Political unrest will damage HK’s weakening economy, says Tsang
Print Edition
HONG Kong’s financial secretary said yesterday that political unrest would “unavoidably” damage the economy as he predicted a slowdown in growth this year.
In an unusually emotive budget speech, John Tsang said the riots that had rocked the city earlier this month had left him “distressed and angry.”
The violence broke out on the first night of the Lunar New Year, February 8, after protesters gathered around illegal food sellers in the busy commercial district of Mong Kok to protect them from health officials.
Masked demonstrators hurled bricks at police, who in turn fired warning shots in the air — a rare occurrence in the city.
More than 30 protesters are facing charges of “rioting” while some have also complained of police violence.
“I was shocked that our city could have turned overnight into such a strange and alien place that I hardly recognized,” Tsang said.
“We anticipate that political disputes will only intensify over the coming months,” he added, warning of possible “chaos.”
“Political volatility will unavoidably impact on our economy,” he warned.
Tsang said legislative elections in September would exacerbate tensions and traced the city’s woes back to major demonstrations in 2014.
Describing the economic outlook as “far from promising,” Tsang said growth for 2016 would be between 1 and 2 percent — down from last year’s 2.4 percent — weighed by US interest rate rises, a lull in exports and a slowdown in tourism.
The property market in the city had also taken a hit, with prices falling 9 percent since October, Tsang said.
The bleak forecast comes as the Chinese mainland’s economy slows, impacting regional and global markets.
In a city where the wealth gap is widening, Tsang announced a HK$38.8 billion (US$5 billion) relief package, including a 75 percent reduction in income tax.
Some economists said core sectors, including trade, property and finance, were in trouble and needed longer-term solutions.
“More one-off relief measures were always likely given the weaker outlook for the Hong Kong and global economy,” said John Zhu, an economist for HSBC, who said the budget was no surprise.
“The long-term challenges are not something that can be solved in a single budget,” he said. “But the support for SMEs, technology and innovation is certainly what Hong Kong could do with.”
After a stint of healthy surpluses, including HK$30 billion for the current financial year, Tsang said he expected the city to run up deficits in its consolidated accounts for two years starting from 2018, largely due to the need to pay for health care reform and retirement protection.
Tsang also unveiled stimulus measures for industry and said the long-awaited Shenzhen-Hong Kong Stock Connect — designed to open up stocks to investors both sides of the border — was ready to go, subject to Beijing’s green light.
He finished with a quote from late US president John F. Kennedy, saying: “Our problems are man-made, therefore they can be solved by man.”
Small groups of protesters gathered outside the government offices during the speech, mainly to call for better pensions.
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