The comments from Heiwai Tang, Associate Dean of HKU Business School, follow US President Donald Trump’s announcement on Monday of a 25 percent tariff on any country that continues trade with Iran, a list that includes China.
According to Tang, the world has grown accustomed to US tariff measures.
“You look around the world, there are three countries within BRICS that are now subject to the so-called reciprocal tariffs from the US, around 50 percent imposed on India, Brazil and China,” he said.
“But if you look at exports from India and Brazil to the US, a lot of the goods are actually exempted from that high level of tariffs because of whatever reasons, like health, emergency, or strategic considerations.”
Tang emphasised that exemptions are common and that businesses have built resilience.
“After almost seven years of Trump 1.0 trade war, supply chains indeed have become more diversified and to some extent more resilient, so the adjustability of those supply chains has increased,” he said.
Tang’s analysis extended to China’s recent record trade data, which showed total import and export value reaching 45.47 trillion yuan last year, a 3.8 percent annual increase.
He linked this growth to the geographical expansion of Chinese firms into overseas production.
“They have to export a lot of intermediate inputs to those locations,” he said, which boosts export figures as final goods are often destined for large markets like the US.
However, he cautioned that increased trade volume does not automatically translate into greater economic benefit.
“At the end, when we think about GDP, it’s a concept of summation of value added, not summation of growth value. So the actual positive impact on China’s growth, if you ask me, is uncertain,” he said.
Shifting focus to Hong Kong’s domestic finances ahead of next month’s budget address, Tang predicted a continuation of increased revenue from stamp duties and potential land sales.
On addressing the city’s fiscal deficit, he highlighted the government’s use of technology to curb expenditure.
“The use of technologies will reduce the demand for new junior staff and also improve the government efficiency. So that will all help the government to reduce their cost in the near future,” he said.
He also acknowledged persistent structural challenges like an ageing population, which increases demand for public healthcare.
The key question, Tang added, is “given the increasing demand, how we can deliver things at a low cost”, suggesting that technology and process reorganisation could be vital for maintaining quality while controlling expenses.
