DHL GLOBAL CONNECTEDNESS INDEX: HONG KONG SAR RANKS 31ST GLOBALLY IN TERMS OF CONNECTEDNESS

• Hong Kong listed first on merchandise exports and imports
• The city ranks fourth in terms of the scale of its international flows relative to domestic activity

DHL and New York University’s Stern School of Business have released the new DHL Global Connectedness Index 2022, an in-depth report on the state of globalization and its prospects. This year’s edition sees Hong Kong SAR, China at the 31^st spot out of 171 economies in terms of its connectedness, dropping seven notches down since 2019.

Despite the drop, Hong Kong was listed fourth on the depth score among the top economies with largest international flows relative to domestic activity, following Singapore, Belgium and United Arab Emirates. Hong Kong also stands out specifically on trade depth, taking the second spot overall and first on merchandise exports and imports. The report said economies with higher depth scores tend to be both wealthy and relatively small. Advanced economies with limited internal markets will have a larger share of their trade, investment, communications, and even people, outside of their own borders.

"The latest DHL Global Connectedness Index data clearly debunks the perception of globalization going into reverse gear,” John Pearson, CEO of DHL Express, concludes. “Globalization is not just a buzzword, it’s a powerful force that has transformed our world for the better. By breaking down barriers, opening up markets and creating opportunities, it has enabled individuals, businesses and entire nations to flourish and thrive like never before. As we continue to embrace globalization, we can build a brighter future that benefits us all, creating a world that is more interconnected, more prosperous and more peaceful than ever before.”

“Amid global challenges, Hong Kong remained resilient and connected with top economies around the world, with the outstanding performance on the trade depth as a strong proof,” said Ng Chee Choong, Senior Vice President and Managing Director of DHL Express Hong Kong and Macau. “DHL is committed to its Purpose of ‘Connecting People, Improving Lives’, working with our customers and supporting each other to overcome obstacles. Our innovative and connected facilities and infrastructure in Hong Kong, boosted by the soon-to-be-launched Central Asia Hub expansion ensure that we can fulfill our customers’ needs in the post-covid era, as we bolster Hong Kong’s connectedness.”

The new GCI report also contains a ranking of economies that share Hong Kong’s external flow, with mainland China on top of the list with 57 percent, followed by the United States (6%), Singapore (5%), and the United Kingdom (4%).

Other key findings of the Index:

• Where China meets the world: While Hong Kong has long served as a gateway for flows between Mainland China and the rest of the world, it is no surprise that it is a strong outperformer on depth. What might appear to be more surprising is its underperformance on breadth, however. The reason for this is that it is so closely connected to the mainland: in 2021, the combined trade, capital, information and people flows that took place between Hong Kong and Mainland China made up 57% of its external flows. The rest of Hong Kong’s connections were spread throughout the world, although primarily with the large Asian economies. The United States and United Kingdom also feature prominently in Hong Kong’s connections.

• Resilient international flows despite world’s issues: The report shows that international flows have been remarkably resilient in the face of recent shocks such as the Covid-19 pandemic and the war in Ukraine. After a slight decline in 2020, the composite DHL Global Connectedness Index rose back to above pre-pandemic levels in 2021. The currently available data points to a further increase in 2022, despite slower growth in some flows. International trade in goods was 10 percent above pre-pandemic levels in mid-2022. International travel remained 37 percent below 2019 levels in 2022, but doubled compared to 2021.

• U.S. and China - Geopolitical rivalry fray connection: The DHL Global Connectedness Index provides evidence that the U.S. and China are decoupling in many fields. Looking at 11 types of trade, capital, information, and people flows (such as merchandise exports, M&A transactions, and scientific research collaboration), the share of U.S. flows with China declined for 8 out of 11 types since 2016. In the same period, the share of China’s flows with the U.S. decreased for 7 out of 10 types with data available for China. Several of these were large declines. Nonetheless, the U.S. and China are still linked by far greater flows than any other two countries that do not share a border. Further, the data shows that, so far, the decoupling between these two countries has not led to a broader fragmentation of global flows between rival blocs of countries.

• Trade flows stretched out over longer distances during the Covid-19 pandemic, contrary to predictions of a shift from globalization to regionalization. Roughly half of all international flows already happen inside major world regions, and it is still an open question whether regionalization will increase significantly in the coming years.

• The volume of world trade in goods reached 10% above its pre-pandemic level in mid-2022, and trade in services also surpassed pre-pandemic levels last year. Trade growth, however, is forecast to slow in 2023, mainly due to slower global economic growth.

• The Netherlands was the most globally connected country in 2021, after falling to second place in 2020. Singapore ranked second overall and first in terms of the size of international flows relative to domestic activity. The United Kingdom had the most globally distributed flows.

• Europe is the most globally connected region, with 8 of the 10 most globally connected countries located there. Europe leads on connectedness of both trade and people, while North America leads on capital and information.

The DHL Global Connectedness Index

Published regularly since 2011, the renowned DHL Global Connectedness Index provides reliable findings on globalization trends by analyzing 13 types of international trade, people, capital, and information flows. The 2022 edition is based on over four million data points from 171 countries, accounting for 99.7 percent of the world's gross domestic product and 96 percent of its population. A collection of 171 one-page country profiles provides concise summaries of individual countries’ globalization patterns.

The report was commissioned by DHL and authored by Steven A. Altman and Caroline R. Bastian of New York University Stern School of Business.