Foreign Trade Home Trade VS External Trade Reasons

Foreign Trade Home Trade VS External Trade Reasons foreign trade Hong Kong’s External Trade Restrictions of Trade The Balance of Payments Promoting Hong Kong Trade Hong Kong and Internal Organizations

Home Trade VS External Trade Currency Competition Payments Distance Language Duties Conditions

Reasons foreign trade difference in resources specialization Advantages of large-scale production Providing a wider variety of choice of goods

Hong Kong’s External Trade Factors Contributing to Hong Kong’s role as a World Trade Centre 1) stable government 2) good position 3) good infrastructure 4) excellent telecommunication services 5) hard-working labor force 6) free trade and free enterprise policy

The composition of trade Import

Export

Importance of External Trade to Hong Kong obtain goods and services earn foreign currency to buy imports enjoy high standard of living Problems faced Dependence Protectionism Competition Rise in the cost of production

Restrictions of Trade Tariffs (關稅) Import quotas (入口配額) Subsidies (資助) Controls (管制) Exchange controls (外匯管制) Embargo (禁運)

Reasons for Protectionism To protect its own countries To reduce dependence on other countries To protect its standard of living To maintain its balance of trade To raise government revenue To prevent “dumping” of goods

Arguments against Protectionism Advantages of specialization lost Resources not used effectively Other countries retaliate by raising tariffs Prices rise as imports become expensive

The Balance of Payments What is “balance of payments”? the relationship between payments received for exports to other countries and the payment made to other countries for imports Visible import and export Invisible import and export

Balance of trade = visible exports – visible imports IMPORT EXPORT IMPORT

Balance of payments = balance of trade + invisible exports – invisible imports The Current Account The Capital Account The Official Reserve Account

Promoting Hong Kong Trade Government Statutory Bodies Non-statutory Bodies International Organization