As 2010 drew to a close, we could look back at what happened in Hong Kong this past year, and learn from both the successes and failures to better prepare ourselves for the future.
Our economy made an impressive comeback last year. The International Monetary Fund recently raised its forecast for Hong Kong's economic growth in 2010 to 6.75 per cent, but expected it would drop to between 5 and 5.5 per cent this year. Growth was mainly due to robust financial and housing markets that, in turn, fuelled the economy.
The growth was not prompted by local factors but was the result of a monetary phenomenon; many major economies implemented a loose monetary policy to counter the global financial crisis. The mainland's 4 trillion yuan (HK$4.6 trillion) stimulus package and a moderately loose monetary policy to help maintain its high gross domestic product growth caused a flood of funds into the market and led to huge investment demand.
The introduction of the 100 per cent bank deposit guarantee, the absence of foreign exchange control policies, the free flow of capital, the linked exchange rate system and a consistent rise in the yuan's value have all made Hong Kong an attractive investment choice and a great launch pad into the mainland market.
During his annual duty visit to Beijing, Chief Executive Donald Tsang Yam-kuen met Premier Wen Jiabao , who spelled out three tasks for the city's administration: to maintain Hong Kong's financial stability and become more competitive; to solve its deep-rooted conflicts and improve people's livelihood; and to plan ahead for its long-term prosperity and stability. Wen was right to observe that, to solve our deep-rooted conflicts, we must improve people's livelihood. To achieve that, the government must focus on housing, transport, health and education.
There is no doubt that the administration is determined to curb speculation and runaway property prices. Although the measures introduced last year did cool housing prices and reduce speculation, most prices remain relatively high.