Trade war is the perfect time to justify Hong Kong’s huge reserves
Finance chief Paul Chan has instead taken to scaremongering, when he should be reassuring us that there is plenty in the kitty to tide us over in case the worst happens
We all know our financial secretary is not the smartest cookie in the jar. Still, Paul Chan Mo-po might have taken the occasion of a potential Sino-US trade war to offer some reassurances – and self-justification. Instead, he wrote in his latest weekend blog warning what a terrible thing it would be for Hong Kong, as if we all didn’t already know.
The first rule of crisis management is not to pray to the heavens and hope for the best. It’s to tell people that you are prepared and will do whatever it takes to soften the blow.
Chan manages to state the extremely obvious, that is, Hong Kong is sandwiched between the world’s two biggest economies that are also our major trading partners and that any trade dispute would certainly be felt locally.
One in five Hong Kong jobs could be lost, he warned, in a full-blown trade fight.
He says he is worried about rising American protectionism that has spawned tariffs on imports of solar panels and washing machines, and a 25 per cent tariff on steel and 10 per cent tariff on aluminium.
“[Hong Kong] is a highly open and small economy,” he wrote. “Free trade is an important foundation of our success. The total value of traded goods and services is about 375 per cent of our gross domestic product. Trading and logistics is a pillar industry of Hong Kong, contributing to some 22 per cent of GDP and employing some 730,000 people. Roughly one-fifth of our labour force work in the sector.”
What we really want to know is, is this the mythical “rainy day” that our government has been saving its reserves of almost HK$2 trillion for?
The finance chief has been under heavy criticism for not sharing more of his current fiscal surplus of HK$138 billion. Chan, like his predecessors, has stressed the need for financial prudence in case we might need the reserves for an unforeseen catastrophe.
Now is the perfect time for him to justify the government’s “prudence” and to reassure that we have enough reserves to tide us over in case the worst happens, say, fiscal stimulus to cushion the adverse impact of a trade war and welfare spending for workers whose jobs might be affected. Maybe he should do this with his next blog post. Let’s make this part one.