Hong Kong finance chief vows to boost consumption amid sales slump
Acting financial secretary says action is needed in face of US interest rate rises and Donald Trump’s uncertain trade policy
The government plans to beef up local consumption this year to mitigate economic risks arising from global uncertainty at a time when the city’s retail slump is worsening.
Acting Financial Secretary Professor Chan Ka-keung told a Legislative Council meeting on Tuesday that the city’s economy faced mounting external uncertainties associated with the trade policy of US president-elect Donald Trump and a strong Hong Kong dollar.
This came as retail sales reversed gear, with the figure for November dropping 5.5 per cent from 2.9 per cent in October and 4.1 per cent in September as tourists tightened their belts.
“The focus of economic development in the coming year is to expand domestic demand,” Chan said. He was commenting in Legco for the first time as financial secretary since his former boss, John Tsang Chun-wah, resigned last month ahead of a possible bid for the city’s top job.
Chan said the city was on track to meet its 2016 economic growth target of 1.5 per cent on the back of resilient domestic consumption. He noted the latest unemployment rate improved by 0.1 percentage points to 3.3 per cent and private consumption and investment picked up following volatility at the start of last year.
“It should not be any problem to meet the 1.5 per cent economic growth target this year,” Chan said.
Hong Kong’s economy grew 1.9 per cent in the third quarter, marking an improvement on the first and second quarter growth figures of 0.8 and 1.7 per cent respectively.
Retailers called for aggressive relief measures to stimulate local consumptions in this year’s budget, including tax rebates for Hongkongers.
Retail Management Association chairman Thomson Cheng Wai-hung said local purchases, which represent 60 to 70 per cent of the overall figure, could effectively help boost retailers’ business, especially at a time when there was little hope of tourist consumption growing due to the strong Hong Kong dollar.
“The easiest and the most direct way is to give money back to the people,” he said, adding measures such as tax rebates would encourage people to visit shops.
However, Chan did not reply when he was asked by lawmakers if the government would return money to the people “given its massive fiscal surplus”. Chan is in charge of drafting the budget.
But he said the government would always consider allocating resources based on the relevant policies in accordance with previous practice.
The November sales figures dealt a blow to city retailers, who have seen 21 consecutive months of declines. Cheng thought retail sales had declined 8 per cent last year and would drop 3 per cent in the coming year.