Hong Kong is expected to announce measures to boost the territory’s economy in its annual policy address today, including slashing liquor tariffs, as it seeks to revive the financial hub, which has been struggling to recover since the COVID-19 pandemic.
Hong Kong’s small and open economy has felt the ripple effects of a slowdown in the Chinese economy. Its economy expanded 3.3 percent in the second quarter from a year earlier, and is forecast to grow by 2.5 to 3.5 percent for the year.
Although tourism numbers have rebounded since the COVID-19 pandemic, with 46 million visitors expected this year, consumption and retail spending remain sluggish, while stock listings have dried up and capital flight remains a challenge.
Photo: Reuters
In February, Hong Kong’s financial secretary announced new measures spanning property, tourism and financial services, noting headwinds including a complex geopolitical environment and ballooning budget deficits.
However, in a meeting last month between Hong Kong and Macau Affairs Office Director Xia Baolong (夏寶龍) and Hong Kong Chief Executive John Lee (李家超), Xia emphasized a need for further “reforms” to spur economic growth, in line with China’s national strategy.
He called on the Hong Kong government to “unite and lead all sectors of society” to promote reforms, while urging businesspeople to help in this drive.
One commentator in the state-run China Daily said Xia’s speech suggested a need for “economic and social reforms.”
Lee has said the focus this year would be on economic development and people’s livelihoods. His government pushed through new national security laws in March, which Lee said had improved stability.
Some countries, including the US, have criticized Lee for leading a years-long security crackdown that has jailed opposition democrats, shutdown liberal media outlets and curbed freedoms.
Local media also reported possible plans to phase out some of Hong Kong’s more squalid subdivided apartments — tiny cubicles that have been criticized as below acceptable living standards.
Lee is also expected to push more tourism-related initiatives.
On real estate, a key pillar of the economy, Lee is under pressure to do more to revive a market that has fallen about a fifth from its 2021 peak.
Some market players including Midland Realty’s Hong Kong residential CEO Sammy Po (布少明) have called for further cutting of red tape to help Chinese buyers, including younger ones on talent schemes, to transfer capital and secure mortgages.
Liquor taxes could also be slashed from the current 100 percent — one of the highest rates globally — to try to turn the territory into a spirits trading hub in the way that it became an Asian wine trading hub after wine duties were abolished in 2008.
The move might benefit local bars and restaurants that have struggled since COVID-19, with many local residents now opting to travel across the northern border to the Chinese city of Shenzhen to dine more cheaply.
Retail sales were down 7.7 percent for the first eight months of this year compared with the same period a year before.
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