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English or languish
Probing the ramifications of Hong Kong's language policy

Quality Assessment
Section Four
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Language and Society
Hong Kong's Principal Trade Partners
Introduction

Hong Kong's prosperity is founded on its external economy; notwithstanding, the Hong Kong economy is far more complex, and much of what appears to require a second language -- in particular the English language -- requires nothing of the sort.

More than 20 new graphs including pie charts, line graphs, and bar charts about Hong Kong's external and domestic economies were added this time around. Hopefully they will provide you with a convincing picture of the true situation and how the wool has been pulled over your eyes.

 Index
 Discussion and Explanation


In pursuit of perspective

Commercial and political pursuits are similar insofar as both require substantial image building. Just as the best advertised products or ideas fail, when they cannot withstand the test of public scrutiny; products and ideas that never receive this scrutiny are unlikely to be adopted -- no matter how good they are. In order to obtain this scrutiny substantial public attention is required, and the competition for that attention is fierce. This is especially true of products and ideas that are complex in nature, very expensive, and require as a result careful thought and examination before purchase and adoption. As few of us examine well things about which we have little knowledge and that do not concern us directly, we depend on others, whose knowledge and opinions we can trust, for our own assessment. Notwithstanding, when these others have a vested interest in the product or idea of interest, it is likely that neither their evalutation nor their final assessment will be objective. This is the reason that the UEL requirement in Hong Kong and East Asia has managed to escape balanced public scrutiny in the past, and why it will continue to escape it in the future -- at least until these vested interests are exposed and the soundness of the requirement more rigorously challenged. With this by way of introduction let us now examine Hong Kong's import and export industries, their relative importance to the Hong Kong economy, and the consequent importance of the English language.

Although the status quo is recognized by many to be fully inadequate; because it is the status quo, it enjoys the backing of those in power -- namely, those who introduced the UEL requirement, and those who risk the embarrassment of error for having promoted it, were it eventually eliminated. As a result, anyone who has suffered because of the requirement and challenges its further promotion, is automatically labelled a troublemaker, misfit, or poor loser with regard to the established game and those who established its rules. In order to elude these damaging epithets and thereby counter the establishment's first line of defense, the HKLNA-Project must not only meet the establishment on its own playing ground, but also show why its rules are inadequate. As Hong Kong's Education and Manpower Bureau is uninterested in exploring its own false assumptions, the task before us is especially difficult. Notwithstanding there is plenty of information from which important inferences can be drawn with or without the support of Hong Kong's EMB.

The most obvious place to begin our analysis is with Hong Kong's external economy, because this is where the obvious need for the English language strikes at the heart of those in power -- their bank accounts. Although we have touched on tourism, trade, and Hong Kong academia in important ways already, let us now tackle the economy head on.


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Hong Kong's Rise to prominence

Hong Kong's rise to economic properity began during the Korean War, when the United States imposed an economic blocade preventing ocean trade between northern China and the rest of the world. Hong Kong entrepreneurs exploited the war by serving as an alternative trade route for the north. This politically cozy trade relationship endeared Hong Kong merchants to the mainland and provided a major impetus for continued trade after the war ended. As subjects of the British crown many Hong Kong merchants were sufficiently bilingual in both Chinese and English and could serve as intermediaries between the mainland and their overseas trade partners. Needless to say, the English language remains an important part of Hong Kong society. What no one seems to know, but what everyone claims to have knowledge about, is just how important the language is. Some light can be shed on the truth of the matter by examining Hong Kong's principal trade partners and external accounts.


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Hong Kong's merchandise trade

In order to bring things into perspective quickly open to graph 16 (new window). In 2000 Hong Kong's external merchandise trade volume was HK$3,230.7 billion.1 Trade with the Chinese mainland amounted to nearly 40% of the total -- more than double the volume traded with its next largest trade partner the United States. The rest of Hong Kong trade was distributed in far smaller amounts among a large number of countries, nearly each with a different national language. The category Other comprises primarily East Asian nations and member countries of the European Union; included among the nations of East Asia are those of both Northeast and Southeast Asia.

