Hong Kong's merchandise exports to the mainland are expected to experience a double-digit growth in 2006, said Hong Kong Trade Development Council (TDC) on Friday.

The mainland's booming consumer market and its reliance on Hong Kong electronic parts will be the main reasons for the robust export growth, TDC Chief Economist Edward Leung told reporters at a press conference in Hong Kong.

"The booming electronics manufacturing business in Guangdong Province will boost the demand for electronic parts and components from Hong Kong," Leung said. Electronics is Hong Kong's largest export item, which contributed 72 percent of its export growth this year so far.

In the first nine months of the year, Hong Kong exports to the mainland increased by 13.8 percent year-on-year to stand at HK$739.7 billion (US$95 billion), TDC data show.

On a global basis, TDC predicted that Hong Kong merchandise exports will increase 9 percent in value in 2006, compared to an estimated increase of 11.5 percent in 2005.

Its exports increased 12 percent year-on-year to HK$1.65 trillion (US$211 billion) in the first three quarters of this year.

"A slowdown in exports is mainly because of oil price hikes and interest rate hikes (in Hong Kong and the United States), which dampens consumption in the United States and the global market," Leung said.

Hong Kong has high exposure to the world economy. Its exports will thus slow down slightly if global markets turn sluggish, he explained.

He also said the yuan appreciation will also cast an uncertainty on Hong Kong exports in 2006.

"Although the 2 percent appreciation of RMB in July did not hamper Hong Kong export apparently, it will inevitably affect Hong Kong's export growth if the range of appreciation further widened," he said.

Commenting on avian flu, Leung said a severe outbreak of the virus might drag down the export growth by 4 percent. An outbreak that lasts for two consecutive quarters will result in a loss of HK$90 billion in Hong Kong's exports, TDC estimated.

However, some good factors will keep Hong Kong's trade fundamentals.

Leung cited continued globalization, liberalization of trade and strong global demand as conducive boosters to the city's exports.

(China Daily December 10, 2005)