By / Member of the National Committee of the Chinese People’s Political Consultative Conference

Lin Long’an, President of the Greater Bay Area Importers and Exporters Association

Latest figures show that in the first eight months of 2026, Hong Kong’s total merchandise exports rose by 42.5% year-on-year and imports by 43.2%. In August alone, exports jumped 53.0% to HK$667.9 billion, while imports grew 60.0% to HK$739.1 billion. Amid strong export growth, the rebalancing of EU-China trade will not generate a marked aggregate impact on Hong Kong, yet its structural implications merit close attention. What truly warrants vigilance is not EU tariffs levied directly on Hong Kong goods, but indirect channels including re-exports, cross-border e-commerce logistics, as well as rules of origin and compliance regulations.

EU-China Relations Shift toward “Rebalancing Negotiations”

According to Eurostat, the EU’s goods trade deficit with China climbed to €103 billion in Q2 2026, the highest level since Q3 2022. In the first half of 2026, EU imports from China stood at approximately €299 billion, against EU exports to China of around €98 billion; the former was roughly 3.1 times the latter. The full-year deficit for 2025 reached €359.8 billion, equivalent to about €990 million per day.

Against this backdrop, the two sides held the first round of Trade and Investment Consultations in Brussels on 29 June. They agreed to set up four working groups covering trade and investment rebalancing, export controls, intellectual property and WTO reform, and establish a Joint Monitoring Mechanism to exchange relevant data, track trade flows and support technical work. On 18 September, the EU announced that the second ministerial round of consultations would be held in Beijing on 8–9 October, with expectations for tangible and “credible” outcomes. Valdis Dombrovskis, European Commissioner for Trade, expressed hope to see concrete deliverables in October. This makes October a critical window to observe whether EU-China trade rebalancing can move from dialogue to practical arrangements.

On the policy front, the EU has also tightened customs arrangements for low-value e-commerce parcels. Starting from 1 July, tariff exemptions for small parcels worth under €150 sent directly to EU consumers were scrapped. A temporary tariff of €3 per product category will be imposed according to different tariff classifications within each shipment. EU data indicates that nearly 5.9 billion low-value e-commerce items entered the EU in 2025, over 90% of which originated from China. Meanwhile, anti-subsidy measures targeting Chinese electric vehicles, foreign subsidy reviews and rare earth export controls remain major friction points in bilateral economic and trade ties.

Modest Share, Unique Position

Data from the HKSAR Trade and Industry Department shows that Hong Kong’s bilateral merchandise trade with the EU totalled HK$490.8 billion in 2025, down slightly by 0.6% year-on-year and accounting for around 4.5% of Hong Kong’s total external trade. Total exports to the EU amounted to HK$273.6 billion, and imports from the EU HK$217.2 billion, falling by 0.7% and 0.3% respectively.

Trade structure is the most critical factor. Of all exports to the EU, re-exports reached HK$272.2 billion, while domestic exports of Hong Kong-manufactured goods were merely HK$1.4 billion, representing only 2.2% of Hong Kong’s total domestic exports. In other words, the scale of Hong Kong local goods directly exposed to EU trade measures is relatively limited. The real impact to watch is the indirect pressure borne by Hong Kong as a re-export and supply chain hub linking the Chinese mainland and Europe.

The contrast becomes even starker against broader trends. Hong Kong’s overall exports rose 15.4% year-on-year to HK$5.24 trillion in 2025, with imports increasing by 15.5%. By contrast, exports to the EU edged down by 0.7%. This shows Hong Kong-EU trade failed to fully keep pace with the robust growth of Hong Kong’s overall foreign trade.

Three Key Areas to Watch

1. Re‑exports

Re-exports constitute the most direct connection between Hong Kong and EU-China trade relations. Estimates by the Trade and Industry Department suggest that about 4% of mainland China’s goods exported to the EU in 2025 (€21.6 billion, roughly HK$190 billion) were transshipped via Hong Kong. Around 5% of EU goods entering the mainland (€11.7 billion, approximately HK$103 billion) passed through Hong Kong.

Notably, divergences emerged in the two directions. Measured in Hong Kong dollars, the value of mainland goods transshipped via Hong Kong to the EU fell by about 7%, whereas EU goods shipped to the mainland through Hong Kong rose by roughly 27%. This timing coincides with the EU’s tightening trade measures targeting Chinese goods, though these figures alone cannot prove a causal link. Separately, the average EUR/HKD exchange rate rose from around 8.45 in 2024 to 8.81 in 2025, which also creates discrepancies in percentage changes calculated under different currencies.

In aggregate terms, this channel exerts limited influence over Hong Kong’s total merchandise trade. Hong Kong’s total re-exports stood at about HK$5.17 trillion in 2025, of which re-exports to the EU accounted for roughly 5.3%. Even a 10% drop in EU-bound re-exports would drag down annual total re-exports by merely 0.5 percentage points.

2. E-commerce & Air Cargo

While re-exports represent a slow-moving variable, e-commerce air freight quickly reflects policy shocks. Hong Kong International Airport is the world’s busiest cargo airport, handling 5.07 million tonnes of cargo in 2025 and topping the global cargo airport ranking for the 15th time since 2010. The airport identifies high-value cargo, e-commerce fulfilment and cross-border transshipment as key high-growth cargo segments.

