January 9, 2023
HONG KONG – The progressive and orderly resumption of quarantine-free travel with the Chinese mainland will boost consumption and investment confidence in the Hong Kong Special Administrative Region, Financial Secretary Paul Chan Mo-po said at the 2023 CGCC Forum on Friday.
“Although the number of visitors is not expected to immediately reach the level (that it did) before the pandemic, it will help the local tourism and catering sectors to some extent,” Chan said during the keynote speech of the forum, which is themed “Building strong growth momentum for greater competitive advantage”.
Under the first phase of the travel resumption, the financial center will allow up to 50,000 arrivals daily from the mainland to enter via land ports starting Sunday
The annual event, organized by the Hong Kong Chinese General Chamber of Commerce, explores the economic opportunities and challenges facing the city in the year ahead.
The finance chief predicted that Hong Kong’s economy will recover this year, while warning that inflation will be higher than in 2022. “The exact figures will be announced during the 2023-24 Budget release,” he said.
The central government late last year gave the green light to reopen the border with Hong Kong, which has been shut for three years because of COVID-19. Under the first phase of the travel resumption, the financial center will allow up to 50,000 arrivals daily from the mainland to enter via land ports starting Sunday, while Hong Kong has set a limit of about 60,000 people who are allowed to travel to the mainland each day.
Chan said, “The domestic spending last year was stable, and the unemployment rate declined significantly because of the administration’s support measures.”
He remains upbeat about the city’s housing market despite rising interest rates. “There will be no huge downside risks to the property market. But it might be still under pressure in the short term as the US rate hike cycle is going on,” Chan added.
Chairman of CGCC Jonathan Choi Koon-shum forecast that inflation will continue to dog the economy. But he said the resumption of normal travel with the mainland is crucial to reinvigorating the local economy.
Looking forward, “Hong Kong should enhance its role as a superconnector, investor and operator, attracting foreign capital (to the mainland) with its wide business connections, robust transportation system and professional services,” he said.
During a panel discussion on how to sustain Hong Kong’s prosperity, E Zhihuan, chief economist of the Bank of China (Hong Kong), said the economic recovery this year will depend on internal consumption amid multiple external headwinds, such as inflation and geographic tensions, looming over the city.
Under Secretary for Hong Kong Commerce and Economic Development Bernard Chan Pak-li said one of his work priorities is to speed up goods flow between the mainland and Hong Kong via GPS system, in a bid to cut logistics costs for small and medium-sized enterprises.
In addition to talking about Hong Kong’s prospects, Yu Yongding, an academician of the Chinese Academy of Social Science, discussed the mainland’s macro economy, suggesting that policymakers consider increasing residents’ income to stimulate economic growth. “Consumption vouchers can only boost markets in the short term”, improving anticipated revenue is a more sustainable way to spur spending, he said.