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Tuesday, February 7, 2023

Hong Kong seeks boost from China to jump-start economy

Hong Kong Chief Executive Carrie Lam announced on Wednesday a host of new measures to further integrate the city’s battered economy with mainland China in an effort to seek new growth as the financial hub reels from its worst recession on record amid the coronavirus pandemic and the aftermath of last year’s social unrest.

In her annual policy address, Lam repeatedly emphasized the importance of maintaining social stability and promoting patriotic education in the restive former British colony, hailing the sweeping national security law imposed by Beijing in June as “remarkably effective” in bringing peace and order despite international pushback including U.S. sanctions.

“Advocacy of Hong Kong independence and collusion with external forces have subsided, radical organizations have ceased operation or dissolved, prominent leaders have absconded and street violence [has] largely been eradicated,” Lam said in her 135-minute speech, adding that her administration would hit back at “unreasonable criticism” by foreign countries and promote Hong Kong’s business opportunities to the world.

New measures to strengthen economic ties with mainland China include expanding the existing Stock Connect programs which allow people on each side of the border to invest in the other’s share markets, encouraging young people to seek jobs on the mainland, and facilitating Hong Kong businesses to tap the mainland market.

Hong Kong’s airport operator will also acquire more shares in Zhuhai’s airport, a nearby regional airport, to establish a “world-class aviation cluster.”

Lam also pledged to build more public housing to stabilize Hong Kong’s high property prices and collaborate with mainland authorities to open the border and resume travel between the two sides once COVID-19 infections are contained.

For the first time since the 1997 handover, the key policy speech had been postponed. In pushing back the address by a month, Lam insisted that she had to consult with Beijing officials on some of her proposals as they would involve collaboration with local mainland governments.

Earlier this month, Lam embarked on a five-day trip to the mainland to hold talks with top ministries on plans to revive Hong Kong’s ailing economy.

Most new measures are expected to pass the Legislative Council with minimal resistance after opposition lawmakers resigned en masse this month to protest against the ouster of four of their colleagues on what were described as national security grounds.

The city government has so far rolled out several rounds of coronavirus relief measures totaling 310 billion Hong Kong dollars ($40 billion) to shore up the economy and protect jobs, leaving limited room for further stimulus spending, Lam said in her address.

Hong Kong’s economy is expected to shrink 6.1% this year — the biggest contraction on record — while officials have warned of huge budget deficits in the coming years. The city government traditionally runs a significant surplus and has built up large reserves.

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