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Shoppers are hopping across the border after a prolonged decline in prices.

Thu, Feb 22, 2024 4:53pmGrey Clock 3 min

Prices are falling in mainland China. That’s a boon for people living in Hong Kong, but a big problem for the city’s businesses.

Consumer prices in China fell 0.8% in January compared with a year earlier, the country’s biggest deflation reading in more than a decade. That is a sign of the tepid state of the world’s second-largest economy, where a sputtering recovery has knocked confidence and encouraged Beijing to censor some economic research.

Hong Kong residents are increasingly hopping across the border to the city of Shenzhen, where they load up on frozen food and cheap furniture at big-box stores such as Costco and Sam’s Club. Hong Kong business owners, unable to compete with their Chinese counterparts on price, are feeling the squeeze.

“Walking on the streets these days, you’ll feel that Hong Kong retailers are in big trouble,” said the city’s former financial secretary, John Tsang, in a recent social-media post.

The pain being felt by businesses in Hong Kong offers a partial answer to a question that has been debated by economists for much of the past year: How will deflation in China affect the rest of the world?

Chinese export prices have dropped steadily since late 2022 and were 8.4% lower in December than they were a year earlier, according to customs data. Economists think that’s probably a good thing for Europe and the U.S., where central banks have been forced to embark on an aggressive series of interest-rate increases to keep rising prices in check. But the impact on smaller countries could be more troublesome.

China is the biggest trading partner for many countries across the world, and is particularly influential for countries in Asia. The risk for them is that Chinese companies dump their goods overseas in response to weak demand at home. They can also undercut manufacturers in countries such as Vietnam and Malaysia, which have slowly been muscling in on China’s status as the world’s factory.

“This Hong Kong story is applicable to countries that are near the neighbourhood of China because the supply chain is much smaller,” said William Lee , chief economist at the Milken Institute, an economic think tank. The shorter supply chain for China’s trade with its neighbours means changes in price pass through more directly, rather than being swallowed up by the various companies that get involved in shipping goods over longer distances.

China’s neighbours in East Asia don’t have the option to impose protectionist policies against it, analysts at Citigroup wrote in a January note. China is simply too big a force in global trade for them to risk its ire.

But if it is hard for China’s neighbours to push back against falling prices, it is even tougher for Hong Kong—which is run by a pro-Beijing government that wants closer integration with the superpower next door.

Hong Kong residents are partly benefiting from the strength of the U.S. dollar. The Hong Kong dollar is pegged to the U.S. dollar, and the city’s de facto central bank has copied the Federal Reserve’s series of interest-rate increases over the past two years. China’s central bank has gone in the opposite direction, cutting rates in an attempt to boost the moribund economy.

Since the end of 2021, the Chinese yuan has lost more than 11% of its value against the Hong Kong dollar.

Counting the cost

Hong Kong’s economy grew 3.2% last year, clawing back some lost ground after a 3.7% contraction in 2022. But the numbers mask a host of difficult problems, including an exit of foreign businesses, a prolonged slump in the real-estate sector and the lowest fertility rate in the world.

The apparent embrace of what mainland China had to offer would have appeared unthinkable five years ago, when the city was swept up in antigovernment protests. Back then, shoppers and diners looked up colour-coded maps to help them identify businesses that shared their political stance to patronise—and avoided those perceived as having links to mainland China.

But years spent cooped up in Hong Kong during the pandemic and penny-pinching by anxious residents have helped boost Shenzhen’s appeal.

“We’re seeing a readjustment of our way of life that suggests economic interdependency between Hong Kong and Shenzhen,” said Edmund Cheng, a political sociology professor at the City University of Hong Kong.

Last year, Hong Kong residents made more than 50 million trips up north following the lifting of all pandemic-related travel restrictions in February, according to Hong Kong Immigration Department data. That’s still below pre pandemic levels, but the Hong Kong residents’ spending power helped boost retail sales in Shenzhen, which rose by 7.8% in 2023, recording one of the biggest jumps at any mainland city last year.

