Hong Kong Business News

Financial Secretary Paul Chan this morning spoke about the Government’s fiscal consolidation strategy, the removal of residential property sector cooling measures and more as he answered questions from the public about the 2024-25 Budget on a radio phone-in programme.

Besides giving answers on Hong Kong’s overall fiscal position and the decision to end demand-side management measures in relation to residential properties, Mr Chan discussed the Kau Yi Chau Artificial Islands project, and the Government’s support for green development.

Asked about policies designed to support the city’s ongoing post-pandemic recovery, he said: “We are implementing a financial consolidation strategy. On the one hand (we are) cutting expenditures, and on the other hand trying to increase our revenue.”

Explaining that the Government hoped to minimise any impacts of this strategy on people and businesses, he iterated that the city’s economic fundamentals are strong.

“The borrowing level of the Government is very low and we have a very strong fiscal reserve, and the economy is growing. We went through a couple of difficult years during the COVID-19 times, (but) last year the economy grew by about 3.2%, and this year it will grow by between 2.5 to 3.5%.”

On plans to issue bonds of between $95 billion and $135 billion per annum over the next five years, he added that these would allow the Government to continue to invest in worthwhile capital projects.

“The Northern Metropolis development is one (project). The Hung Shui Kiu/ Ha Tsuen New Development Area is another. And we are also (investing) heavily in innovation and technology. That is the reason for us to raise funds from the market.

“We are using bonds to tide us over, to continue to make investment. During the interim, the Government's fiscal reserves stand at between 11 to 12 months of our yearly expenditure, which is still a healthy level.”

On the removal of demand-side housing measures, the finance chief said these had been introduced at a time when the market was not functioning well but that it was now more stable in terms of the supply of residential units.

“I think the volume (of transactions) will probably be going up because by removing all these measures, we release some supplies which have been held because of the restrictive measures before.

“Coupled with the relaxation in the mortgage measures, I think for home owners now they will be better able to buy property with these bank loans and there will be more choices for them as well.”

He added that the Government will monitor the property sector closely going forward. “If (the market is) running out of hand again, nothing stops us from reintroducing those measures.”

In response to a question about the Kau Yi Chau Artificial Islands project, which has been deferred, Mr Chan said it will definitely go ahead but that a pause will allow the Government to take stock and look into different financing options.

“We have to complete all the feasibility studies, and then take stock of the findings of those studies to see whether we have to do some mitigating measures to the environment. At the moment, it will be delayed slightly – maybe two or three years – but we are determined to push this project ahead.”

He explained that the reclamation project is important in terms of logistics and Hong Kong’s overall spatial development, as it will establish a new community on the west side of the city.

Mr Chan was also asked a question about the significance of green development as a growth driver, after announcing a number of Budget measures to support both green initiatives and digitalisation.

“Green is a global development,” he said. “We must embrace this. In the Hong Kong situation we are positioning ourselves as the green tech and green finance centre. If we can marry these (two things) together, they will reinforce each other and create a complete industry chain.”

He added: “(Digitilisation) is going to cut across different sectors. On the one hand it will be able to empower traditional sectors to upgrade themselves, but on the other hand in itself it can develop into a completely new sector.”

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