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  • Dec 18, 2014
  • Updated: 9:27am
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ECONOMY

Impact from cutting number of mainland tourists ‘only short term’, says think tank

Think tank director says the impact of a 20 per cent cut in individual travellers will be significant in short term, but not in long run

PUBLISHED : Thursday, 12 June, 2014, 7:18pm
UPDATED : Friday, 13 June, 2014, 3:50am
 

Cutting the number of solo travellers to Hong Kong will hinder the city's economic growth but only in the short term, according to a think tank's economic simulation.

Andy Kwan Cheuk-chiu, director of the ACE Centre for Business and Economic Research, projected that if the government reduced the number of mainland individual travellers by 20 per cent, the city's real gross domestic product "will immediately drop drastically" in the worst-case scenario.

However, the economist said the impact would be reduced over the course of two years as "tourism only contributes to a small part of the city's economy".

Kwan forecast that the expected gross domestic product for this year would drop to 1.4 per cent from 3.3 per cent if there was a 20 per cent cut in mainland tourists, but the economy would pick up gradually due to its flexibility.

He said real GDP growth in 2016 would be 3.4 per cent compared with the expected 3.7 per cent.

"The cut will only affect one particular industry, not like the financial crisis in 2009 affecting all sectors," Kwan said. "And the tourism industry is small, so small that it won't drag down the whole economy."

He estimated that such a cut would drive up the unemployment rate this year to 3.48 per cent from the forecast 3.21 per cent. In 2016, the rate would be 3.69 per cent compared to 3.2 per cent if there is no reduction.

His projection is based on a simulation called the "Hong Kong economic model", which was formulated by Project LINK under the United Nations to study how different factors such as income, investment, imports and exports affect economic performance.

Late last month, Chief Executive Leung Chun-ying sought the views of the Commission on Strategic Development on a 20 per cent reduction in the number of mainlanders visiting Hong Kong each year.

That came after Hongkongers expressed widespread discontent over mainland tourists flooding the city.

About 40 million mainlanders visit Hong Kong each year, but that figure is projected to hit 100 million by 2020, putting an ever-greater strain on the city.

The debate about reducing mainland visitors has drawn fire from the business sector, with some saying any reduction would harm the city's economy.

Kwan's views were shared by other economists and academics. Bank of East Asia's chief economist Paul Tang Sai-on said the individual traveller scheme did not contribute much to the city's GDP.

"The total economic value-added of [mainland travellers] was only 1.3 per cent in 2012," he said, adding that a reduction in the number of mainland tourists may reduce employment opportunities for low-skilled workers.

Professor Terence Chong Tai-leung of the department of economics at Chinese University did not believe the drop in real GDP would be that drastic, even if the number of visiting mainlanders was cut by 20 per cent.

"The unemployment rate was also about three per cent several years ago when we did not have so many mainland visitors," said Chong. "So the worst case of cutting the number of mainland tourists would be going back to that situation, which is actually not too bad."

 

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This article is now closed to comments

ssslmcs01
I totally agree that slashing the number of Chinese visitors would not have a significant impact on the overall economy in Hong Kong. A large percent of these visitors are coming here to buy things like milk powder which won't boost the local economy and it causes a major inconvenience for local parents.
sudo rm -f cy
So do it NOW.
CutieCat
"75 prostitutes aged 20 to 45 from Sichuan and Hunan holding two-way permits were arrested for breaching the conditions of stay" - Apple Dalily.
.
How many more are out there abusing the permits? Are these the type of people Hong kong so desperately needs, and which the government and tycoons support, despite street-protests from local residents?
.
An utter disgrace.
donniemcm
Let's cut it so that HK can focus on other more sustainable income.
53941394-7914-4aa1-a023-35100a320969
They love to use the phrase "think tanks" to make a statement as an absolute and infallible truth and when they generate a set of numbers and if you don't take heed, you will be a loser. The problem with this city is not the economy, but the mental health and well being of people! We don't need any more pretentious economists to tell us how we are underperformed but we need doctors to tell us how close we are to insanity. How about hiring some in the field of psychology or sociology to gather some statistics, where Hongkoners are from 0 - 10 as 10 being the breaking point.
-
This cutthroat society is build on the philosophy of Gordon Gekko of wall street - "Greed is Right ". The bureaucrats are the epitome of die hard opportunists and they worship no one but mainlanders because mainlanders are the reincarnation of money. They have no interests in how people feel because bottom feeders have no genuine social empathy or responsiblities because these ruthless go-getters regard them as a signs of weakness. Heck, they would have the audacity to use John F Kennedy's speech - ask not what your country can do for you,ask what you can do for your country. In other words, stop whining and keep milking the cash cow you idiots!
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They will put up a charade and reach a consensus to restrict inflow but only for a little while to calm the unrest but soon enough they will invite economists to fabricate more apocalyptic numbers to scare the living daylight out of you.
nicolas
JUST CANCEL THE INDIVIDUAL VISIT SCHEME WITH MULTPLE ENTRY PERMIT AND REPLACE IT WITH 2-WAY ENTRY PERMIT. THIS WILL MAKE HONG KONG SOCIETY BACK TO NORMAL WITHOUT BEING ANNOY BY THESE UNETIQUETTE AND UNCIVILIZED BEHAVIOURS OF MAINLANDERS....HONG KONG WILL BE PLEASE AND PEACEFUL AGAIN...
Dao-Phooy
Prediction of .3% in our economy - Cut the pay of our useless Mandarins and ministers, including their bloated pensions and the predicted drop in our growth would be more than covered!
eddywonlung247
Kick all those mainlanders out,
Tax 25%on all goods.
mmdd67
just charge them an entry tax and use the money to develop tourists projects. I am sitting on a train in Versailles and Hong Kong lags way behind in tourism. There are ecological and other tours we can develop and to bring in more cultural events with the entry tax.
comuller
Hong Kong people should make up their mind. Mainland visitors and tourists do bring business - buying and selling things is business and generates income, profit and revenue. If the impact of mainland visitors was so little in the past, then what was all the whining, shouting and screaming about? Ask the retailers in the New Territories, which make a very profitable business especially with the mainlanders, what they think about lower tourist and visitor numbers. When the numbers dropped after CNY, mainly because visitors increasingly are getting tired of being abused, shouted at and being cheated (yes), business associations already expressed their 'concern'.
Get a hold of yourself and act with common sense. Hong Kong was and is a big shopping mall, it's built and geared for that. Without tourists, what are you going to do? Get plastic factories back to Kwai Hing? Good luck.

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