Policy Address officially bids farewell to ‘small government, big market’

The maiden Policy Address of Chief Executive John Lee Ka-chiu comes at a time when Hong Kong finds itself in a complex, volatile, and turbulent internal and external environment. The chaotic situation that plagued Hong Kong for two decades has finally ended thanks to the powerful and effective actions taken by the central authorities, especially the National Security Law for Hong Kong and the drastic revamping of the city’s electoral system. 

The principle of “patriots govern Hong Kong” has been largely realized. Harmonious relations between the executive and the legislature are now the norm. Consequently, the political factors that have for a long time hobbled the governance of the Hong Kong Special Administrative Region, particularly the wanton obstruction and disruption by internal and external hostile forces, have been swept away. These auspicious circumstances thus allow the HKSAR government under the leadership of John Lee to carry out its work proactively and aggressively.

However, because of the grim and changeable international and domestic economic environment, many economic and trade links between Hong Kong, the Chinese mainland and overseas have been blocked because of the raging COVID-19 pandemic. Hong Kong’s economy has also been hit hard by the global recession, rising protectionism, strained supply chains, deglobalization, and the hostile actions of the United States and the West. As a result, the deep-seated social and livelihood problems in Hong Kong that have accumulated for a long time have become more numerous, serious and intractable. The HKSAR government’s financial situation has become quite difficult because of falling revenues and soaring expenditures. In the coming years, it is estimated that the economy, people’s livelihoods and the government’s financial troubles will not only not improve palpably, but may further deteriorate. Hong Kong will continue to face constant attacks and containment from the US and the West, especially in finance and technology. Therefore, how to make full use of the hard-won stable situation, safely navigate the dangerous economic and geopolitical shoals, effectively mobilize and make good use of the resources from all quarters, competently solve various economic, social and livelihood problems with appropriate policies, and live up to the expectations of the central authorities and Hong Kong residents will be the major challenges to John Lee and his administration.

In his Policy Address, John Lee rightly focuses the work of his administration on economic, social and livelihood issues in the coming period. A series of relatively bold and innovative policies and measures are put forward to tackle these issues. The Policy Address reflects the new administration’s high sense of distress and crisis. It realizes that Hong Kong’s economic, social and cultural competitiveness is declining, and is facing intense competition from the mainland and overseas. The mood of Hong Kong residents toward the city’s future is a bit dark. In the new situation, the leadership from a powerful, active and capable government is indispensable to invigorating the city and boosting public morale; and John Lee and his government choose to take on the challenges. In essence, this Policy Address bids farewell irrevocably to the dogma of “small government, big market” that has always been upheld as the lodestar of governance by both the “colonial” government and the HKSAR government in the past. Instead, it shows that the new HKSAR government is prepared to bite the bullet and form an active and accountable government for the country and Hong Kong residents. It’s determined to shake off some of the shackles of policies, rules and procedures “happily” self-imposed by previous governments. This will allow the government of John Lee to carry out its work more boldly, freely, energetically and innovatively.

In essence, this Policy Address bids farewell irrevocably to the dogma of “small government, big market” that has always been upheld as the lodestar of governance by both the “colonial” government and the HKSAR government in the past. Instead, it shows that the new HKSAR government is prepared to bite the bullet and form an active and accountable government for the country and Hong Kong residents. It’s determined to shake off some of the shackles of policies, rules and procedures “happily” self-imposed by previous governments

In the coming days, the new government will actively and proactively intervene in Hong Kong’s economy and promote its global competitiveness, economic development and industrial transformation, and give strong support to some industries with potential or clear competitive advantages, such as innovation and technology, cultural and creative industries, and finance, whereas previous governments generally relied on the market as a driving force for economic development and refrained from “picking the winners” or “tampering” with the “free” market. The new HKSAR government will take the initiative to bring in important enterprises from the mainland and overseas and will provide them with special support. For this purpose, an “Office for Attracting Strategic Enterprises” will be established. It will focus on attracting high-potential, representative strategic enterprises from around the globe and providing them with targeted facilitation and one-stop services.

