Economists warn of US act eroding investor confidence
What they say Global leaders gather to promote multilateralism, sustainability
The Hong Kong Special Administrative Region announced on Tuesday it will soon unveil a new round of relief measures, one day after the city recorded its biggest plunge in retail sales.
It will be the fourth round of such measures amid social unrest gripping the city for half a year. In addition, the Hong Kong government is on course to record its first fiscal deficit in 15 years.
Briefing the media before the weekly Executive Council meeting, Chief Executive Carrie Lam Cheng Yuet-ngor said details of the new round of relief will be announced by the financial secretary to help “targeted businesses and sectors” ride out the economic downturn.
Thomas Yuen Wai-kee, economics professor at Hong Kong Shue Yan University, said the new measures are likely to target the tourism and retail sectors, which have borne the brunt of prolonged violent protests. Those sectors lack cash flow since tourists have turned their backs on the city, and local consumer sentiment is quite low, Yuen said.
He also suggested new measures be quick and efficient in providing help because previous rounds took too much time and involved too many administrative procedures.
The Hong Kong government has rolled out three rounds of relief measures amounting to more than HK$21 billion ($2.67 billion) since August. Previous measures included fuel subsidies for commercial vehicles and vessels, cash incentives for tourism providers, waivers of government fees for small and medium-sized enterprises and subsidies for low-income households.
Lam said the government has about HK$1.1 trillion in fiscal reserves to weather pressures from bruising SinoUS trade disputes and crippling antigovernment protests.
The chief executive said international business confidence in Hong Kong will be undermined by economic uncertainties brought by the controversial Hong Kong Human Rights and Democracy Act signed by US President Donald Trump last week.
Describing the act as totally “unacceptable” and “unnecessary”, Lam said it has created “an unstable environment” in Hong Kong and hurt local businesses, including about 1,300 US enterprises with regional offices in the city, adding that many business chambers in Hong Kong have voiced strong opposition.
The act subjects Hong Kong’s autonomy to an annual assessment by the US State Department with the threat of revoking the territory’s separate status in trade and finance.
Beijing has announced a series of countermeasures against the US, including barring US military from Hong Kong ports and sanctioning various nongovernmental organizations. Lam said her government will follow Beijing’s moves.
Stopping violence remains high on the agenda if the city wants to recover the economy, said Lam, while expressing her regret that violence returned to the streets over the past weekend after about two weeks of peace.
On Sunday, radical protesters smashed local shops that they believe support the government or have business ties with the Chinese mainland.
Hong Kong economists have warned about the possible impacts the so-called Hong Kong Human Rights and Democracy Act may have on investor confidence in the city as an international financial center, as well as its status as an independent tariff territory.
United States President Donald Trump signed the bill into law last week despite strong opposition from China. The new law demands an annual review of Hong Kong’s autonomy to justify its trade and economic relations with the US, which are separate from those of the Chinese mainland.
David Wong Yau-kar, chairman of the Mandatory Provident Fund Schemes Authority, said that investor confidence is rather important
“While Macao has always been regarded a model in the implementation of the ‘one country, two systems’ principle, especially in safeguarding national sovereignty, security and development interests, Hong Kong falls short in this regard. The deficiencies were especially pronounced during the city’s ongoing social unrest, and the central government has expressed its disappointment over the years.”
Lau Siu-kai, vice-president of the Chinese Association of Hong Kong and Macao Studies
“Macao’s National Security Law becomes a deterrent to activities that threaten national security and the city’s stability, but does not affect the lives of ordinary residents. Looking back at the legislation 10 years ago, it has proved to be a necessary and right move.
With the guarantee of the Basic Law, Macao has achieved excellent development on all fronts, and remains stable in terms of public order. The people of Macao have great confidence that we will have a brighter tomorrow.”
Tong Io-cheng, dean of the Faculty of Law at the University of Macau for an economy as open and international as the Hong Kong Special Administrative Region.
