Changes in the legislation of the PRC should limit the autonomy of Hong Kong, and therefore experts expect that this administrative region of China will lose its privileges in terms of the supply of electronic components to the so-called “mainland” China. Until the changes took effect, trade in this area has grown significantly.
Bloomberg shared its observations on this matter. Chinese importers have increased their purchases of microprocessor components from abroad through Hong Kong, fearing the imminent introduction of a new stage of US sanctions. In the first half of the year, re-exports of semiconductor products through Hong Kong increased by 11%. In June, re-export volumes grew by 21%. In total, 38% of imported semiconductor components are imported to the PRC through Hong Kong.
Prior to China’s new national security law, which strengthens the influence of the central government in Hong Kong, the administrative region enjoyed privileges in customs clearance of goods the US government is trying to restrict exports to China. Now Chinese consumers of overseas electronic components are trying to buy for future use before restrictions cut off this supply channel.
The local logistics system will also suffer if the US deprives Hong Kong of its existing benefits. Warehouse areas will be empty, product supply routes will have to be rebuilt, and this will inevitably negatively affect customer costs. Some Hong Kong-based companies are already planning to open sales offices in Vietnam, India or Cambodia to continue working with Chinese customers, the source said.
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