Dr Jonathan CHOI Koon-shum (Chairman of the 51st terms of office) September 2019
I firmly believe that when all sectors of society are united – especially when we return to peaceful, rational dialogs on the social issue facing us, we will be able to find a way out and usher Hong Kong into a better future.
The business environment and the social and economic developments of Hong Kong continue to deteriorate as a result of external and internal challenges. On the one hand, the trade friction and political tension between China and the US has escalated further, following new tariff hikes imposed by the two countries on one another, and the US’s calling China a “currency manipulator”. On the other hand, the contestations and violent clashes caused by the Fugitive Offenders Ordinance amendments show no sign of abating.
While the relief measures announced recently by the Financial Secretary to help businesses and local residents do provide a boost to the local economy, I earnestly hope all sectors in the community can stand together to ride out the difficult time.
Economic alarm triggered by the trade war
The enduring trade conflict between China and the US is shaking the global economy, and Hong Kong’s open, export-oriented economy is not immune from the impact. In the second quarter of this year, the city’s year-on-year GDP growth was merely 0.5%. The figure is not only lower than that of the first quarter, but is nearing a 10-year low and marks a 0.4% quarter-to-quarter decline.
The entrepot trade of Hong Kong has been under much pressure since the beginning of this year. The stock and currency markets have also been fluctuating as a result of the Sino-US trade war, the extensive impact of which is manifest in the unemployment rate, which has risen again for the first time in nearly two years. The risk of a “no-deal” Brexit and trade conflicts between Japan and Korea, among other factors in the external environment, only add to the uncertainties facing the Hong Kong economy and local businesses.
In response to the unfavorable economic climate, the HKSAR Government has launched a number of measures to aid small to medium-sized enterprises (SMEs) and relieve people’s financial burden. Measures targeting businesses include the extension of the “Special Concessionary Measures” under the “SME Financing Guarantee Scheme”, and additional funding for the BUD Fund (Dedicated Fund on Branding, Upgrading and Domestics Sales) and the SME Export Marketing Fund (EMF). These programs are also streamlined to enhance flexibility in capital allocation and encourage risk diversification through the opening up of more new markets. I hope the authorities will also consider expanding the coverage of the “BUD Fund” to the Belt and Road (B&R) markets to help Hong Kong businesses to tap into more diverse markets.
Returning to rationality and seizing new opportunities
In addition to the trade war and other external factors, the controversies over the Fugitive Offenders Ordinance amendments have severely dampened the morale of the local community and hampered businesses. Consumption desire has dwindled due to protests in the streets. Violent incidents and activities that resulted in the crippling of air traffic have even tarnished the international image of Hong Kong. Numerous countries and regions have issued travel warnings to the city, dealing a direct blow to the hotel, retail and catering industries. Considering the changes in the business environment, the proposed government fees exemption, and rent and tax reductions by the authorities will no doubt relieve the burden and operational cost of businesses and in turn secure employment opportunities for those working in the affected industries.
A recent document released by the State Council which outlines the Central Government’s intention to build the city of Shenzhen into a pilot demonstration area of socialism with Chinese characteristics has caused concern over whether Hong Kong’s status will be replaced by Shenzhen. I personally believe that the strategic positioning of Shenzhen and Hong Kong will create plenty of cooperation opportunities for the two cities. In fact, through coordinated policies, Hong Kong and Shenzhen will be able to take up leading roles together in the development of the Guangdong-Hong Kong-Macao Bay Area (Greater Bay Area).
Meanwhile, Hong Kong still enjoys free capital flow and no foreign exchange control, which are vital to its status as an international financial center. Hong Kong must fully utilize these advantages to play a hub and bridge role in the internationalization of the RMB.
The city of Hong Kong has seen its fair share of ups and downs. But generation after generation of Hong Kong people have demonstrated their can-do spirit to help Hong Kong out of one challenge after another. In the face of the current internal and external challenges, I firmly believe that when all sectors of society are united – especially when we return to peaceful, rational dialogs on the social issue facing us – put our focus once again on the economy and the livelihood of the people, and actively integrate into the country’s national development framework by seizing opportunities from the B&R and the Greater Bay Area, we will be able to find a way out and usher Hong Kong into a better future.
