Peru is over 18,200 kilometers away from Hong Kong, and it takes nearly 24 hours to fly to Lima, the capital of Peru. That Chief Executive John Lee Ka-chiu has traveled such a long distance to visit the country suggests there are benefits to be gained from a closer bilateral relationship. Indeed, for an outward-oriented economy like Hong Kong, having an additional overseas market is always a good thing. Peru is not a completely unfamiliar country to the Hong Kong business community; last year, Peru was Hong Kong’s fifth-largest trading partner in Latin America, with bilateral trade totaling HK$5.2 billion ($668 million). During the chief executive’s visit to Peru, the Hong Kong Special Administrative Region government signed a free trade agreement with the Peruvian government. Once it takes effect, most Hong Kong exports to Peru will be exempt from tariffs, which will undoubtedly enhance the attractiveness and competitiveness of Hong Kong goods there.
The significance of this free trade agreement cannot be overstated. It marks a strategic move for Hong Kong, opening up new avenues for trade and collaboration with South American countries. The elimination of tariffs on Hong Kong products will provide a substantial boost to local manufacturers and exporters, enabling them to penetrate the Peruvian market more effectively. The signing of a free trade pact with Peru aligns with Hong Kong’s broader strategy to diversify its trade partnerships and reduce dependence on traditional markets.
While the media extensively reported on this agreement, they barely mentioned another important piece of news. President Xi Jinping, who also attended the APEC meetings in Peru, participated via video in the opening ceremony of the Chancay Port in Peru. Once operational, Chancay Port will become the largest deep-water port on the western coast of South America. Currently, container ships that cannot dock at other South American ports can dock at Chancay, and with this new port, the transportation time between China and this region can be reduced significantly.
Shipping industry experts estimate that the Chancay Port project will disrupt the current shipping model and may change the global trade landscape in years to come. This development has significant implications for Hong Kong’s shipping industry, which has been facing challenges in recent years. The news about Hong Kong dropping out of the global top 10 port rankings highlights the urgent need for the city to adapt and explore new trade opportunities. The rise of Chancay Port may bring new opportunities for Hong Kong’s shipping industry, potentially revitalizing it by providing new trade routes and reducing shipping costs. This could lead to increased shipping activity in Hong Kong, boosting the local economy and creating more job opportunities.
The future of Hong Kong’s economy depends on its ability to adapt, innovate, and seize new opportunities in an ever-changing world. By embracing these developments, Hong Kong can continue to thrive and maintain its status as a leading global trade and shipping hub
The importance of Chancay Port extends beyond mere logistics. It represents a strategic investment by China in enhancing its connectivity with South America. The country attaches great importance to the Chancay Port project, with Chinese banks providing loans worth nearly $1 billion. This financial commitment underscores the project’s significance in China’s Belt and Road Initiative. The upgraded version 2.0 of the BRI aims to cover a wider region, and Chancay Port occupies an important position in this initiative. By integrating Chancay Port into the Belt and Road framework, China is reinforcing its commitment to fostering global trade and economic development.
Both China and Peru have grand visions for Chancay Port. The Chinese ambassador to Peru, Song Yang, said that Chancay Port has the potential to become the “Shanghai of South America”, while Raul Perez Reyes, Peru’s minister of transport and communications, said that his country’s goal is to make Chancay the “Singapore of South America”. These ambitious statements reflect the strategic importance of the port in facilitating trade and fostering economic growth in the region. The port’s development is expected to attract significant foreign investment, create jobs, and boost local industries.
For Hong Kong, the Chancay Port project presents a unique opportunity to strengthen its position as a global shipping hub. By leveraging the enhanced connectivity provided by Chancay Port, Hong Kong can tap into new trade routes and expand its influence in the South American market. This requires strategic planning and collaboration between the government and industry stakeholders. Hong Kong’s maritime industry must adapt to the changing landscape by investing in technology, improving infrastructure, and enhancing efficiency to remain competitive in the global market.
In conclusion, the free trade agreement with Peru and the development of Chancay Port represent significant milestones for Hong Kong’s trade and shipping sectors. These initiatives offer new opportunities for growth, diversification, and increased competitiveness. The government and industry must work together to capitalize on these opportunities, ensuring that Hong Kong remains a key player in the global trade landscape. The future of Hong Kong’s economy depends on its ability to adapt, innovate, and seize new opportunities in an ever-changing world. By embracing these developments, Hong Kong can continue to thrive and maintain its status as a leading global trade and shipping hub.
The author is a specialist in radiology, master of public health of the University of Hong Kong, and an adviser to the Our Hong Kong Foundation
The views do not necessarily reflect those of China Daily.