Imports
Among Hong Kong's top five sources of imports (graph 13 - new window) four of them were located in East Asia including the Chinese mainland, Japan, Taiwan, and South Korea. These four economies alone accounted for more than two thirds of everything Hong Kong imported. The largest source of these imports was, of course, the Chinese mainland from which Hong Kong received more than HK$700 billion worth of merchandise annually -- over 40% of total Hong Kong imports. Including Taiwan more than 50% of Hong Kong's imports came from a Chinese speaking economy. Among Hong Kong's Western trading partners only the United States ranked among Hong Kong's top five sources of imports coming in at number four with less than 7%. Imports from the United Kingdom and Germany were too small to mention and were included among all others -- the motley group making up less than 30% of all Hong Kong imports.
Service at home, service abroad, and the difference it can make | index

Exports
Turning to Hong Kong's exports (graph14) -- an area in which knowledge of the importing economy is crucial -- the pattern was clearly different. Hong Kong's exports to the United States were greater than those to China, the second largest importer of Hong Kong domesticallly produced goods. Also, three of Hong Kong's five principal importers were from the West, and two of these included the United States and the United Kingdom. Notwithstanding, among Hong Kong's top five importing economies, exports to Chinese speaking economies were nearly equal to those shipped to the US and UK. The Chinese mainland and Taiwan lagged only by 8%.2 Germany, a country in which the English language is taught as the nation's principal second language, ranked number four among Hong Kong's top five. Hong Kong exports to Japan, the world's second largest economy, and South Korea, one of Asia's fastest growing economies, were negligible and listed under the heading Other among the remaining 26%. (See table 13.)

Insofar as nearly 70% of Hong Kong's domestic exports are already destined for economies where either English or Chinese are the principal languages, would it not make good sense for Hong Kong to increase its overseas competitiveness -- not by learning more English, but by learning the languages of its closest neighbors?


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Re-exports
Hong Kong is often called an entrepot, because a large portion of its trade volume consists of goods that come to and leave Hong Kong with no intrinsic value added. In 2000 Hong Kong's re-exports accounted for over 40% of Hong Kong's total trade volume. Although nothing in the manufacture of these goods adds to the Hong Kong economy, their passage through the port of Hong Kong contributes signficantly to Hong Kong's gross domestic product in the form of administrative, transportation, financial, and other fees paid to domestic and overseas service companies based in Hong Kong. Graph 15 shows the trade pattern for these goods in 2000. It resembles Hong Kong's import pattern insofar as the Chinese mainland once again overshadows all other sources of trade including the general category Other. Though an important component of Hong Kong's overall trade pattern, the United States came in only second to the Chinese mainland with more than 35% fewer re-exports.3 Japan ranked number three ahead of both the United Kingdom and Germany. Re-exports to both the United States and the United Kingdom fell a full 25% short of re-exports to the Chinese mainland. Although these data tell us nothing about these goods' port of origin, it is the final destination that is most important in terms of language, because as a consumer one invariably purchases in one's own language. In any case, because they are re-exports, it is unlikely that Hong Kongers played a very important role in their marketing. In effect, the amount of English utitlised to conduct these routine trades must be substantial, but hardly of the sort that could justify a full-decade of primary and secondary school English language study. See the subsections entitled Tool of record keeping and transcription and Tool of transaction under the section entitled Language as Tool for further insight in this regard.
Hong Kong's IT&T industry (A macroeconomic overview) | index

Hong Kong's service trade

Having introduced briefly the most visible aspect of Hong Kong's external economy -- namely, merchandise trade; let us now turn to its more important, less visible aspects. In 2001 Hong Kong' merchandise and service exports (new window) made up 37.5 percent of Hong Kong's gross domestic product. Service exports made up 68 percent of these 37.5 percent -- just over a quarter of Hong Kong's gross domestic product.

