The sharp drop in Chinese imports in December has only deepened concern over the health of the world’s second-largest economy. However, Hong Kong proved an unexpectedly bright spot as its exports to mainland China more than doubled to US$1.2bn in December. That was enough to outshine China’s imports from Brazil, whose soyabean industry has been a big beneficiary of the trade war between Washington and Beijing.
The third consecutive month of outperformance by Hong Kong’s exporters to a Chinese economy that is cooling, has raised questions as to what is going on. The sector breakdown of the December trade data is not yet available. But Elsa Lignos, head of currency strategy at RBC Capital Markets, noted that recent months have seen a sharp rise in Chinese imports of precious stones from Hong Kong.
In November, for example, precious stones — diamonds, sapphires, opals and the like — accounted for 53 per cent of China’s total imports from Hong Kong, up from a low of just 2.9 per cent last February. Yet at the same time, analysts at Jefferies noted that sales of jewellery, watches, clocks and valuable gifts were down 3.9 per cent in Hong Kong in November. That was led by “slower consumption of big-ticket gem-set jewellery” in a market where mainland customers account for about three-quarters of sales.