Compare the Impacts of the US-China Trade War on the Economies of Singapore and Hong Kong

The US-China Trade War effects are surfacing. Mainland China just released its latest data on imports and exports for the 1st half of 2019. Exports to the US contracted by -8.1%, in comparison with +13.5% rise in the first half of 2018. Worse still, imports from the US dropped by about -30%! It is not merely the consequence of the trade war but a slowdown globally. China’s overall imports also dropped by -4.3% during the same period (cf +19.9% rise last year), indicating that Chinese are not simply switching to buy from other countries. (Chan, 2019)

The impacts of the Trade War have already spilled-over to Singapore and Hong Kong. Both the GDP growths and Exports yoy of Singapore and Hong Kong have been severely impacted by the US-China Trade War and the global slowdown, as both are heavily reliant on trade. Singapore is even said to be the bellwether for the rest of Asia. (Jamrisko, 2019)

Let’s take a look about the GDP growth rates first. Figures 1 and 2 show the GDP annual growth rates of the 2 economies, and they show a very similar continuous reducing trend in recent 4 quarters. Singapore’s and Hong Kong’s GDP annual growth rates have both been decreasing from 4.6% in 2018Q1 to 0.1% in Singapore and 0.6% in Hong Kong in 2019Q2.

Figure 1 The Annual Growth Rate of GDP of Singapore. Source: Trading Economics
Figure 2 The Annual Growth Rate of GDP of Hong Kong. Source: Trading Economics

They reflect a 4.0 — 4.5% reduction in GDP annual growth rate in the past one year. In fact, take Hong Kong as an example, the latest +0.6% growth rate is dominantly by a very strong increase (+4.5% yoy) in government consumption expenditures, it implies that other economic sectors are facing severe blows.

Since both the two economies are heavily reliant on trade, the US-China trade war and the global slowdown have already dragged the yoy change of goods imports and exports in recent months into negative zones in the two economies.

Here I only show the figures of the exports for a simple comparison purpose. Figures 3 and 4 show the Exports YoY of Singapore and Hong Kong from July 2013 to June 2019. Singapore’s exports have dropped continuously for 4 months, whereas Hong Kong’s exports have dropped continuously for 8 months. The depths of the drowns are also compatible. Singapore’s deepest drop in exports yoy was -17.3% in June 2019, whereas Hong Kong’s was -9% in June 2019. In other words, the Singapore’s exports plummet is faster and deeper, the Hong Kong’s is slower but longer.

Figure 3 Singapore Non-Oil Domestic Exports YoY. Source: Jamrisko (2019)
Figure 4 Hong Kong ‘s Total Exports YoY. Source: Census and Statistics Department, HKSAR Government. Source: CSD (2019)

The Hong Kong situation is quite similar to 2016, due to the slowdown of China’s economy. However, Singapore’s situation is unseen since the Global Financial Crisis of 2008. The annual growth rates of GDP of Singapore have been steady at about 2–4% in the past 10 years as shown in Figure 5. Would it be an indication of a coming recession in the region may take some more time to reveal.

Figure 5 The Annual Growth Rate of GDP of Singapore 2009–2019. Source: Trading Economics

I guess the reason is that Singapore’s manufacturing industry is accounting for a higher proportion of the GDP, and the trade war — global slowdown affects the manufacturing sector more than the services sector. Figure 3 shows the PMI and the PMI for Electronics, both are now below the 50, indicating a contracting phase. The PMIs are similar to the 2016 situation though, the GDP performance seems to be quite different this time. Are the PMIs over-estimated or there are some other reasons for the impacts on GDP?


Chan, E. (2019) China’s weak exports in first half of 2019 are also bad news for its major trading partners, SCMP, July 26.

CSD (2019) Table 055 : External Merchandise Trade Aggregate Figures, Census and Statistics Department, HKSAR Government.

Jamrisko, M. (2019) Trade War Spurs Recession Risk in Singapore, Bloomberg, July 24.