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Opinion | As Hong Kong’s economy sputters, it’s time to face the new reality
- The falling visitor numbers, increase in Hongkongers heading to the mainland and a patchy economic recovery call for a clear-eyed recognition of the changed business environment
- The government must take a longer-term view and think hard about what sort of city Hong Kong will become in 10 to 20 years’ time
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After a year of stability pockmarked by patchy economic recovery, Hong Kong’s financial secretary faces the triple challenge of weak local consumption, slumping stock and property markets, and the spectre of a structural fiscal deficit.
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For an economy that has prided itself on the ability to chalk up hefty fiscal surpluses despite a low and simple taxation system, Hong Kong’s current predicament calls for a clear-eyed recognition of underlying trends and the changed business environment.
The government estimated about 34 million visitors came to Hong Kong in 2023. Although the numbers were higher than the 25.8 million visitor arrivals estimated by the Hong Kong Tourism Board in early 2023, the authorities were shocked to find far more Hong Kong people flocking to Shenzhen to spend their money than the other way round.
On December 23, at the start of the Christmas weekend, 435,661 travellers left Hong Kong for the mainland, more than 2½ times the 161,789 who came from the north. Likewise, on December 30, 299,713 people went north, substantially more than the 151,428 southbound visitors.
The northbound traffic has become so alarming that the government launched a “Night Vibes Hong Kong” campaign – night markets in various districts – to stimulate local consumption and tourist spending. Yet, despite officials’ best efforts, the contribution of such low-end economic activity to gross domestic product has been minimal.
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The government cannot be faulted for striving hard to revive nightlife and domestic consumption, but it is far more important to grasp what this seemingly unstoppable trend portends. It shows that because of the strong local currency, high business costs and labour shortage, Hong Kong’s low-end consumer services are losing out to the mainland.
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