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To gauge next year's export growth of Hong Kong, count the visitors en masse to trade fairs held in the latter half of 2003. For sure, the critical mass of buyers jamming these fairs has been a positive sign of an export rebound to Hong Kong manufacturers and exporters engaging in toys, consumer electronics, imitation jewellery, travel goods, handbags, artificial flowers, as well as watches and clocks.

"While the Sars had come to an end, European and American buyers have returned to Hong Kong to restock for a more buoyant consumer market in 2004," keynoted Kenfair's chairman, Mr Herbert Ip, at the opening of Kenfair's Hong Kong October Mega Show 2003. Or to say, trade fairs that many small and medium-sized enterprises (SMEs) bank on to run exports business can be deemed as one of the indicators to project export growth, at least to some extent.

Some people may like to believe more in figures, the scientific ones. No problem - the export figures recorded in the first three quarters of 2003 have been proved consistent with the upbeat sentiments. The Census and Statistics Department of Hong Kong in late November last year has released the export figures for the third quarter, marking the better-than-expected 9.8% growth. At a closer look, exports quickened to 9.4% from 6.4% in September, which continued to be fuelled by re-exports of mainly consumer products, a category increased by 10.7% comparing to that in the same session in 2002.

During the Sars epidemic, academics, the government and various financial institutions have pared down their economic forecasts for the remaining quarters and the year 2004. But as time went by, the manufacturing and exports sector surprisingly was not hurt much by the disease outbreak. "Indeed the toy industry has stayed safe and sound during and after the outbreak," Mr Samson Chan, chairman of the Hong Kong Toys Council, told MegAsia, "I remain optimistic for a steady growth of toys export in 2004."

Now all sides have readjusted their previous forecasts once again. The government, academics and regional banks have successively announced modified figures, ranging from 10% to 12.5% for 2004. Why could they suddenly have such sanguine expectation? It is because there came a good news from the Census and Statistics Department. Accordingly, the increment of growth during the first ten months 2003 was at 12.8%. Within the total, the value of re-exports surged by 14.7% though the value of domestic exports shrank by 9.1%.

Although sales to the US remained weak, the retardation was compensated by robust regional trade to China, Taiwan and Thailand. "Hong Kong exports will continue to benefit from the weak (US) dollar, and will be picking up during the last quarter of 2003 and gain further momentum in 2004 when the world economy is expected to recover at a faster pace," Mr Edward Leung, chief economist at the Trade Development Council of Hong Kong (TDC) predicted recently.

In November 2003, the US government threatened to wage a trade war against some China-made products, particularly TV sets, furniture and textiles. But on the China side, central officials reiterated that the nation had no intention to launch such a war and preferred peaceful negotiations. Li & Fung also said it would not be curbed by such possible Sino-US trade war. The biggest trader for consumer products in Hong Kong said the war was unlikely to take place, and even anti-dumping tariffs were imposed, it would turn to other Asian countries to do sourcing such as for furniture.

Similarly, a decision by the European Union (EU) to halve the tariff concession for several categories of mainland products under its Generalised System of Preferences Scheme, effective November 1, 2003, could hurt Hong Kong.

Nonetheless, on long-term views, economists widely believe that Hong Kong is to benefit from a number of favourable factors. First, Hong Kong is to benefit from China's WTO accession. Since more than half of China's exports pass through Hong Kong, liberalised trading rules for China will ultimately benefit the territory.

Second, Hong Kong is well-positioned to gain from the Closer Economic Partnership Arrangement (Cepa) signed with the mainland authorities in June 2003. Under the new pact, 273 tariff classes of goods can enter some Chinese regions at zero import tariffs beginning January 1, 2004. These products include electrical and electronic products, plastic and paper articles, textiles and clothing, chemical products, pharmaceuticals, clocks and watches, jewellery, cosmetics and metal products. Zero tariffs will apply to all other goods by the year 2006.

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