In a survey by a business lobby last year, just 37% of Hong Kong businesses said they expected revenue to grow in 2024. Less than a third thought they were on track to beat pre pandemic levels.

Korsy Lee, 39 years old, is one of many Hong Kong residents who make a regular pilgrimage to Shenzhen—and earns a profit from it. He began shuttling goods back from Shenzhen last August as a side hustle, and now goes there four times a week, loading up his Toyota minivan with frozen hamburgers, fish maw soup, Panasonic dishwashing machines and even toilet-paper rolls. He takes orders from customers and charges a flat fee.

“Eighty percent of my customers are housewives who want to make every penny count,” he said.


Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’

Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual

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Preparatory Work for UAE to Oman Hafeet Rail Project Commences at Full Speed

Preparations have begun on the transformative UAE to Oman Hafeet Rail network, revealing significant construction details during a site visit.

Thu, May 16, 2024 3 min

The $3bn Hafeet Rail project between the UAE and Oman will feature 60 bridges and a 2.5km tunnel, making it an “architectural and engineering marvel,” according to CEO Ahmed Al Musawa Al Hashemi.

Hafeet Rail has announced that preparatory work is moving full speed ahead for constructing the transformative railway link between the UAE and Oman. This announcement was made during a site visit attended by key officials, members of the Asyad and Hafeet Rail executive management teams, project contractors, and consultants.

Key Highlights

During the visit, attendees were introduced to the main components of the project, including passenger, repair, and shipping stations, as well as major bridges and tunnel sites.

The Hafeet Rail project is set to play a very important role in enhancing local and regional trade, unlocking new opportunities in the infrastructure, transportation, and logistics sectors, and fostering economic diversification. It will also strengthen bilateral relations between the UAE and Oman.

The project will involve constructing 60 bridges, some reaching heights of up to 34 meters, and tunnels extending 2.5 kilometres. The Hafeet Rail team showcased the latest rail technologies and innovative engineering and architectural solutions designed to navigate the challenging geographical terrain and weather conditions while maintaining high standards of efficiency and safety.

The rail network will boost various industrial sectors and economic activities and significantly impact the tourism industry by facilitating easier and faster travel between the two countries.

Ahmed Al Bulushi, Asyad Group Chief Executive Asset, noted that the project’s rapid progress reflects the commitment of the UAE and Oman to developing and realizing the project’s multifaceted benefits.

Investment and Future Impact

Al Bulushi added that investments in developing local capabilities and expertise in rail-related disciplines over recent years have enabled the project to reach the implementation phase successfully under the leadership of highly efficient and professional national talent.

Hafeet Rail’s CEO Ahmed Al Musawa Al Hashemi emphasized, “The commencement of preparatory works for construction is a testament to the robust synergy between all parties involved in both nations, achieving this milestone in record time. We are confidently laying down the right tracks thanks to the shareholders of Hafeet Rail and the expertise of local companies in Oman and the UAE, alongside international partners.”

During the site visit, the visitors explored some of the key preparatory sites, including Wadi Al Jizi, where a 700-meter-long bridge towering 34 meters will be constructed. This ambitious project is envisioned as an architectural and engineering marvel in a complex geographical landscape.

Future phases will require more collaboration, with a continued focus on quality, safety, and environmental considerations in line with the international industry best practices.

The Hafeet Rail project represents the first-of-its-kind railway network linking two Gulf nations, marking a significant shift in regional goods transportation. This efficient and reliable transportation option will reduce dependence on slower and less sustainable road transport.

Hafeet Rail promises a 40% reduction in shipping costs and a 50% in transit times compared to traditional land transportation methods, as it will be connecting five major ports and several industrial and free zones in both countries.

This shift will reduce reliance on road transport by cars and trucks and promote more sustainable shipping practices. The establishment of the railway network will also create significant opportunities for SMEs in construction, engineering, and logistics support, acting as a catalyst for economic growth and innovation within the domestic economy.

By linking major ports, the Hafeet Rail project will enable local SMEs to import, export, and distribute their products more effectively, enhancing their market reach and global competitiveness.


Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’

Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual

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