Who is most affected by the change from "Made in Hong Kong" to "Made in China"?

Interview : Chang Chun  / Editor : Shang Yan / Publisher : New Tang Dynasty Television

Ref : https://www.ntdtv.com/gb/2020/08/12/a102916819.html  

Translation, editing : Gan Yung Chyan, KUCINTA SETIA

Image : Camel vacuum flasks are made in Hong Kong. From 25 September 2020, Hong Kong-manufactured goods must indicate the "Made in China" label only.

The United States has begun to implement the policy of canceling Hong Kong's preferential trade status. According to the new regulations announced by the U.S. Customs, from September 25, Hong Kong-made goods imported into the United States must be marked as "Made in China." Critics believe that Hong Kong has always been a gateway to China's re-export trade, so the US Customs move actually affected mainland companies the most.

The US Customs Administration issued an announcement on August 11, stating that "45 days after the announcement," that is, starting from September 25, products made in Hong Kong must be labeled as "China" and no longer labeled "Made in Hong Kong".

This measure is concretely implementing the new US policy towards Hong Kong. After the CCP forcibly implemented the "Hong Kong version of the National Security Law" in Hong Kong, the US government clearly stated that Hong Kong "no longer has sufficient autonomy and no longer has any reason" to continue to enjoy "differential treatment" different from China. US President Trump signed the "Hong Kong Autonomy Act" on July 14 to hold the CCP responsible for its actions to suppress Hong Kong people. He also signed the "Hong Kong Normalization Executive Order" to end Hong Kong's status as an independent customs territory.

After the "Made in Hong Kong" will be changed to "Made in China", the goods produced in Hong Kong in the future may also be subject to the same tariffs imposed by the U.S. on mainland China. But Tang Jingyuan, a commentator on current affairs in the United States, analyzed that the actual impact of this measure is not Hong Kong's local product exports, but the mainland's re-export trade.

Tang Jingyuan, a commentator on current affairs in the United States, said, "Because Hong Kong has been a transit point for mainland products exported to the United States for many years, that is, this kind of re-export trade. Mainland products account for more than 80% of Hong Kong’s entire re-export trade. The amount reaches hundreds of billions of dollars. So once this regulation is implemented, all these commodities will be subject to the same high tariffs as those on the mainland."

Currently, only 1% of Hong Kong’s exports are locally manufactured. In 2019, Hong Kong’s local exports to the United States amounted to US$471 million, accounting for only 0.1% of Hong Kong’s total exports including re-exports.

Li Hengqing, an auditor of the Washington Pension Fund, analyzed that after the label was changed to "Made in China", these mainland companies that used Hong Kong to avoid taxation not only lost profits, but also threatened their product supply chains.

Li Hengqing said, "Many of the mainland products are listed in Hong Kong and through Hong Kong, they are exported to the rest of the world. They can avoid the high tariffs imposed on mainland Chinese products. If the label is changed to "Made in China", in fact, all the profits are taken away. This is the first and second. The cost of exporting to Western countries, especially the United States, is high, so these countries will not buy from you (Hong Kong). Soon, your (Hong Kong's) product supply chain will be broken."

A Hong Kong government spokesperson strongly opposed this on 11 August 2020, claiming that the Hong Kong Special Administrative Region enjoys the unique status of a separate customs territory under "one country, two systems" and has been recognized by multilateral organizations such as the WTO. "It is not granted or revoked by individual countries."

Tang Jingyuan pointed out that the Hong Kong government's argument is a kind of sophistry because Hong Kong's unique status is predicated.

Tang Jingyuan, a current affairs commentator in the United States, stressed, "The premise is that Hong Kong is truly implementing a one country, two systems, and truly retaining a high degree of autonomy. However, Hong Kong is now essentially fully controlled by the CCP. So the so-called one country, two systems in Hong Kong has long since become an empty shelf. In other words, whether the WTO or multilateral organizations, they recognized the premise of Hong Kong's independent tariff status has basically disappeared."

The Hong Kong government also claimed that the US move would not help protect the interests of consumers but Li Hengqing said it may not be the case.

Li Hengqing said, "Because the tariff will be imposed immediately after the tariff is imposed, consumers will have to pay 25% to 35% of the cost to buy your goods. In this case, consumers will definitely vote with their feet. Most consumers You won’t buy your goods anymore. Everyone will buy goods produced in countries like Indonesia, Malaysia, and Southeast Asia, instead of all these goods exported from Hong Kong.”

Li Hengqing said that if Hong Kong wants to restore its original status, it can only abolish the "Hong Kong version of the National Security Law" that led to one country, one system, abide by the Sino-British Joint Declaration, and return to the state of freedom and rule of law. But if the CCP fails to keep its promises, Hong Kong's economy cannot recover.