The law might not have an actual impact on Hong Kong’s economic activities, Wong said. However, the US will review its special treatment of Hong Kong in trading on an annual basis and discuss the possibility of sanctions, he added.
Amid the trade war between China and the US, this will make investors worry about whether there will be a limit to Hong Kong’s import from the US in high-tech products and other potential fields, Wong said.
With the addition of months of social unrest, Wong said Hong Kong has imposed on its investors more political risk than ever.
Multilateralism and global partnership are critical to building a new world order that will ensure people reach the future they desire, agreed the attendees of a top-level international forum in Conghua district of Guangzhou, South China’s Guangdong province, Monday.
More than 260 former heads of state or government, leaders of international organizations, academic experts and entrepreneurs attended the 2019 Imperial Springs International Forum on Sunday and Monday. This edition of the forum highlighted the issues of multilateralism and sustainability.
“The international community must actively defend multilateralism, support the United Nations’ essential multilateral system, and take effective collective measures to enhance and strengthen global partnership,” said Vaira Vike-Freiberga, former president of Latvia and president of the World Leadership Alliance - Club de Madrid.
Nathalie de Gaulle, an entrepreneur focusing on technology and energy and great-granddaughter of former French President Charles de Gaulle, agreed that global partnership is important.
“We cannot do anything without the cooperation between countries,” she said. “What we can do between France, European Union and China together can actually change things and move in the right direction,” she noted.
Zhu Feng, director of the Institute of International Relations of Nanjing University, said people should work together to stand against power politics and unilateralism.
When it comes to multilateralism
Once there are doubts, Hong Kong’s status in international wealth management could fluctuate, while the city’s long-time rival, Singapore, becomes a safer destination, warned Wong, who is also a member of the Exchange Fund Advisory Committee — a statutory body that advises the financial secretary about the city’s Exchange Fund.
The law does no good to Hong Kong except for casting the SAR as a “gaming piece” for the US against China, Wong said.
Stephen Wong Yuen-shan, a board member of the Hong Kong Financial Services Development Council, echoed that sentiment, noting that the SAR is a highly export-oriented economy, which is and sustainability, he said, respect is very important, including respecting the diversity of different developmental approaches and the difference in culture, economy and politics.
“China is a practitioner, promoter, beneficiary and advocate of multilateralism. And it is a common view for most of the nations worldwide to expand cooperation and promote co-development,” remarked Chau Chak Wing, president of the Australia China Friendship and Exchange Association.
“Sustained development is beneficial for all the nations and will be good for the whole world. China’s proposal fits in with the trend of today and China is contributing its wisdom and strength to the global governance system reform and development in the new era,” he added.
Neil Bush, founder and chairman of the George H.W. Bush Foundation for US-China Relations, attended the forum for the first time.
“We are living in a day and age where there’s a growing trend toward unilateralism, populism and very sensitive to the uncertainties of the international situation.
The city therefore needs a stable environment to maintain its status as a financial center, Stephen Wong said, adding that the US law can threaten Hong Kong’s independent tariff treatment and as a result lead to a possible decrease in the city’s shipping and cargo transit volume. nationalism,” he said.
To counter this trend, Bush said it’s important for world leaders to gather and talk about the importance of working together and multilaterally approaching issues.
“Rational thinkers at the end of the day will prevail,” he said.
As a firm supporter of multilateralism, China won wide recognition at the forum for its efforts to adhere to peaceful development, use sustainable development as its national strategy and benefit the world through its own development, especially the Belt and Road Initiative.
Bush said he believes it’s true when China invests in infrastructure, buildings, roads and rail, power, schools and hospitals, it does so for the benefit of people in those countries.
Yukio Hatoyama, president of the East Asian Community Institute and former prime minister of Japan, said China has made great achievements in poverty alleviation domestically and improved the living standards of the countries and regions involved in the BRI internationally.