Hong Kong’s external direct investment statistics for 2022 released, demonstrating resilience amid challenges

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8th December 2023 – (Hong Kong) Hong Kong’s Census and Statistics Department (C&SD) revealed the external direct investment (DI) statistics for 2022 today, shedding light on the city’s economic performance. Despite the impact of a weakened local economy, the ongoing epidemic, a challenging external environment, and tightened financial conditions, Hong Kong showcased its resilience in attracting and generating significant DI flows.

The total stock of inward DI, which represents Hong Kong’s DI liabilities, reached $17,306.5 billion at the end of 2022, marking a 2.9% increase compared to the previous year. This figure accounted for 614% of the Gross Domestic Product (GDP) in 2022. The positive growth in the stock of inward DI can be attributed to the inflow of DI into Hong Kong during the year.

In contrast, the total stock of outward DI, representing Hong Kong’s DI assets, decreased by 0.6% from 2021 to $17,051.3 billion in 2022. The outward DI stock accounted for 605% of the GDP. The decline in the stock of outward DI was primarily due to the decrease in the market values of non-resident enterprises that received DI from Hong Kong. However, this decline was partially offset by the positive outflow of DI to enterprises outside Hong Kong during the year.

Analyzing the immediate sources of investment, the British Virgin Islands (BVI) and mainland China emerged as the two largest sources of inward DI for Hong Kong, accounting for 30.9% and 30.0% respectively at the end of 2022. In terms of major economic activity, Hong Kong enterprise groups (HKEGs) engaged in investment and holding, real estate, professional and business services held the largest share of inward DI at 65.4% at the end of 2022. This was followed by banking at 13.0%, and import/export, wholesale, and retail trades at 10.9%.

When examining the immediate destinations of investment, the mainland China and the BVI were the top two destinations for Hong Kong’s outward DI, with shares of 49.4% and 30.3% respectively at the end of 2022. In terms of major economic activity, HKEGs engaged in investment and holding, real estate, professional and business services accounted for the largest share of outward DI at 78.7% at the end of 2022. Import/export, wholesale, and retail trades accounted for 8.3%.

In 2022, the total inflow of DI amounted to $958.4 billion, slightly lower than the $1,066.2 billion recorded in 2021. On the other hand, the outflow of DI in 2022 reached $931.3 billion, surpassing the $726.0 billion recorded in the previous year. When considering both inflows and outflows, a net DI inflow of $27.1 billion was recorded in 2022.

Analyzing the immediate sources of investment, mainland China emerged as the major source of DI inflow into Hong Kong in 2022, amounting to $315.8 billion. The BVI followed closely with an inflow of $189.8 billion. Regarding major economic activity, HKEGs engaged in investment and holding, real estate, professional and business services attracted the largest amount of DI inflow in 2022, totalling $504.7 billion.

Examining the immediate destinations of investment, mainland China accounted for the predominant share of Hong Kong’s DI outflow in 2022, reaching $493.5 billion. The BVI followed with an outflow of $249.5 billion. In terms of major economic activity, HKEGs engaged in investment and holding, real estate, professional and business services represented the largest share of DI outflow, amounting to $591.5 billion.

A Government spokesperson highlighted the significant inflow and outflow of DI, amounting to $958.4 billion and $931.3 billion respectively in 2022. Despite the challenges posed by the weakened local economy, the ongoing epidemic, the deteriorated external environment, and tightened financial conditions, Hong Kong showcased its resilience as a major destination and source of external DI.

The substantial stocks of inward and outward DI, standing at $17,306.5 billion and $17,051.3 billion respectively at the end of 2022 (614% and 605% of GDP), reaffirm Hong Kong’s position as an influential international financial centre and commercial hub. Hong Kong’s attractiveness as a base for multinational corporations to manage investments and businesses worldwide is evident in the vast stock of external DI in the city.

Hong Kong’s DI covers a broad geographical spread and encompasses a wide range of economic activities, with mainland China playing a prominent role as both a source and destination of investment.

The Hong Kong government remains committed to proactively attracting foreign direct investment, particularly those aligned with Hong Kong’s development as the “eight centres,” in order to enhance the city’s competitiveness and foster high-quality growth. Efforts will be made to develop the “headquarters economy” by attracting enterprises from outside Hong Kong to establish headquarters or corporate divisions within the city, thereby bringing in high-quality enterprises to explore the vast opportunities presented by national development. Additionally, the government plans to introduce a mechanism to facilitate the re-domiciliation of companies to Hong Kong, further bolstering its position as a favourable investment destination.