In this undated photo, containers are stacked on the shoreline at Kwai Chung container port in Hong Kong. (PHOTO / XINHUA)
Exports to Hong Kong from the Chinese mainland’s small and medium-sized enterprises are expected to improve in August despite a weaker performance in the first seven months of the year, compared with the same period last year, according to a report by Chinese cross-border payment operator XTransfer.
The Chinese Mainland SMEs: Exports to Hong Kong Leading Indicator, released on Monday, showed that exports from smaller businesses on the mainland to Hong Kong are on a “steady and rising trend”. The indicator is projected to reach 70.53 in August, up from 70.46 in July.
The overall performance of exports in the first seven months was bleaker than that of the same period last year, with only the February index higher than the figure for February a year earlier.
But the index has been on an upward trajectory since April, growing from 68.58 to 70.46 in July.
The shrinking demand from overseas markets due to economic slowdown, especially in the United States and Europe, has dampened mainland exports to Hong Kong. Moreover, as the two markets have accumulated a high inventory, they need to reduce stocks and this also discourages them from importing goods.
Bill Deng, founder and chief executive officer of cross-border payment operator XTransfer
In business-to-business international trade, data on payment collections often precedes customs and logistics data, as buyers normally make advance payments before the goods are shipped to them. Therefore, cross-border payment collections are a measurement of the exports outlook in the coming one to three months.
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“Since Hong Kong and the Chinese mainland resumed normal cross-border travel early this year, tourism, catering and other services sectors have seen remarkable improvement. However, the manufacturing sector has shown a different picture,” said Bill Deng, founder and chief executive officer of XTransfer.
“The shrinking demand from overseas markets due to economic slowdown, especially in the United States and Europe, has dampened mainland exports to Hong Kong. Moreover, as the two markets have accumulated a high inventory, they need to reduce stocks and this also discourages them from importing goods.”
Among mainland provinces, SMEs in Guangdong were the most active in trading with Hong Kong in the first seven months, with 72.9 percent of the total payment collections coming to exporters in the province, according to the firm. That was followed by eastern Zhejiang province and Fujian province, at 5.5 percent and 4.1 percent respectively.
Tianjin municipality recorded a significant growth in exports to Hong Kong, with a 32.3 percent increase in payment collections compared to the same period a year earlier.
Mechanical appliances and parts, base metals and their products, and textile raw materials and textile products are the three categories that mainland SMEs export the most of to Hong Kong.
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Hong Kong’s exports continued to drop due to sluggish external demand. According to official statistics, the city’s total exports of goods fell by 15.3 percent year-on-year in the second quarter, following a decrease of 18.9 percent between January to March.
