Hong Kong International Trade Analysis

Nowadays, international trading plays a very important role in different countries. Trading can generate revenue and account for the main part of countries GDP, especially in those developing countries, like china, Vietnam.

Trading refers to the process of exchanging products or services between two or more countries. It is always important to the growth of economy. Trading can be divided into import and export. An import means one country purchase goods from the foreign countries. An export means one country sells their goods to foreign countries. Moreover, the Net trade, known as balance of trade also is important to measure one country’s economy. The balance of trade is the difference of export and import. The trade deficit exists when

2005 to 2014). Hong Kong has been regarded as freest economy in the world. The free trade policy simulates the trading development between Hong Kong and other countries.

Discussion

We can see that nearly all the hypothesis testing between export and factors, import and factors are not able to reject. Therefore, we have not enough evidence to conclude that there is relationship between the tested variable. But in 2009 , for the test between Inflation and Export, Inflation and import, we can reject the null hypothesis which is H_0:   0. We can conclude that there is a relationship between inflation, import and export. Besides, in 2012, the GDP growth (annual %) is positively related to Import. I am going to analysis the relationship in these two particular years.

Apart from analyzing the relationship in 2009 and 2012, I will focus on the relationship between GDP growth (annual %) and Trade Balance and the relationship between Currency and Trade

The ranking of Hong Kong changed from 2 in 2011 to 6 in 2012 which means Hong Kong’s GDP growth rate is lower than other five countries in 2012. As a small and open economy, Hong Kong is greatly affected by the global economy. Although the global economy was gradually recovered from the financial crisis in 2008, the European debt crisis and the economic growth of china slowed down still affect the trading activity of Hong Kong. Thus, the GDP growth rate of Hong Kong fell behind other countries.

Interpretation for the positive relation between GDP growth rate and Trade Balance

From table 2, we can observe that net trade is positively related to the GDP growth rate. That means the higher the value of net trade can led to the growth in GDP. By the testing the significance of the coefficient correlation (α=0.1), we can reject the null hypothesis in the period from 2010-2013. We have enough confident to claim that there is positive relation between net trade and GDP growth. It is believed that the trade surplus contributes to the employment rate and boosts the economic growth. As more goods are being exported, more revenue will be generated and more people will be hired.

But if the trade deficit exists, many people will lose their job, the factories will be close and the wages of the worker will be lowered. This will adversely affect the GDP Growth and thus