The original text comes fromBloomberg, authored byNectar Gan and James Mayger

Translated by｜Odaily Planet Daily Qin Xiaofeng (@QinXiaofeng888)

The Hong Kong region has become an important channel for high-tech products entering and exiting China, and has become a key node in the $2 trillion trade network in Asia driven by the global AI boom.

Analysis of official data by Bloomberg shows that in the first five months of 2026, Hong Kong accounted for more than half of China's $239 billion in chip imports, marking a record high share. Ten years ago, Hong Kong accounted for only one-third of semiconductor procurement in mainland China.

After experiencing a massive influx of capital, Hong Kong has recently surpassed Switzerland to become the world's largest offshore wealth center, and it is now carving out new economic niches for the AI era. Official data released last week showed that trade between Hong Kong and China increased by nearly 50% year-on-year in May, the largest increase since 1992 (excluding the pandemic period).

"Hong Kong's strong air cargo network and free port status make it an ideal trade hub for semiconductors—these goods are high-value, lightweight, and time-sensitive," said Gary Ng, a senior economist at French foreign trade bank. "Chip manufacturers can engage in frequent and stable transport through Hong Kong or store flexibly for future sales."

As a longstanding gateway connecting China and the world, Hong Kong operates under a free port system with no capital controls, making it a critical part of the emerging business system in Asia, primarily driven by AI infrastructure development.

Economists at HSBC believe this technology "is hardwiring Asia into a tighter production bloc," estimating that AI trade within Asia will double from pre-pandemic levels by 2025, approaching $2 trillion.

However, the role as an intermediary has its pros and cons. Hong Kong lacks chip manufacturing capacity compared to Taiwan and South Korea, and it does not have the market scale of mainland China, making it vulnerable to shifts in geopolitical conditions.

Hong Kong has long been caught up in the US-China trade war. During Trump's first presidency, Washington revoked Hong Kong’s special customs treatment, no longer viewing it as a region separate from China. Since Trump returned to the White House and tightened restrictions on China's access to advanced US chips, Hong Kong has increased its procurement of US-manufactured semiconductors—likely those not subject to restrictions—and has been sourcing heavily from third countries.

The following chart shows that since the second trade war initiated by Trump, US-origin chip imports to Hong Kong have surged:

The yellow line represents US-origin chip imports, and the black line represents chips imported from the US; data from 2012-2026, with a peak of approximately $2 billion; source: Hong Kong Census and Statistics Department

This risk is driving Hong Kong to explore new markets, with Chief Executive John Lee personally leading delegations to the Middle East, Central Asia, and Southeast Asia to achieve economic diversification.

However, at present, AI is the focus of growth.

Despite its limited industrial base, according to data from the Oxford Economics Institute, Hong Kong exported nearly $159 billion in AI-related goods last year, ranking fifth in Asia, surpassing Japan.

"Hong Kong's advantage lies in facilitating the circulation of AI-related products rather than in production," said economist Yongshi Mai from the consulting firm.

Based on calculations by Bloomberg using data from the Hong Kong Census and Statistics Department, nearly all of Hong Kong’s semiconductor shipments are transshipments, with over 80% by value destined for mainland China. About 40% of these chips are supplied from mainland China, one-fifth from Taiwan, followed by Singapore and South Korea.

In the latest report on Asian GDP growth prospects released by S&P, Taiwan and Hong Kong saw the largest rating upgrades, as shown in the following chart:

Source: S&P Global Ratings

Customs data indicates that from January to May of this year, Hong Kong transshipped $124 billion worth of semiconductors to mainland China, accounting for 52% of China's total chip imports. Although the Iran war has triggered global energy shocks, economic prosperity has still helped Hong Kong achieve the fastest growth rate in nearly five years in the first quarter.

Furthermore, data also shows that most of Hong Kong’s exports are related to AI; AI-related electronic products accounted for 57% of total exports this year, up from 44% in 2024, as shown below:

Note: Data is from January to May 2026; source: Hong Kong Census and Statistics Department, Hong Kong Trade Development Council Research Department

Recently, the Hong Kong Trade Development Council raised its export growth forecast for the region in 2026 to over 20%, citing an AI-driven "technological upcycle." The council's research shows that AI-related electronic products currently account for 57% of Hong Kong's exports, up from 44% in 2024. Barclays Bank believes this figure could reach 70%.

Hong Kong waives import duties—an advantage amidst the tit-for-tat trade war and export control between the US and China; however, goods transiting to mainland China are still subject to Chinese taxes and fees.

Even so, mainland Chinese enterprises may prefer to conduct transactions through Hong Kong companies, as dealing through Hong Kong often makes payments and currency exchanges more convenient than directly dealing with foreign suppliers.

"As an intermediary, Hong Kong has found ways to handle payments," said Charles Mok, a Stanford University researcher and former legislator representing the Hong Kong IT sector. "This makes operations easier for mainland buyers."

Hong Kong has surpassed mainland China to become the largest chip export market for Taiwan, achieving triple-digit growth in shipments from South Korea.

This shift occurs as China emerges as the world's largest supplier of AI-related products, although mainland China remains a net importer of advanced chips. China's semiconductor overseas sales surged 111% in May, representing the fastest growth since 2013.

This boom has pushed trade between Hong Kong and China to new historical highs. In just the month of May, Hong Kong absorbed over $40 billion in Chinese exports—this is the largest monthly total since 2015, roughly three to four times the amount China sends to Japan or Germany.

According to Chinese customs data, semiconductors drove much of the growth, accounting for more than one-third of the total export value.

In terms of shipping, Hong Kong's role as an intermediary has been declining for years, as China has built world-class ports in Shanghai, Ningbo, and Shenzhen, allowing mainland goods to enter global markets directly. However, in high-value trade, Hong Kong still maintains advantages.

"For products with a very high intellectual property content, Hong Kong can still play a role in quality assurance, standard validation, and intellectual property protection," said Heiwai Tang, an economics professor at the University of Hong Kong.

Hong Kong's status as an international aviation hub is another advantage. "Hong Kong is close to the mainland and can serve as a distribution center, seamlessly combining air and land transport," said Michael Li Chi Fung, vice chairman of the Nam Pak Hong Association trade group. "This is something other transshipment hubs like Singapore simply cannot do."

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