David Liao

Macroscope | Hong Kong’s budget offers glimpse of how city can lead China in green and sustainable investment

In addition to providing support for local businesses beset by the pandemic, the 2022-23 budget promises to channel investment into strengthening ties between Hong Kong and the Greater Bay Area, and into making the city a hub for the development of a regional green economy

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A view of Hong Kong’s skyline from Victoria Peak on January 27. As the city battles a Covid-19 outbreak, the 2022-23 budget delivered in February offered some relief for struggling businesses and signalled future opportunities for growth. Photo: Bloomberg

David Liao

Published: 4:15pm, 2 Mar 2022

Last week’s budget offered a reminder that despite the significant challenges of the pandemic, there are still opportunities to strengthen Hong Kong’s economic future, particularly when it comes to enhancing our status as a global financial centre.

Financial Secretary Paul Chan’s primary focus was, as it should have been, ensuring that Hong Kong’s commercial sector would not only survive the continuing disruption caused by the fifth wave of Covid-19, but bounce back as soon as restrictions are lifted.

It was particularly good to see that funds are being channelled into small and medium-sized enterprises (SMEs), which have been hard hit but remain the backbone of our local economy. These are the companies that are the nurseries of Hong Kong’s unique entrepreneurialism and make us who we are: every one that fails makes us all poorer.

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Despite the huge challenge of containing the pandemic, we cannot afford to let it divert us from our preparations for the future. Unlike manufacturing, retail or hospitality, modern financial services can continue to grow in lockdown. The world will not stand still while we address our problems and we must make sure that we maintain the momentum that has for decades made Hong Kong the world’s most innovative and agile financial centre.

This year’s budget laid out what the government is doing to promote new growth. Special attention is being given to making capital markets deeper, more diverse and more efficient, including promoting Hong Kong as a global centre of green finance; fostering connectivity with the rest of China and the Greater Bay Area in particular; and realising the territory’s potential as a regional and global hub for the new economy.

It is welcome to see the government using this opportunity to take proactive measures to expand the “Connect” schemes, develop a local yield curve by issuing bonds with longer tenors, promote the use of renminbi, and accelerate plans to develop an electronic bond trading platform.

These developments will be particularly valuable when it comes to consolidating our position as a global centre for climate funding.