The Challenge Of Parallel Trading In Hong Kong

The Challenge Of Parallel Trading In Hong Kong by Dan Steinbock, ChinaDaily - Reprinted with permission

This week the Ministry of Public Security took action to restrict visitors to the Hong Kong Special Administrative Region after the increase in day-trippers and traders buying goods in the city led to weeks of protests. As Shenzhen authorities announced a limit on cross-border trips by the city's residents, Hong Kong Chief Executive Leung Chun-ying issued a warning against parallel traders. Concurrently, the multiple-visit permit will be replaced by a new one-visit-per-week permit.

What will be the effect of the policy change?

"Parallel traders" buy their supplies in Hong Kong, which does not charge a goods and services tax, and then sell them on the...