateway, also kills the billions of dollars in profits, that American companies make in China. Look it up. Qualcomm now makes over 60% of their revenue from China! Just in Intellectual Property royalties alone. Boeing, Coke, KFC, Microsoft, Apple, AMD, Intel, nVidia, Ford, GM, Starbucks, and on and on.. All American companies. These companies depend on China, to make the cream of their profits, so they can pump that back into new research, to keep their edge. Say goodbye to all those sweet juicy dollars.
- ww520 6y ago
  What these companies do are selling/shipping components to China for assembly and then re-export the final products, which make the biggest revenue and profit. It's relatively easy for these companies to shift the manufacture (assembly) to other countries to keep the same revenue and profit. An India or Vietnam assembled iPhone generates the same profit for Apple. Foreign companies have difficult time making profit in China due to protectionism. McDonald opened thousands of restaurants in China and had to sell their ownership to Chinese companies last year.
  - blackrock 6y ago
    This is not entirely correct. In the past, while exports from China, was important for foreign companies, the new situation, is that it is increasingly more profitable to sell within China. Something like, close to half of GM’s profit from auto sales, are to customers inside China. They charge normal worldwide prices for their cars, but the labor costs are a fraction of what it is in America. This is what GM risks losing, in an ever increasing trade war with China. For another example, Intel miscalculated during Obama’s reign, and lost out on billions in sales, because the U.S. wanted to restrict advanced CPU server chips to China. What happened instead? China designed their own CPU chips. iPhone assembly is really not that important, or profitable, to China anymore.
  - Obsnold 6y ago
    I think a lot of people underestimate how difficult it is to move manufacturing out of China. Manufacturing isn't all unskilled labour that can be moved to whatever the cheapest country is. There is a lot of expertise needed in modern manufacturing and these days China has most of the experts. I'm not saying it won't happen but it will be a more gradual shift over time than a sudden change.
    - blackrock 6y ago
      This is correct. And China isn’t really interested in low quality sweat-labor manufacturing anymore. This brings in very little added value, and it damages the environment. But these jobs keep the lesser educated people from the villages occupied, and it gives them a chance to get their children a formal education. Instead, they want massive robotic, automated, and mechanized manufacturing. Where a technician is standing by, and just watching the robots, for quality control. All those assembly line technicians at Foxconn can go to college and train to be a Computer Scientist or Engineer. Then in another 10 years, China will have a massive amount of computer programmers, engineers, and AI scientists.
sangnoir 6y ago
I don't believe China is currently under any trading sanctions - did you mean they are evading tariffs?
- ww520 6y ago
  Not sure it's sanctions or tariffs, just there're $307 billion worth of machine equipment per year they cannot buy directly.
  - sangnoir 6y ago
    Did you account for value addition? It may be HK is in the middle of electronics value chains that start and end outside of its borders - I imagine Singapore has a similar import/export numbers it makes a lot of hard disks (export) but doesn't make a lot of chips (import). This doesn't imply Singapore is a front for another country
    - ww520 6y ago
      There isn't much of electronic industry in Hong Kong since the 80's. https://en.wikipedia.org/wiki/Manufacturing_in_Hong_Kong https://en.wikipedia.org/wiki/Manufacturing_in_Hong_Kong
zachguo 6y ago
https://ustr.gov/countries-regions/china-mongolia-taiwan/hong-kong https://ustr.gov/countries-regions/china-mongolia-taiwan/hon... Trading volume with US is just a fraction, and US actually has a surplus. It's unlikely for US to change the status quo in HK which would hurt US companies more. > Most of the imports are purchased by China because it cannot buy them legally and has to use HK's "autonomous" status to import. This is simply groundless speculation without concrete data.

by ww520 6y ago

blackrock 6y ago

Plugging up the China gateway, also kills the billions of dollars in profits, that American companies make in China. Look it up. Qualcomm now makes over 60% of their revenue from China! Just in Intellectual Property royalties alone. Boeing, Coke, KFC, Microsoft, Apple, AMD, Intel, nVidia, Ford, GM, Starbucks, and on and on.. All American companies. These companies depend on China, to make the cream of their profits, so they can pump that back into new research, to keep their edge. Say goodbye to all those sweet juicy dollars.

ww520 6y ago
What these companies do are selling/shipping components to China for assembly and then re-export the final products, which make the biggest revenue and profit. It's relatively easy for these companies to shift the manufacture (assembly) to other countries to keep the same revenue and profit. An India or Vietnam assembled iPhone generates the same profit for Apple. Foreign companies have difficult time making profit in China due to protectionism. McDonald opened thousands of restaurants in China and had to sell their ownership to Chinese companies last year.
- blackrock 6y ago
  This is not entirely correct. In the past, while exports from China, was important for foreign companies, the new situation, is that it is increasingly more profitable to sell within China. Something like, close to half of GM’s profit from auto sales, are to customers inside China. They charge normal worldwide prices for their cars, but the labor costs are a fraction of what it is in America. This is what GM risks losing, in an ever increasing trade war with China. For another example, Intel miscalculated during Obama’s reign, and lost out on billions in sales, because the U.S. wanted to restrict advanced CPU server chips to China. What happened instead? China designed their own CPU chips. iPhone assembly is really not that important, or profitable, to China anymore.
- Obsnold 6y ago
  I think a lot of people underestimate how difficult it is to move manufacturing out of China. Manufacturing isn't all unskilled labour that can be moved to whatever the cheapest country is. There is a lot of expertise needed in modern manufacturing and these days China has most of the experts. I'm not saying it won't happen but it will be a more gradual shift over time than a sudden change.
  - blackrock 6y ago
    This is correct. And China isn’t really interested in low quality sweat-labor manufacturing anymore. This brings in very little added value, and it damages the environment. But these jobs keep the lesser educated people from the villages occupied, and it gives them a chance to get their children a formal education. Instead, they want massive robotic, automated, and mechanized manufacturing. Where a technician is standing by, and just watching the robots, for quality control. All those assembly line technicians at Foxconn can go to college and train to be a Computer Scientist or Engineer. Then in another 10 years, China will have a massive amount of computer programmers, engineers, and AI scientists.

sangnoir 6y ago

I don't believe China is currently under any trading sanctions - did you mean they are evading tariffs?

ww520 6y ago
Not sure it's sanctions or tariffs, just there're $307 billion worth of machine equipment per year they cannot buy directly.
- sangnoir 6y ago
  Did you account for value addition? It may be HK is in the middle of electronics value chains that start and end outside of its borders - I imagine Singapore has a similar import/export numbers it makes a lot of hard disks (export) but doesn't make a lot of chips (import). This doesn't imply Singapore is a front for another country
  - ww520 6y ago
    There isn't much of electronic industry in Hong Kong since the 80's. https://en.wikipedia.org/wiki/Manufacturing_in_Hong_Kong https://en.wikipedia.org/wiki/Manufacturing_in_Hong_Kong

zachguo 6y ago

https://ustr.gov/countries-regions/china-mongolia-taiwan/hong-kong https://ustr.gov/countries-regions/china-mongolia-taiwan/hon... Trading volume with US is just a fraction, and US actually has a surplus. It's unlikely for US to change the status quo in HK which would hurt US companies more. > Most of the imports are purchased by China because it cannot buy them legally and has to use HK's "autonomous" status to import. This is simply groundless speculation without concrete data.