The John Lee Ka-chiu administration is about to release its first budget. From any point of view, the upcoming budget will be a bellwether of the government’s post-pandemic strategy for economic recovery and future development.
When I met with Financial Secretary Paul Chan Mo-po a few days ago, he talked about the difficulty of formulating this year’s budget owing to a wealth of negative factors such as capricious geopolitics, supply-chain disruptions, high inflation, tightened monetary policies worldwide, rising interest rates and repercussions of the pandemic, as well as a 3.5 percent contraction in the local economy and an anticipated deficit of HK$100 billion ($12.74 billion) last year. The good news is that with the resumption of quarantine-free cross-border travel, expectations are running high for Hong Kong’s economic recovery.
If public expectations, as revealed in recent public consultations, are anything to go by, the new budget should center on policies/measures aimed at helping the city return to normalcy and facilitating economic recovery.
COVID-19 has taken a heavy toll on all sectors and people’s livelihoods. Many businesses have shut down or operated under capacity; many employees have had their salaries cut; and many families are struggling to make ends meet. Therefore, the main theme of the budget should be a bailout, aimed at both businesses and individuals.
The reopening of borders is a game changer for Hong Kong; it rekindles hope for brighter economic prospects. Previously all quarters of society could only hope to hang in there; now the aim is for a return to normalcy. 2022 was the most difficult year for Hong Kong’s economy in recent years; the previous budget thus served as a “lifesaver”. Now that things are changing, the new budget should respond accordingly, adding a new role as a booster to resumption of normalcy. One of the key focuses of the budget should be to revitalize the market forces, or the growth engines, which would turbocharge economic recovery.
Industries such as tourism, retail, catering, hotel, transportation and exhibitions were hit hard over the past few years owing to the interruption of cross-border personnel exchanges and material flows. Hong Kong’s renowned professional services sector was also affected to a certain extent. The consumption vouchers were of great help in our hour of need. Now that most difficult period is over, good days are set to come and the government must do what it can to rekindle the hope for recovery. Thus, the budget should set out a clear road map toward this end, introducing measures to revive shut-down enterprises, revitalize ailing businesses, and buttress startups. Conceivably, businesses contributing more to economic growth and job creation should get a larger share of subsidies and perks.
The government recently launched the Hello Hong Kong campaign, giving away 500,000 free flight tickets and consumption vouchers to tourists in a bid to revive the tourism, catering and hotel sectors, which has been wellreceived.
Handing out cash to everyone was merely an expedient measure during hard times. At the end of the day, Hong Kong must invest its money wisely to yield maximum economic benefits. Free air tickets will multiply benefits to various sectors. According to 2018 statistics, each overnight visitor spent HK$6,600 on average. The huge benefits brought in by tourists justify the freebies.
Relief measures in the past three years have eaten up a large chunk of Hong Kong’s fiscal reserves accumulated over the years. With signs of economic recovery in sight, the government should, instead of lavishing money on short-term initiatives, invest more in long-term projects that boost the impetus of economic growth.
For instance, the Northern Metropolis will utterly change Hong Kong’s urban landscape by integrating with Shenzhen’s high-end manufacturing industry belt, and subsequently become a growth engine for Hong Kong. The Northern Metropolis is also well-positioned in the Guangdong-Hong Kong-Macao Greater Bay Area, which deserves more investments that will benefit Hong Kong in the long run.
Another example is the development of the “four new hubs”, which, upon completion, will augment Hong Kong’s distinctive advantages and sharpen its global competitiveness. Injecting more funds into these areas is bound to generate countless benefits.
According to the 2020 Hong Kong Poverty Situation Report, the number of people living below the poverty line has increased to 1.653 million, or nearly a quarter of the population, with over 200,000 people living in subdivided flats. The poverty situation has been aggravated by the pandemic over the past two years.
Relief measures will presumably be one of the focal points of the upcoming budget, but instead of handing out universal benefits, more emphasis should be placed on bailing out the special groups. Measures that were present in the previous budget, such as subsidies for electricity and public transport, additional amounts for the social security allowance, old age allowance, old age living allowance and disability allowance should be retained in the new budget. Hopefully the government will also earmark more funds for public housing to ease the plight of the needy. After all, the government is obligated to take care of the underprivileged.
Speaking at a symposium on the spirit of the 20th National Congress of the Communist Party of China, Xia Baolong, director of the Hong Kong and Macao Affairs Office of the State Council, emphasized the need to be cognizant of the various challenges along the course of “one country, two systems”, to soldier on in the face of obstacles, and to work together to tackle problems. With the guidance of the central government, the special administrative region administration strives to make a difference. It’s hoped Paul Chan will come up with a budget that meets the expectations of society.
The author is a Hong Kong member of the National Committee of the Chinese People’s Political Consultative Conference and chairman of the Hong Kong New Era Development Thinktank.
The views do not necessarily reflect those of China Daily.