Anisha Bhaduri says encouraging trade figures point to the city’s continuing success as a regional superconnector

Hong Kong’s focused trade diversification away from traditional bases to foster deeper engagement with the region seems to be paying off with the special administrative region recording its slimmest trade deficit in more than a year.

According to Hong Kong Special Administrative Region government data released in the last week of August, the shortfall stood at HK$4.9 billion ($624.7 million) in July. This is a considerable improvement over the March data, when a year-on-year 41 percent surge in imports posted — as was widely reported — the biggest increase in over three decades. The resulting deficit of HK$89.1 billion was clocked as the highest in more than 70 years. The turnaround, while underpinned by a pivot to the Middle East, the Association of Southeast Asian Nations (ASEAN) — comprising Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Timor-Leste and Vietnam —and Central Asia, is a clear nod to sustained policy initiatives.

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Since taking office in 2022, Chief Executive John Lee Ka-chiu has led three missions to ASEAN, while last December the fourth Hong Kong Economic and Trade Office in the ASEAN region was opened in Kuala Lumpur, Malaysia. As Lee pointed out at the South China Morning Post GBA-Asean Summit 2026 on June 30, “Our people-to-people ties are flourishing alongside the increased trade and investment flows.”

Indeed, Hong Kong’s total July exports to Asia as a whole grew by 54.6 percent vis-a-vis July 2025. Some of the biggest increases in the values of total exports were recorded in the ASEAN region with Vietnam posting a 77.7 percent increase, Thailand 63.1 percent, Singapore 46.5 percent and Malaysia 41.5percent. In particular, in a first seven months comparison between 2026 and 2025, values of total exports to Singapore registered a growth of 82.6 percent, to Thailand 55.6 percent and to Vietnam, 50.4 percent.

Exports of AI-related electronic products have consistently registered a steady growth and a government spokesperson said recently that going forward, Hong Kong’s merchandise trade performance was expected to be supported by a “robust global demand for AI-related electronic products”.

In the context of ASEAN, the AI-related demand is expected to be explosive. In a statement issued in June 2024, the bloc noted, “AI is projected to significantly impact the ASEAN economy, potentially resulting in a 10 to 18 percent GDP uplift, valued at approximately $1 trillion by the year 2030”.

READ MORE: HK exports surge 35.8% in March on demand for AI-related electronics

ASEAN concluded negotiating the Digital Economy Framework Agreement in May and aims to sign it at the ASEAN Summit in November. The pact looks at syncing digital trade and identity, e-commerce, data governance, cybersecurity standards and digital talent mobility across the 11 member nations. But the uniqueness of the agreement, as the World Economic Forum points out, lies in how ASEAN not only future-proofed the agreement by baking in “emerging technologies including artificial intelligence” but by also “pioneering its own approach to cross-border data flows and artificial intelligence governance at a time when other parts of the world lack uniform guidance.”

If we delve into the characteristics of the economic and policy landscapes of ASEAN, and take just one example, it is impossible to miss the dominant informality of micro, small and medium enterprises (MSMEs) that provide livelihoods for hundreds of millions of people across the region — staggeringly more than the formal sector. According to one ASEAN estimate from 2020, about 10.04 million companies are formally registered, creating more than 72 million jobs. In contrast, the ASEAN secretariat points out, 70 million MSMEs accounted for 97.2 percent — 99.9 percent of total establishments across the bloc, contributing 85 percent to employment, 44.8 percent to GDP and 18 percent to national exports. The bloc envisages AI playing a massive role in the digitalization of this sector which policymakers believe will promote formalization of micro enterprises, offering a level playing ground as well as organic growth. The on-the-ground, human impact of this could be massive and will certainly steer trade relations with one of the world’s biggest transshipment hubs — Hong Kong.  

What is also impossible to miss is ASEAN’s avowed commitment to environmental security and accessibility. ASEAN is described as the most natural disaster-prone region in the world with more than 50 percent of global disaster mortalities between 2004 and 2014. Biodiversity, geoinformatics, disaster risk reduction, agriculture, environment and resource monitoring, new and renewable or alternative energy, meteorology and geophysics are listed among priority areas of cooperation. In a 2024 statement promoting safe AI, ASEAN pledged to “empower youth, women, rural populations, and vulnerable communities to boost their readiness to utilize AI to participate meaningfully in the digital economy”.

How can Hong Kong help?

As InvestHK’s global head of financial services, fintech and sustainability King Leung  has pointed out, “Hong Kong is not only a capital marketplace; it is also an incubator and accelerator for green technology, where innovations can be commercialized, scaled and introduced to global investors.” It is a leading platform for Chinese mainland green technology and sustainability firms seeking to go global and as of the first quarter of 2026, Hong Kong has been home to 190 environmental, social and governance funds recognized by the Securities and Futures Commission, with assets under management reaching $139.1 billion.

Hong Kong is strengthening its heft as a superconnector in the global AI supply chain. For ASEAN, which is a major manufacturing base, its AI readiness and levels of adoption across member states has been uneven. Trade not only provides access to the latest technologies but also helps build a new-age ecosystem that facilitates high-tech integration at a time when the world wants goods to keep moving seamlessly, with sustainability underpinning the whole show.

Hong Kong’s latest trade data surely iterates that.

The author is an award-winning English-language fiction writer and current affairs commentator.

The views do not necessarily reflect those of China Daily.