In graph 48 (new window) trade volume in both merchandise and services are compared over a five-year period beginning in 1997 and ending in 2002. As 1997 is the year in which Hong Kong's sovereignty changed from British to Chinese hands it represents a crucial starting point. What we observe is a general rise in merchandise re-exports and service exports accompanied by a significant decline in the export of domestically manufactured goods. Trade in merchandise and service imports is largely unchanged. These changes suggest that Made in Hong Kong is giving way to Made in China, Traded by Hong Kong. The simultaneous increase in service exports and merchandise re-exports makes good sense in sofar as more service activity is required to handle the increase in re-exports. Certainly the increase in service exports implies greater demand for knowledge of foreign language and culture. So, how do we determine whose foreign culture and language were affected by these changes?
A matter of inference
Since the Hong Kong Census and Statistics Bureau does not provide us with knowledge about the recipients of Hong Kong's service exports, we must infer these from the recipients of Hong Kong's merchandise re-exports. Graph 47c (new window) depicts the recipients of Hong Kong's re-export trade over the same five-year period examined in graph 48 (new window). Among the principal recipients only the Chinese mainland demonstrates a monotonic rise in merchandise from Hong Kong. In fact, all other principal recipients of Hong Kong re-exports demonstrate either no or little net change. Thus, it is likely that the increase in services associated with the rise in Hong Kong re-exports are not focused on the English language, rather on Chinese language and culture.

Of course, there are two sides to every trade, and what Hong Kong re-exports it must also import. Graph 47a (new window) shows us the principal sources of Hong Kong imports over the same five-year period. What we observe are nearly monotonic slight declines in merchandise imports from Japan and the United States, little or no change in imports from Taiwan and South Korea, and a net fall in imports from aggregated, less important, other sources over the five-year period. Since only the Chinese mainland demonstrates a significant increase in either Hong Kong imports or re-exports, and the mainland is unlikely to import the same goods that it exports, how can we account for the simultaneous increase in Hong Kong imports from, and re-exports to the Chinese mainland? The answer is found in graph 47b (new window) where we observe a monotonic decline in exports to each and every principal purchaser of domestically produced Hong Kong merchandise. In other words, Hong Kong is now consuming more goods produced on the Chinese mainland and fewer goods produced overseas, while simultaneously exporting fewer of its own domestically produced goods to everyone, but selling more of what it purchases from overseas to the mainland.

This general shift from many things foreign to more things Chinese is summarized in graphs 49b, and 49c (new windows). In graph 49c (new window) we observe a monotonic increase in re-exports to the Chinese mainland, but only a slight and ever variable increase in the number of goods re-exported elsewhere. Taiwan is included among those considered elsewhere.4 In graph 49b (new window) domestically produced exports declined across the board, but declined faster with regard to non-Chinese destinations.5 Although Hong Kong appears to be importing fewer goods of ethnic Chinese origin (see graph 49a - new window), the decline is likely coming from Taiwan who now exports many of its own goods directly to the mainland.

Thus, though there is a need for better English language proficiency among Hong Kongers, that this improvement is required for the entire population is not supported by Hong Kong's emerging pattern of trade since the reversion. The increase in service exports is closely related to Hong Kong's re-exports, and trade with the mainland accounts for most of this increase.


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Service at home, service abroad, and the difference it can make
Those who advocate the UEL requirement often point to Hong Kong's service industries, as if providing more service automatically meant speaking and writing more English. Although more speaking and writing is probably required in service than in manufacturing industries, the ceteris paribus condition that more service necessarily requires more English does not hold. As we have just observed, Hong Kong's post reversion trade pattern does not support it.

Of course, the same services that are traded overseas can usually be traded at home. Moreover, what language they are traded in has more to do with who is doing the trading, than the place in which the trade occurs. In contrast, not all services that are traded at home can be traded overseas. Moreover, when they are traded at home, they are unlikely traded in English. Thus, when UEL requirement advocates discuss the issue of Hong Kong's service industries, they need to be clear about what services are being rendered and between whom. What UEL requirement advocates are generally eager to point out is what we easily discover in graph 42a (new window) -- namely, that more than 85% of Hong Kong's gross domestic product consists of some sort of service activity.6 The extent to which these services contribute to Hong Kong's external economy, and thus necessitate the use of English, remains unclear, however.

By comparing how Hong Kong's major service components are proportioned in the domestic and external economies some insight can be obtained into what extent Hong Kong's service industries require use of a second language.

