HONG KONG: Hong Kong's merchandise exports are expected to increase by 5 percent in 2010 over this year, thanks to stronger demands for electronic products, according to the Hong Kong Trade Development Council (HKTDC).

The TDC also reported that its export index has returned to expansion territory - any number higher than 50 means an increase in exports. The index for the fourth quarter of 2009 is 53.

"Higher demandfor electronics components will boost Hong Kong's exports, since electronics account for more than half of the city's exports," said Edward Leung, TDC chief economist, at a briefing yesterday.

Leung said exporters are taking an optimistic stance toward 2010, as electronic component orders have rebounded from a year-on-year decline of 30 percent in January 2009 to an increase of 20 percent in October 2009.

The higher demand is due to the quicker pace of computer upgrades in the consumer market, brisk sales and new product models in the mobile phone market. The demand has also shifted to low-priced and energy-efficient models.

"People are thinking twice before they spend money. They are going back to the basics. They also prefer stylish, safe and environmental friendly products. As people dine out and travel less, many are finding comfort at home. Thus domestic appliances are expected to be a strong market," said Leung.

Among Hong Kong's traditional markets, Leung said the pace of the recovery in the USA and Europe lags behind China's. Although China remains the top sourcing location for most overseas buyers, there is competition from other Asian suppliers, such as Vietnam and Indonesia.

Leung said local exporters are optimistic about business in the fourth quarter, as their products move upscale in quality and offer higher-end features. Exporters also intend to continue to explore consumer markets that already have matured.

Despite the brighter outlook, Leung issued a warning about the rising threat of protectionism. He said some politicians are threatening international trade and global economic growth by imposing trade barriers to protect their home industries.

"For decades, developed countries have imposed barriers against China's textile and garment export. Such measures are still found in certain countries," Leung said.

(HK Edition 12/17/2009 page4)