HK must take decisive action against virus or fall behind, economists say
Hong Kong must aggressively move to stop the coronavirus pandemic that has knocked the city to its knees or risk losing out on the unprecedented growth opportunities of the Guangdong-Hong KongMacao Greater Bay Area, senior economists warned, as medical experts cautioned about a looming fourth wave.
A third wave of COVID-19 infections started in July, with the total number hitting 5,193 as of Monday.
If the outbreaks continue and almost all crossings with the mainland remain closed, Hong Kong “may not be able to keep pace with other cities on matters related to the Bay Area’s development,” Francis Lui Ting-ming, a prominent economist and professor emeritus at the Hong Kong University of Science and Technology, told China Daily. “It would be a great loss for Hong Kong.”
Lui said he would feel pessimistic about the city’s long-term development if it continues to adopt only “defensive” anti-pandemic measures and wait for a coronavirus vaccine to reverse the infection rate.
Hong Kong’s economy is suffering its worst decline on record. The city’s real GDP fell by 9.1 percent year-on-year in the first quarter and slumped by 9 percent in the second quarter. The figure is worse than the third quarter of 1998, when the city was mired in a recession caused by the Asian financial crisis and GDP shrank 8.3 percent.
In Lui’s view, one of the golden opportunities for restarting the city’s hammered economy is the development of the Bay Area.
The Chinese mainland’s economy has seen a recovery from the second quarter, and cross-boundary travel and economic activities between the mainland and Macao, the other special administrative region in the Bay Area, have gradually resumed as the pandemic in both places comes under control.
In addition, the prolonged public health crisis may also distract Hong Kong’s efforts to optimize its recruitment policies, which can help the city attract more top Chinese professionals who leave the United States amid increased US sanctions, Lui said.
“As far as I know, some mainland cities and universities of foreign countries have had plans to seize the opportunity and net these worldtop scientists,” he said. “Hong Kong should not miss out.”
Lui urged the Hong Kong government to take stricter anti-pandemic measures, saying he thinks mandatory citywide testing for COVID-19 will be the “most cost-effective” option.
As the Hong Kong government spent HK$530 million (68.4 million) in last month’s universal virus testing in which more than 1.78 million residents participated, he estimated the cost of a citywide mandatory testing program will be HK$2 billion to HK$3 billion.
Considering that Hong Kong’s economy lost an average of HK$5 billion every week in the first half of this year, Lui said the cost of the testing program is low and it can help to identify more invisible local transmission chains and give both the
Hong Kong needs to recover from the COVID-19 crisis as soon as possible and create a good reputation. Only in this way can it build up overseas investors’ confidence in the city.’’
Billy Mak Sui-choi, associate professor in the Department of Finance and Decision Sciences at Hong Kong Baptist University
government and the private sector confidence to restart the economy.
Terence Chong Tai-leung, associate professor of economics at the Chinese University of Hong Kong, agreed that the SAR should adopt tough and multiple anti-pandemic measures to prevent a spike in new local infections, and encouraged the timely opening of boundaries with the mainland.
“Once the pandemic is under control, the government should not be over-cautious about border restrictions,” he said.
With no immediate recovery in sight from the months-long pandemic, economists suggested the global financial hub look into feasible ways to boost the city’s hard-hit economy beforehand.
Chong suggested boosting the financial sector, which is one of Hong Kong’s economic pillars and is less affected by the pandemic.
“We can widen the scope of financial products and financial services provided in markets, and improve the competitiveness of existing financial products,” he said.
Introducing new measures
Echoing Chong, Billy Mak Suichoi, an associate professor in the Department of Finance and Decision Sciences at Hong Kong Baptist University, said more effective measures have to be introduced to protect investors’ interests and further promote Hong Kong’s financial services and products outside the territory to attract more investment.
As the frictions between the US and China generate heat on a broad front, Mak urged Hong Kong to explore new overseas markets, including Southeast Asian, Middle Eastern and Central European countries, to reduce risks.
“Hong Kong’s economic and trade offices need to play a bigger role in this process, and the government should grant funding to local small and medium-size enterprises to encourage them to explore new markets,” Mak said.
Hong Kong has 13 Economic and Trade Offices in foreign countries and regions in Asia, Europe and North America.
Only by implementing these plans and measures beforehand can the local economy revive quickly after the pandemic ends, he said.
“Hong Kong has to recover from the COVID-19 crisis as soon as possible and create a good reputation. Only in this way can it build up overseas investors’ confidence in the city,” Mak said.