Compiling trade in goods and services statistics of Hong Kong

1. Compiling trade in goods and services statistics of Hong Kong using the change of ownership principle Group of Experts on National Accounts (6-9 May 2014, Geneva) Census and Statistics Department Hong Kong Special Administrative Region, China

2. Outline • Implementation work : Develop practical definition of outward processing trade that have no change in ownership • Benefit: • Obtain more data for understanding structural changes in outward processing trade and merchanting of Hong Kong • New trade data reflect more closely the trade situation of Hong Kong

3. Develop practical definition of outward processing trade that does not involve change of ownership • Challenge • Information on goods sent abroad for processing not available from custom records • Only part of outward processing trade with mainland China does not involve change of ownership • Need definition that is consistent with both international guidelines and current trade practices • Easily understood by traders • Solution • Make reference to the practical definitions of processing trade in Mainland China customs’ regulations

4. Develop practical definition of outward processing trade that does not involve change of ownership (cont’d) • Processing and assembling • Hong Kong traders provide all or part of the raw materials or parts • The imported materials and the finished products remain to be the property of Hong Kong traders • No transfer of ownership • Hong Kong traders are familiar with the definition

5. Understand better structural change of outward processing trade • Decline in share of outward processing trade with mainland China since late 1990s • Mainly due to decline in processing and assembling (P&A) arrangement Share of processing trade in Hong Kong’s imports from Mainland China Share of processed goods under P&A arrangement in Hong Kong’s import from Mainland China Share of processed goods with change of ownership in Hong Kong’s import from Mainland China

6. New data reflect more closely the trading activities of Hong Kong • The value of total exports of goods in 2013 compiled using the new principle was 3% higher than that compiled using the old principle. Exports of goods compiled using the old and new principles, 2013 Goods acquired under merchanting = US$ 478 billion Goods sold under merchanting = US$ 507 billion

7. New imports of goods reflect more closely the value of goods procured by Hong Kong traders • The value of total imports of goods compiled using the new principle in 2003 was smallerthan that using the old principle. Imports of goods compiled using the old and new principles, 2013

8. Hong Kong’s trade in goods balance generally reversed from deficit to surplus • The balance of trade in goods of Hong Kong generally reversed from deficit under the old standard to surplus under the new standard, except in 2011-2013. Balance of trade in goods compiled using the old and new principles

9. The new data show that manufacturing services take up a significant share of Hong Kong’s imports of services • Imports of services was 28% more than that compiled using the old principle in 2013. Imports of services compiled using the old and new principles, 2013 BPM6 / 2008 SNA BPM5 / 1993 SNA

10. For exports of services, travel services have become the largest component under the new standard • Exports of services was 23% less than that compiled using the old principle in 2013. Exports of services compiled using the old and new principles, 2013 BPM5 / 1993 SNA BPM6 / 2008 SNA

11. The balance of trade in services of Hong Kong generally reversed from surplus to deficit • The balance of trade in services of Hong Kong generally reversed from surplus to deficit, except in 2009-2013. Balance of trade in services compiled using the old and new principles

12. Concluding Remarks • Hong Kong has implemented the change of ownership principle in compiling trade in goods and services statistics • New data are collected, providing insights into outward processing trade and merchanting of Hong Kong • Future challenge : analysis of new trade in goods figures by trading partners and commodities

13. Thank You