Building Stronger China-ASEAN Relations

China-Hong Kong-ASEAN Relations More Important Than Ever

Integral to China's vision of multilateralism in a multi-polar, open and inclusive world is a mutually beneficial and enduring partnership with the ASEAN.

Hong Kong is uniquely endowed to play a crucial role in China-ASEAN relations with its positioning as an international financial, trading and logistics centre, as well as its economic and cultural ties with both markets. Both economies have much to gain from engaging with each other via Hong Kong, capitalising on the city's professional services and financing platform. Hong Kong can provide a valuable third dimension to the growing interconnectivity in intra-Asian trade and economic integration.

In July 2023, Chief Executive John Lee led a delegation to three member states of the ASEAN, namely Singapore, Indonesia and Malaysia, to strengthen ties between Hong Kong and ASEAN nations. It proved a success with MOUs and agreements signed, covering a wide range of areas such as trade and commerce, investment and finance, innovation and technology as well as cultural exchange.

Under the "One Country, Two Systems" principle, Hong Kong can help ASEAN enterprises access the 86 million people in the Greater Bay Area market, while Hong Kong and Chinese companies can better engage with the vibrant ASEAN economy.

As of December 2021, some 84 ASEAN-headquartered or incorporated companies were listed on the Hong Kong Stock Exchange – the highest tally for a non-ASEAN stock market. Among these, 57 percent hail from Singapore, and 33 percent from Malaysia.

This closely-knitted relationship with Hong Kong has been growing. The ASEAN is Hong Kong's second largest trading partner, with total merchandise trade reaching 1.29 trillion HK dollars (about $165.4 billion) in 2022; meanwhile, Hong Kong is an important entrepôt for merchandise trade between the ASEAN and Chinese Mainland. Re-export trade between the two economies through Hong Kong amounted to 624.1 billion HK dollars in 2021, with an average of 7.4 percent annual growth rate in trade volume between 2017 and 2021- the year the ASEAN overtook the United States to become China's largest trading partner. Hong Kong remains the ASEAN community's critical partner in realising the far-reaching opportunities offered by the rapidly-growing Greater Bay Area.

Two new initiatives are particularly worth noting. The first is the Regional Comprehensive Economic Partnership (RCEP), the world's largest free trade agreement, which came into effect on 1 Jan, 2022, and which Hong Kong has applied to join. RCEP membership paves the way for Hong Kong and the ASEAN to advance further reductions in trade tariffs, and facilitates the harmonisation of legal standards as well as collaboration in new areas. The second is the ASEAN–Hong Kong, China Free Trade Agreement and its related Investment Agreement, which aims to reduce or eliminate customs duties on at least 80 percent of goods originating from Hong Kong.

These two trade pacts will accelerate closer regional economic integration across Asia, creating opportunities for Hong Kong to help ASEAN companies in setting up projects in Chinese Mainland and vice versa. Hong Kong can facilitate these two-way investment and funding flows by supplying funding and know-how.