In the past, the HKSAR government was not very keen on importing talent, and in fact, it was quite passive and even somewhat reluctant. The new HKSAR government regards the enhancement of the quantity and quality of talent as a top priority, particularly given the substantial outflow of talent in the past several years. It will take the initiative to provide convenience and assistance to talents who wish to come to or stay in Hong Kong. A “Talents Service Unit” will be set up to build the city up as a talent hub. A plethora of measures such as launching a Top Talent Pass Scheme and enhancing the “General Employment Policy” and the “Admission Scheme for Mainland Talents and Professionals” will be introduced for the purposes.

The new government will better link education with economic development and industrial transformation. Vocational training will be boosted. These initiatives are undertaken to promote Hong Kong’s reindustrialization as well as create a broader space for young people to develop and be gainfully employed.

In terms of improving people’s livelihoods, the new HKSAR government echoes the paramount and burning concern of the central authorities and Hong Kong residents about the deep-seated social issues that have become major sources of political discontent, social misery and social instability. It has adopted new attitudes and practices to deal with them. Policy and procedural reforms will be undertaken to speed up the supply of land and housing, so that the problem of shortage of land and housing problems that have plagued Hong Kong for a long time can be better addressed. The new government’s proposal to strengthen and broaden the primary healthcare system can be described as a highlight of Hong Kong’s upcoming healthcare system reforms. There are also other sincere efforts at alleviating the suffering of the underprivileged.

The new HKSAR government has actively responded to the appeal of the central authorities and patriotic forces to actively promote Hong Kong’s integration into the overall development of the country. The new HKSAR government is prepared to jettison the passive attitude and political concerns of previous governments in promoting economic and trade cooperation between Hong Kong and the mainland. In this Policy Address, there are many policies, measures and initiatives that are devised to strengthen various links between Hong Kong and the mainland. It’s particularly noteworthy that the new HKSAR government will establish the “Steering Group on Integration into National Development”, chaired by John Lee himself, to strengthen the top-level institution for better implementing national strategies, including the 14th Five-Year Plan (2021-25), development of the Guangdong-Hong Kong-Macao Greater Bay Area, and the Belt and Road Initiative. All these reflect the new government’s awareness that Hong Kong’s future development is inseparable from the development of the country.

To bid farewell to the “small government, big market” dogma of governance, the government’s fiscal thinking and policies must also be revamped accordingly. In the past, the HKSAR government was in principle averse to investing public resources in industries, enterprises, and talents, let alone investing in the mainland, believing that it was anathema and not befitting a “small government”. This self-bound “sacred cow” will be slaughtered with the establishment of the “Hong Kong Investment Corp Ltd” proposed in the Policy Address. This corporation will pool the resources from several funds related to various development purposes. The corporation will be under the steer of the government to attract and support more enterprises to develop in Hong Kong. Undoubtedly, in the future, the fiscal policy of the new government will be more active and in line with the government’s economic and industrial development strategy.

John Lee’s Policy Address demonstrates a strong sense of distress and crisis and could be regarded as a considerable effort of his administration to respond to the concerns of the central authorities and Hong Kong residents. Nevertheless, we need to be soberly aware of the difficult financial situation that the government and Hong Kong will face in the coming days. Fiscal revenue in all areas is likely to continue to decline in an economically difficult environment, but fiscal expenditures are bound to escalate because of the government’s need to introduce a multitude of measures to promote Hong Kong’s development, enhance its competitiveness, and alleviate the people’s suffering. External forces will continue to hamper Hong Kong’s development, disrupt the work of the government, and undermine the governance of the city. Even though John Lee’s administration is bidding farewell to the dogma of “small government, big market”, there are still a lot of people inside and outside the government who are reluctant to give it up, particularly those vested interests which have been the beneficiaries of a “small” and hands-off government. Moreover, the capability and determination of the public officials to successfully and faithfully implement all the new initiatives have still to be closely observed and monitored.

The new HKSAR government’s various ambitious plans will hence severely test its ability, courage, wisdom and stamina to govern, especially its ability to execute those initiatives that require “sacrifices” by individuals and social groups. When determining how to make good use of the support of the central authorities, as well as how to vigorously mobilize the resources and support of all sectors of society, the patriots will certainly be the key to the success or failure of the HKSAR government’s future undertakings.

The author is a professor emeritus of sociology, the Chinese University of Hong Kong, and vice-president of the Chinese Association of Hong Kong and Macao Studies.

The views do not necessarily reflect those of China Daily.