Question Period Note: Canada's trade relations with Hong Kong

New security legislation being promulgated by China could threaten Hong Kong's status as a trade and investment hub

• Owing to its rule of law and favourable business environment, Hong Kong acts as an international financial centre and a platform for Canadian companies to access China and other Asian markets

• Hong Kong is an important conduit for both Canadian investment into China and for Chinese outbound investment to Canada

• Total bilateral trade with Hong Kong amounted to $4.4 billion in 2019, making Hong Kong Canada's 22nd largest trading partner, and 6th largest in Asia (after Taiwan)
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• The imposition by China of national security legislation without the engagement of Hong Kong's own institutions would undermine confidence in the integrity of the One Country, Two Systems framework, and in Hong Kong's role as a global hub.

Owing to its rule of law and favourable business environment, Hong Kong acts as an international financial centre and a platform for Canadian companies to access China and other Asian markets. The bulk of foreign direct investment in China continues to be channelled through Hong Kong

Investment - Hong Kong is a major investment partner for Canada, acting as both a source of investment and as a hub mediating investment flows from third party countries (most notably China). In 2018, total FDI investment that flowed immediately into Canada from Hong Kong was $21.8 billion. The total stock of Canadian direct and portfolio investment in Hong Kong was $9.1 billion in 2018.

Trade Flows - Total bilateral trade with Hong Kong in 2019 amounted to $4.4 billion, a 3.6% increase over $4.2 billion in 2018. Major Canadian exports to Hong Kong are precious stones and metals (mainly gold in unwrought form), meat, ginseng roots, live fish and plant products with specialty uses (pharmacy, perfumery, insecticides, fungicides etc.).

Services - In 2018 Hong Kong ranked seventh as a global destination for Canadian exports of services, totalling $2.2 billion, a 13.5% increase from 2017. Canadian service providers excel in a diverse range of sectors such as finance, engineering, information technology and professional services.

New Security Legislation - China has announced that the National People's Congress (NPC) will deliberate on a draft bill that would impose national security legislation on Hong Kong in a process that circumvents the legislative channels of the Hong Kong Special Administrative Region. The legislation would likely criminalize a wider range of politically-related activities and greatly shrink the range of freedoms Hong Kong citizens have traditionally enjoyed, notably those related to freedom of association and expression. Inasfar as the new legislation is seen to undermine Hong Kong's autonomy, it may weaken its attractiveness as a regional business and investment hub.

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