Hong Kong's strategic role in supporting China's trade: Leveraging institutional, geographical, and service advantages

Editor's Note: Bruce Pang is an AsiaGlobal Fellow of Asia Global Institute at the University of Hong Kong. The article reflects the author's views, and not necessarily those of CGTN.

According to the latest data from China's General Administration of Customs, the total value of goods trade in Chinese mainland rose by 4 percent year on year in the first three quarters of 2025. Moreover, the pace of growth accelerated each quarter - up 1.3 percent, 4.5 percent, and 6 percent, respectively - underscoring the resilience of China's foreign trade and the continued optimization of its trade structure.

By destination, exports maintained the trend of "strong performance in Europe, weakness in the US, and robust growth in other markets" in September. Under the pressure of US tariffs, mainland exports to the United States fell by 27.0 percent year on year in September, a decline similar to August's and remaining at low levels, dragging overall export growth down by 4.2 percentage points. In contrast, the Eurozone's manufacturing PMI averaged 49.0 in the first three quarters - higher than the 2024 average of 45.9 - signaling an economic rebound and manufacturing recovery that helped boost imports. As a result, mainland exports to the EU rose by 14.2 percent in September, up 3.8 percentage points from the previous month, contributing 2.0 percentage points to overall export growth.

Meanwhile, China's exports to emerging markets such as Africa and the Middle East - benefiting from the Belt and Road Initiative - continued to expand. In September, exports to Africa surged by 56.4 percent, a sharp rebound of 30.6 percentage points, making it the single largest contributor to monthly export growth (2.7 percentage points). Exports to ASEAN and other emerging markets also remained strong, growing by 15.6 percent and 16.7 percent, respectively, contributing 2.4 and 1.7 percentage points.

Notably, trade between Chinese mainland and Hong Kong reached $261.56 billion in the first three quarters of 2025. Imports from Hong Kong to the mainland soared by 86.6 percent year on year, far exceeding the growth rates of 12.4 percent and 35.8 percent recorded in Q3 and full-year 2024. Exports from the mainland to Hong Kong also rose by 12.6 percent, outperforming last year's Q3 and annual growth rates of 9.8 percent and 6.2 percent. Amid growing global trade complexity and rising geopolitical risks, this robust performance highlights Hong Kong's unique strategic value.

Reflecting this momentum, the Hong Kong Trade Development Council's Export Confidence Index for Q3 2025 showed both the current and expected indices climbing above the critical 50-point threshold, marking a record high since the index's revision. Local exporters remain optimistic about prospects in the Chinese mainland and ASEAN, with 64 percent expecting net profit margins to improve or remain stable.

In my view, Hong Kong plays an indispensable "accelerator" role in China's import ecosystem. Firstly, as a free port, Hong Kong offers a highly market-oriented business environment, a sophisticated financial system, and an efficient logistics hub - making it a vital channel for mainland firms to access high-value-added products, technical equipment, and intermediate goods. Secondly, Hong Kong's strength in re-export trade is equally significant. According to the Trade and Industry Department, Hong Kong's re-exports to the mainland grew by 16.6 percent year on year in the first eight months of 2025, outpacing the 15.9 percent growth recorded in 2024. This underscores Hong Kong's growing role as a conduit for global goods flowing into the mainland. Certain high-end products can enter the mainland via Hong Kong, bypassing trade barriers or tariff restrictions, thereby improving import efficiency and flexibility.

Additionally, the acceleration of RMB internationalization has prompted mainland enterprises to conduct cross-border settlements and procurement through Hong Kong. As the world's largest offshore RMB center, Hong Kong offers convenient financial instruments and risk management tools that help firms navigate exchange rate volatility and international payment challenges - enhancing the effectiveness of import operations.

Hong Kong's role as a "launchpad" for mainland exports has also been reinforced. It serves as a springboard for mainland products entering global markets, thanks to its international shipping network, free trade policies, and trade agreements with major economies. Moreover, Hong Kong offers unique advantages in brand building and market promotion. Many mainland companies establish distribution centers, showcase platforms, or participate in local trade fairs to enhance their international image and market acceptance. This is especially valuable in sectors such as premium consumer goods, electronics, and green technologies, where Hong Kong's market feedback and consumer preference data provide strategic insights. Furthermore, Hong Kong's financial services ecosystem supports mainland exporters with financing and risk management tools, helping them better manage order fluctuations and extended payment cycles - ultimately improving export stability.

China's foreign trade diversification continues to advance steadily. In the first three quarters, trade with Belt and Road partner countries grew by 6.2 percent year on year, accounting for 51.7 percent of the total trade and up 1.1 percentage points year on year. Trade with ASEAN, Latin America, Africa, and Central Asia rose by 9.6 percent, 3.9 percent, 19.5 percent, and 16.7 percent, respectively. China is now among the top three trading partners for 166 countries and regions. However, the global trade landscape remains fraught with challenges, including rising unilateralism and protectionism, frequent geopolitical conflicts, accelerated restructuring of supply and value chains, and the rapid push toward green transformation.

Looking ahead, Hong Kong's institutional strengths, strategic location, and service capabilities position it as a powerful enabler of China's import and export development. Future efforts could focus on deepening coordination within the Guangdong-Hong Kong-Macao Greater Bay Area, enhancing cross-border e-commerce platforms, and strengthening green trade cooperation, providing stable support and innovative momentum for China's foreign trade.