Graph 42c (new window) provides us with a quick summary of how services are proportioned in the domestic economy. With regard to English language demand we can readily eliminate over a third of these services with little further consideration. The industries in question are ownership of premises and community, social, and personal services. Although rent must be collected from the buildings that house the hotels and restaurants that serve Hong Kong's foreign guests, as noted elsewhere (new window) the number of these temporary visitors averages only 3.9% of Hong Kong's resident population per day. The number of foreign residents requiring office space must be many times smaller. In 2001 exactly 3,237 transnational corporations claimed regional offices in Hong Kong. In the same year some 944 boasted regional headquarters. Would a large regional headquarters employ more than 500 people? How many of the aforementioned regional branch offices employ no more than a solitary Hong Kong representative? According to Hong Kong's 2001 census data the number of non-Chinese ethnic residents (new window) living in Hong Kong amounted to slightly over 340,000. How these residents are distributed across ethnicity is crucial to their business needs (new window). Surely the number of Hong Kong's foreign residents requiring office space cannot be more than several tens of thousands. Adding the daily total of non-Chinese ethnic residents requiring either a place of residence, office space, or both comes to about 10% of Hong Kong's resident population.7 As it is unlikely that these foreign residents and visitors utilise Hong Kong's community, social, and personal services to an extent greater than their native Hong Kong counterparts, we are looking at less than 4% of Hong Kong's total resident population serviced by these industries.8

Let us now turn to those industries that are more likely to service the foreign community, either resident or nonresident -- namely, those represented by Hong Kong's external service accounts. Graphs 44a (new window) and 44b (new window) show how Hong Kong's service imports and exports are distributed across various large industrial service groups. Let us examine first those groups that also appear in Hong Kong's domestic service accounts -- namely, service exports (graph 44b). Among these the big income winners are transport, trade, and travel. Together they account for more than 80% of Hong Kong's service exports.9 Although a very large number, we must also ask what proportion of Hong Kong's domestic output do each of these categories represent? In 2001 Hong Kong's gross domestic product in current HK dollars was HK$1,279 billion.10 Hong Kong's total service exports during the same year were HK$321 billion. Together they accounted for about only one quarter of Hong Kong's entire economy.11 Transport, trade, and travel only accounted for just over 20%.12 Please keep in mind that a very large number of these exported services are probably going to the Chinese mainland, Taiwan, or other Chinese diaspora in Southeast Asia, North America, and elsewhere where strong family ties and closely knit foreign communities provide an excellent source for overseas commerce that passes through Hong Kong.

Though not everyone who engages in export or import trade also engages in its opposite, the vast majority probably do. This is the nature of overseas trade. In 2001 Hong Kong imported 189.6 worth of current services in current Hong Kong dollars. Because this is productive value purchased outside of Hong Kong it does not appear in Hong Kong's gross domestic product accounts. Nevertheless, viewing it as a proportion of Hong Kong's gross domestic product tells us approximately what proportion of Hong Kongers are involved in its purchase and thus subject to external exposure. In 2001 these HK189.6 billion totaled just under 15% of Hong Kong's domestic economy.13 So, if 80% of everyone who engaged in the export of transport, merchandise, travel, financial, insurance, and other services, also engaged in the import of the same or similar services, then we could add an additional 3% worth of value to the 25% figure already obtained for all service exports.14 Still the resulting 28% must be adjusted downward to account for service trade that necessarily occurs, when Hong Kong imports and re-exports (see Hong Kong's merchandise trade above) from and to the Chinese mainland, Taiwan, and overseas Chinese settlements are traded. Would it be unfair to cut the total value of Hong Kong economic activity exposed to non-Chinese ethnic populations outside of Hong Kong to about one-half of our 28% estimate -- say about 14%?

Adding to the above 14% value-based estimate of affected people the proportion of Hong Kong's actual number of foreign residents in 2001 obtains 19.1%. If we include the additional 4% of domestic services that go into sustaining these foreign residents and others whom we have not discussed, still the figure does not reach 25% of Hong Kong's entire population and economy. Is it for these crucial less than 25% that Hong Kong's remaining over 75% must be subjected to a decade's worth of English language training? Clearly something is amiss in Hong Kong's Education and Manpower Bureau!