Following the new regulations, air cargo volumes from Hong Kong to Europe dropped markedly. WorldACD data shows that for the week ending 5 July, cargo volumes from Hong Kong to Europe fell 12% week-on-week, preceded by 7% and 2% declines in the prior two weeks. For July as a whole, cargo volumes were 19% lower than June and 24% below July 2025. Rotate estimated that dedicated freighter capacity on direct Hong Kong-Europe routes fell by roughly 19% week-on-week in early July. These shifts signal a rapid reassessment of the cost structure for low-value e-commerce shipments.

Nevertheless, the impact on the airport’s overall cargo throughput remains moderate. In August 2026, cargo volume dipped 1.2% year-on-year to 422,000 tonnes. Cumulative cargo throughput for the first eight months reached 3.34 million tonnes, up 2.6% year-on-year. Cathay Cargo recorded an 8.6% year-on-year rise in August cargo volume to 151,904 tonnes, demonstrating resilience in overall air cargo demand alongside shifting cargo flows.

The market is also adjusting. Data from Liège Airport in Belgium shows e-commerce parcel volumes fell 24% year-on-year in July and 41% month-on-month from June. Meanwhile, customs data indicates parcels valued above €150 increased by roughly 10%. This reveals that as low-value B2C shipments contract, part of the cargo flow is shifting toward higher-value products. For Hong Kong’s freight sector, the decline in low-value goods offset by high-value cargo and conventional freight will be a transformation trend worthy of continued monitoring.

3. Rules, Origin & Compliance Risks

EU trade remedies are not determined solely by transport routes; they hinge on product origin, commodity classification and anti-circumvention rules. Simply rerouting shipments through Hong Kong cannot change goods’ origin or bypass trade measures. On the contrary, goods exported via Hong Kong suspected of transshipment to evade trade measures may face stricter origin and anti-circumvention verifications. Hong Kong is a separate customs territory and participates in the WTO under the name “Hong Kong, China”, yet the place of transshipment does not alter a product’s origin.

For Hong Kong, this is not merely a cargo issue but also a services issue. Trade and Industry Department records show that as of 2 June 2025, EU parent companies operated 340 regional headquarters, 510 regional offices and 930 local offices in Hong Kong. At end-2024, the stock of EU direct investment in Hong Kong reached €37 billion. These enterprises often face both EU regulations and countermeasures introduced by the mainland. On 28 May 2026, the European Commission launched an in-depth investigation under the Foreign Subsidies Regulation into JD.com’s acquisition of German retailer Ceconomy. On 19 August, China’s Ministry of Justice ruled that the EU’s relevant cross-border investigation actions targeting Chinese entities in this case constituted improper extraterritorial jurisdiction, and demanded non-execution or non-assistance in enforcement. Where two regulatory frameworks clash directly, multinational enterprises operating in Hong Kong need a regional hub capable of addressing compliance requirements from both the EU and the mainland.

Hong Kong’s Response Strategies

1. Shift from “Volume” to “Value”

New customs costs have undermined the economic viability of low-value B2C parcels. Hong Kong’s freight and logistics industry should pivot toward high-value electronics, precision components and cross-border B2B cargo, and help e-commerce sellers pre-position inventory within the EU. Hong Kong can upgrade its role from a simple “outbound shipment gateway” to a supply chain control tower. For example, SHEIN opened a new European logistics hub near Wrocław, Poland on 22 December 2025 to serve as its primary European logistics base.

2. Turn Compliance into Exportable Services

Starting 1 November 2026, the EU will mandate product identifier (Product Identifiers) declarations for low-value goods. Meanwhile, under the new customs regime, EU member states must start levying small-parcel handling fees no later than 1 November 2026. The EU Customs Data Centre is scheduled to commence operation for e-commerce cargo on 1 July 2028. Rising requirements covering origin verification, product identification, declarations and trade financing create opportunities for Hong Kong’s professional services, logistics and trade finance sectors to meet such demand.

3. Diversify toward the EU’s “Heartland Markets”

Germany, France and the Netherlands are Hong Kong’s top three EU trading partners, collectively accounting for approximately 56.5% of Hong Kong’s EU trade. Poland, Czech Republic and Hungary together represent about 9.5%, with 2025 trade volumes of €2.35 billion, €1.49 billion and €1.43 billion respectively. Re-exports from Hong Kong to these three nations make up roughly 81% of total bilateral trade, showing these markets function as re-export and distribution nodes for mainland goods entering Europe. Traders and logistics providers should plan for these markets in advance.

4. Treat October as a Stress Test

The second round of EU-China Trade and Investment Consultations will be held in Beijing on 8–9 October. The government and industry should treat these talks and subsequent policy reactions as a stress test. Three scenarios should be assessed: reaching phased negotiation outcomes, stalemate, or escalation into reciprocal countermeasures. Evaluate impacts on re-exports, air freight and supply-chain financing, and provide SMEs with guidance on compliance and rules of origin.