Hong Kong feels the domino effects of global crisis

mar bonnin palmer

A leading Hong Kong Industrial body has suggested that rising export costs and weakening demand for Chinese goods could see a significant proportion of Hong Kong’s factories in China shut down before the end of 2011.

The volatile US economy and the ongoing Euro-zone debt crisis have also been blamed for deterioration in this year’s Christmas orders.

Stanley Lau, Deputy Chairman of Hong Kong’s leading industrial promotion body, estimated that approximately 50,000 factories in China are likely to either scale down operations significantly or close altogether as a result of the weakening demand.

“We feel that this is not an overestimate,” said Lau. “Many (factory owners) can’t see when the market will have a rebound so they are trying to cut their losses by closing, before all their money is gone.”

Lau also added that Hong Kong industrialists were also lobbying local Chinese governments to freeze plans for an expected minimum wage hike in the near future.

It all adds up to an extremely concerning situation for the economy in that part of the world. It also serves to demonstrate wider trend which could have a significant bearing on the future of economies everywhere.

The US economic situation and the Euro-zone crisis are clearly having an impact on global trade, as Stanley Lau has made clear.

The domino effect which both situations are having on global economies will need to be monitored closely, before it gets completely out of hand.

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