Mainland China’s focus on domestic growth could push Hong Kong out of recession, according to financial secretary Paul Chan who called on the city to take advantage of the financial sector and international trade.
Ongoing U.S-China tensions, anti-government protests in 2019 and the coronavirus outbreak in 2020 created the backdrop for the worst annual economic performance in Hong Kong’s history at negative 6.1 percent this year, according to government estimates.
GDP has shrunk for five consecutive quarters, including a 3.5 percent contraction in 2019.
According to Chan on his official blog (Chinese only), major challenges are expected to remain in first half of 2021 but «a turning point» could occur in the second half from stronger momentum.
Trade and Finance
In 2021, Hong Kong should take advantage of its capabilities in trade and finance. On the former, he noted that Hong Kongers were getting accustomed to online shopping, noting that mainland retail sales dropped 7 percent to 27.3 trillion yuan ($4.2 trillion) while those from digital channels rose 10 percent to reach 8 trillion yuan.
And on the latter, Chan underlined domestic growth plans from Beijing’s latest five-year plan which includes closer integration via the Greater Bay Area project.
Vaccine Campaign
Chan noted that while certain sectors will continue to struggle such as tourism due to travel restrictions, the overall economy could rebound faster should Hong Kongers be able to broadly embrace the government’s campaign to vaccinate the city.
Although the number of daily cases as spiked since November, the total number of infections has reached 8,964 – or 0.001 percent of the entire population.
In October last year before the fourth coronavirus wave, the International Monetary Fund estimated that the mainland and Hong Kong’s GDP would grow 8.2 percent and 3.7 percent, respectively, in 2021. The forecast for global growth was 5.2 percent.
