HK to loose trade if China's MFN is revoked

HK to loose trade if China's MFN is revoked

HONG KONG (AFP): Hong Kong may suffer direct economic losses
up to HK$234 billion (US$30 billion) if the United States fails
to renew China's most-favored-nation (MFN) trading status this
year, a government official said Saturday.

Trade and Industry Secretary Denise Yue said in a statement
that if MFN were not renewed to China, it could also cost some 23
to $34 billion in income, or around 61,000 to 89,000 jobs, in the
territory.

Hong Kong may see a reduction of 31% to 45%, $66 billion to
$96 billion dollars worth of re-exports from China to the United
States -- goods being transshipped through Hong Kong without
undergoing any physical changes.

Yue, who was to leave for Washington on Sunday to lobby U.S.
officials and Congressmen on the MFN renewal, said Hong Kong's
gross domestic product growth rate, which has been estimated to
reach 5% this year, might be curtailed by 2.1% to 3.0% points in
the case MFN is not renewed.

She expressed concerns that Hong Kong's role as a gateway to
China would be undermined, thereby affecting longer term growth
potential and business confidence in Hong Kong, which reverts to
Chinese rule on July 1, 1997.

"There would be a further loss in income and jobs if China cut
back on its imports from the United States as a result," Yue
said.

"Manufacturing investments and other production arrangements
by Hong Kong and foreign companies in China would also be
adversely affected."

On the outlook of MFN renewal this year, Yue said: "The
situation is more complex this year with the presidential and
congressional elections coming up. "

"The climate is also affected by overall Sino-U.S. relations,
but we shall argue strongly that the MFN issue should not be
linked with non-trade issues, " she said.

In July last year, Washington decided against revoking China's
MFN trading status, saying that trade should not be mixed with
non-trade issues. Debate on the issue is due to begin in March in
the U.S. Congress.

Several U.S. legislators have threatened to revoke China's MFN
status, notably after Chinese authorities detained Chinese-
American human rights activist Harry Wu and charged him with
espionage.