THE contraction of the economy and the package of measures announced by the Government to stimulate growth were the subjects of editorials in all leading Chinese dailies yesterday.
The Hong Kong Economic Journal says it appreciates officials' changed attitude in admitting prospects are bleak instead of continuing to dodge the bad news. But it considers the seven measures mainly cosmetic.
The paper says there is not much the Government can do because its financial policy is constrained by the local currency's link with the US dollar, and the currency board system bars it from varying the money supply or changing interest rates.
In terms of fiscal policy, Hong Kong's profits tax rate is already very low and there is not much to be gained by lowering it further. The only thing the Government may do is increase public expenditure, but its latitude to do so is capped by the spending limit imposed by the Basic Law. Moreover, since the Government's share of economic activity is low, the effect of increased public spending on the economy would be small.
The paper warns legislators against forcing the Government to hand out welfare to save the economy, as that will only delay recovery.
Apple Daily agrees there is little the Government can do to lift the economy, which can only be revived by renewed growth in private consumption and investment. But psychologically, the measures should improve market sentiment.
Ming Pao, however, feels the Government can do more - including setting up a tourism development authority, adjusting the starting pay of civil servants, improving the means of defending the Hong Kong dollar, further lowering taxes, and increasing investment in infrastructure.
