Hong Kong, China had eight free trade agreements with 20 economies as of June 2023.
As part of the contextual environment, while macroeconomic challenges globally and in China continued to impact Hong Kong’s economy, the third quarter of 2023 also saw the announcement of several Hong Kong government initiatives that are expected to provide a significant boost to the local economy, including the inward capital investment plan.
In 1997, Britain handed over control of Hong Kong to the mainland Chinese government.
Since then, Hong Kong has been governed by a semi-constitution known as the Basic Law, which guarantees a high degree of autonomy in certain matters until 2047, while defense and foreign affairs are the responsibility of the central government in Beijing.
Three of the free trade agreements and two subsidiary agreements under the Agreement to Establish a Closer Economic Partnership entered into force during the past five years, according to World Trade Organization (WTO) data.
Hong Kong has significant trade surpluses with the major neighboring economies with which it has FTAs, China and Macau, China, but significant deficits with partners in the Association of Southeast Asian Nations (ASEAN) and the European Free Trade Association (EFTA).
Free trade agreements
Together, its 20 FTA partners accounted for 61% of Hong Kong’s total merchandise imports and 69% of its exports in 2022, demonstrating the importance of these partners, which account for the bulk of Hong Kong’s trade.
These economies are China, New Zealand, Chile, Macau, Georgia, Australia, and the EFTA and ASEAN members.
In addition to these new agreements and ancillary agreements, amendments were also made to the free trade agreement with Chile, whereby the parties improved their respective services commitments.
Looking ahead, Hong Kong continues to pursue FTAs through the conclusion of new agreements and by seeking accession to other FTA networks with its trading partners.
In this regard, Hong Kong, China entered into negotiations with Peru in January 2023 with a view to achieving a comprehensive and quality FTA.
According to the WTO, the negotiations are expected to cover a wide range of trade and related issues, including trade in goods, services, investment, e-commerce, government procurement, intellectual property and competition.
Hong Kong is actively seeking to join the Regional Comprehensive Economic Partnership (RCEP) soon, with the aim of opening up new markets and taking advantage of the potential to boost integration and trade with the 15 RCEP economies, which account for a substantial portion of Hong Kong’s trade.
Once the RCEP came into force, Hong Kong submitted its application for membership in January 2022.