Hong Kong's IT&T industry (A macroeconomic overview)| index


Conclusion

Until we are able to ask Hong Kongers directly (see the first of the HKLNA-Project's proposed research projects) about their use of the English language, we must rely on statistical inference to appraise the situation. What was generously given prior to this report (see English: Bridge or Barrier -- new window) has been taken back, as a closer examination of the facts reveals an even bleaker need for the English language than what was initially thought.


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1 The Hong Kong Special Administrative Region is a separate customs territory. Hong Kong external merchandise trade comprises imports, domestically produced exports, and re-exports. Re-exports are goods that are manufactured and consumed outside of Hong Kong. They enter Hong Kong as imports and leave as exports. Thus, they are twice exported -- once to Hong Kong and then once again to their country of ultimate destination. Merchandise trade statistics are based on information contained in import/export declarations. Import and export declarations are required between Hong Kong and the Chinese mainland and thus form a part of Hong Kong's external trade statistics. Source: Census and Statistics Department. Hong Kong in Figures. External trade. [online document] (15 February 2004). (text)
2 HK exports to the US and UK amounted to HK$54.4 billion and HK$10.7 billion, respectively. Exports to the Chinese Mainland and Taiwan came to HK$54.2 billion and HK$6.1 billion, respectively. Thus, [(54.4 + 10.7) - (54.2 + 6.1)] / (54.2 + 6.1) = 0.0796 = 7.96%. Source: Hong Kong Census and Statistics Department. See bottom of table 13 for exact source. (text)
3 In 2000 re-exports to the Chinese mainland and the United States were HK$488.8 billion and HK$311.0 billion, respectively. Thus, (488.8 - 311.0) / 488.8 = .364 = 36.4%. Source: Hong Kong Census and Statistics Department. See bottom of table 13 for exact source. (text)
4 Taiwan was not included with the mainland, because it was not listed among those countries or territories considered to among principal recipients of Hong Kong re-exports. (text)
5 As Singapore never appears among Hong Kong's principal trade partners, it is never mentioned. One must keep in mind that included in the category Other are many ethnic Chinese of various nationalities -- not merely Singaporeans. Chinese diaspora can be found throughout the world in large numbers, and Southeast Asians are prominent among these. (text)
6 Gross domestic product differs from gross national product in so far as it includes only economic activity that takes place within the territory of Hong Kong. Whether that activity is generated by Hong Kongers or foreigners makes no difference. In contrast gross national product, a perhaps more popular economic indicator, includes all economic activity whose receipts accrue to Hong Kongers. Domestically produced economic activity whose benefits leave the territory are not included, and foreign produced economic activity whose receipts flow into Hong Kong are. (text)
7 262,740 estimated number of tourists + 343,950 foreign residents = 606,690. Add to this several tens of thousands of foreign entrepreneurs requiring office space, and the total comes to about 650,000. Dividing this number by Hong Kong's total resident population in 2001 obtains 650,000/6,724,900 = 0.097 or somewhat under 10%. (text)
8 Percent of all Hong Kong services utilized by foreign residents or visitors for the purpose of housing or community, social and personal services = 0.097 X 0.37 = 0.036 = 3.6%. The figure 0.37 was obtained by adding the percent of all services contained under the headings ownership of premises (13.9%) and community, social, and personal services (23.1%) in graph 42c (new window). (text)
9 Exports: transport = 31.5%, trade related services = 30.7%, and travel = 20%. Thus, 0.315 + 0.307 + 0.20 = 0.822 = 82.2%. (text)
10 Hong Kong Census and Statistics Department. Hong Kong in figures. National income and balance of payments accounts. Gross domestic product 1997 - 2001. [online document] (February 2004). (text)
11 Hong Kong Census and Statistics Department. Hong Kong in figures. External trade. Exports and Imports of Services by Major Service Group. Major service group [online document] (February 2004). (text)
12 Transport, trade, and travel exports accounted for 101.8, 99.3, and 64.6 billions of Hong Kong dollars, respectively. 101.8 + 99.3 + 64.6 = 265.7. Accordingly, 265.7/1,279 = 0.208 = 20.8%. (text)
13 189.6/1,279 = 0.148 = 14.8%. (text)
14 0.15 X (1.0 - 0.80) = 0.03 = 3% (text)
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