Since #HongKong 🇭🇰 & relationship w/ the mainland 🇨🇳 is front page, thought it's topical to talk about trade as it's my favorite statistics to look at. We know that trade links b/n the 2 places are strong: Mainland China is HK's top export/import destination.

Let's look at it🤗

Fact sheet by the HK gov' 👇🏻:

a) Hong Kong is China's 2nd largest supplier of goods (China 🇨🇳➡️🇭🇰export to HK) & that was USD302bn in 2018;
b) China is also HK's biggest export market of USD289bn in 2018 (China import🇨🇳 ⬅️🇭🇰from HK).

So far, so good.

tid.gov.hk/english/aboutu…

But you know, as an economist, I love trade because Hong Kong's exports is China's imports of HK's goods & what China exports is Hong Kong imports of mainland's goods.

Okay, let's look at that trend over time 🧐 (I think some of you know where I am going w/ this😉)

Okay, let's first look at China shipment of goods to Hong Kong (this inversely is documented as Hong Kong imports from China) 👇🏻👇🏻

Meaning, China receives USD from HK (most trade invoiced in USD). Some discrepancy from 2012 to 2016 but trend is similar & no controversy here.

Now let's look at Hong Kong exports to China & (inversely this is recorded as China imports from Hong Kong) 👇🏻👇🏻👇🏻.

In other words, this is HK 🇭🇰receiving of USD 💵💰💸💲 from the mainland 🇨🇳

Okay, see something here that is different than the export figures? Yep, GAP IS WIDE!

Let me show you this spread, which has WIDENED OVER TIME. So, there are some usual explanations of this gap, which include:

a) Statistical discrepancy based on different account measures (but if that's so then why aren't there MAJOR differences for the other direction🤷🏻‍♀️🤷🏻‍♀️🤷🏻‍♀️)

b) Hong Kong-based mainland companies use trade-invoicing as a way to circumvent capital controls. I got plenty of questions regarding this.

1st, why doesn't it get invoiced as imports in China, as in why such a small amount & more importantly, why doesn't this get regulated?

Btw, this same phenomenon occurs with Singapore 🇸🇬 too but if you look at the amount of discrepancy vs Hong Kong then you can say that the relationship w/ China for Hong Kong is defo bigger 😉