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Lanka’s goods sold to China, Hong Kong go downhill
Sri Lanka’s trade with China, including tea shipments steadily declined in 2020. Separately, its meagre bilateral trade with wealthy Hong Kong, a world leading trade and financial services centre, has fallen sharply in the five years to 2020.
Sri Lanka’s exports to China in 2020 have dropped to US$223m, from US$229.06m in 2019, and down from US$230.59m in 2018, data from Sri Lanka Customs, Central Bank of Sri Lanka and Export Development Board show.
Out of Sri Lanka’s total trade, China accounted for just 2.22% in 2020, compared with the United States absorbing 24.9%, the UK taking up 9.06% and Germany buying 5.68% of goods.
Sri Lanka’s biggest trade imbalance is with China at a negative US$3.35b in 2020. Imports from China have swelled to US$3.57b compared with just US$223m goods China buys from Sri Lanka. Trade data does not show any purchases of fruit from Sri Lanka.
The worsened trade picture reflects the foreign debt binge that began with the Mahinda Rajapaksa government issuing Sri Lanka’s first international sovereign bond of US$500 million in 2007 at a fixed annual coupon of 8.25%, and which inevitably birthed the ‘economic Halloween’ that scared the life out of Sri Lankans, thousands of whom are leaving.
On December 17, Fitch Ratings downgraded Sri Lanka’s long-term foreign-currency issuer default rating to ‘CC’, from ‘CCC’, citing “an increased probability of a default event in coming months’’. Moody’s downgraded Sri Lanka in October.
This weaker trade picture with Hong Kong emerges from Census and Statistics Department data cited by Hong Kong Trade Development Council, an agency reputed for its integrity and research excellence. Research Director Nicholas Kwan is a veteran economist.
Even the number of Sri Lankans visiting Hong Kong has plunged to new depths, from 5,838 in 2018 (or more than 448 a month on average) to 4,621 in 2019. In 2020, just 379 Sri Lankans came to Hong Kong (31 visitors a month).
China’s visa restrictions on
Sri Lankans would have played a part, along with border and air travel shutdowns because of the new coronavirus pandemic that sprang from Wuhan in the central province of Hubei in late 2019.
The honorary consulate for Sri Lanka in Hong Kong and Macau shut on October 31, 2020.
Hong Kong’s merchandise exports to Sri Lanka fell by 10.3% from 2016 to 2020; from US$511.7m (Rs 103.11 billion; calculated at a bank exchange rate of Rs 201.50 per US dollar) in 2016, to US$431.1m (Rs 86.82b) in 2020.
Hong Kong’s imports from Sri Lanka have also dropped by 20.9% from 2016 to 2020, sliding from US$122.9m in 2016 to US$107.3m in 2020.
Sri Lanka’s disabled trade in 2020 stands in stark contrast to Hong Kong’s overall goods trade, which rebounded from the fourth quarter of 2020. Hong Kong was able to withstand the pandemic challenges simply due to decades of prudent financial management and trillions in forex reserves and billions in fiscal surpluses. And in the first eight months of 2021, Hong Kong’s merchandise trade was worth HK$6.50 trillion, data disclosed to the legislature in October show. This was an historic high, surpassing the peak in the comparable period of 2018 by 12.8%, the Commerce, Industry and Tourism Branch of the Commerce and Economic Development Bureau, announced.
In 2020, Hong Kong’s economy contracted by 6.1%. It was the largest annual decline on record. Yet, in the first quarter of this year, real gross domestic product grew by 8%, and increased by 7.6 year-on-year in the second quarter.
Sri Lanka was Hong Kong’s 49th biggest trade partner in 2020, and accounted for a negligible 0.05% of the total trade. As for exports, Sri Lanka was the 47th largest market, making up a mere 0.09% of shipments. Among Hong Kong’s imports markets, Sri Lanka’s ranked 54th, accounting for a minute 0.02% of total imports.
The United States was the biggest export market for Sri Lanka in 2020, absorbing US$2.50b in goods, while imports were US$495.24m. Sri Lanka has a favourable trade balance of US$2.01b.
In 2020, Sri Lanka’s total trade with the world tumbled by 20.02% to Rs 2.29 trillion (US$12.33 billion), calculated at a rate of Rs 186.41 per dollar.
China bought apparel worth US$62.69m in 2020 — the largest portion of Sri Lankan exports — compared with US$67.44m in 2019. This is a drop of 7.04%.
Bulk tea shipments increased by 13.73% from the year before to US$49.25m. Turkey, Russia, Iran and Iraq individually buy far more bulk tea from Sri Lanka than China, data show.
Shipments of tea packets to China have gone downhill. Their value dropped by 9.55% on-year to US$4.92m in 2020 from US$5.44m in 2019. In 2018, shipments were worth US$6.65m.
In 2020, Sri Lanka’s exports to Hong Kong were worth US$104.64m, while imports were US$220.8m. The trade balance was unfavourable to Sri Lanka at US$116.16m.
Hong Kong-bound apparel cargoes dropped to US$23.97m, or 13.38% from US$37.35m in 2019. Apparel was the biggest export.
Bulk tea shipments fell to US$11.29m from US$14.99m. Tea packet shipments dropped to US$2.46m from US$3.17m, and tea bags sales fell to US$980,000 from US$1.73m.
Dealers in gems did not fare well, earning US$13.65 million, compared with US$52.29 million the year before. Shoppers can find Sri Lankan blue sapphire-encrusted items at Hong Kong’s prominent jewellery retailers.
Fish exports fell to US$6.06m from US$8.97 million.
Sri Lanka exports lobster, crab, and shrimp and prawn to Hong Kong, where these are pricey delicacies on menus regardless of season.
Loads of lobster fell to US$1.52m from US$4.07m, while sales of crab increased to US$730,000 from US$360,000 in 2019.
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