Hong Kong’s economy is finally on its way to recovery, recording a growth rate of 2.7 percent in the first quarter of this year following a losing streak for four quarters. The welcome rebound is chiefly the result of an adjustment to the city’s anti-pandemic policy, which saw the resumption of personnel exchanges with the Chinese mainland and the rest of the world, the recovery of inbound tourism, as well as local consumption. The post-pandemic growth, however, fell behind the mainland’s 4.5 percent, and far behind Shenzhen’s 6.5 percent.
To accelerate economic growth in the post-pandemic era, I believe Hong Kong should make a greater effort to enhance those sectors where it enjoys distinctive advantages.
Revitalizing tourism by enhancing service quality
Although inbound tourists, particularly mainland visitors, are gradually on the rise, the rebound is still falling short of expectations. The number of mainland visitors peaked at 51.03 million in 2018; it then continued to decline before bottoming out at 65,000 in 2021. If the figure returns to its 2018 peak this year, it will substantially fuel Hong Kong’s economic growth.
The problem is that the preferences of mainland visitors have changed following the pandemic. Moreover, Hong Kong is facing growing competition from other places. If Hong Kong still holds on to its old ways of doing things, it will hardly be able to “make the cake bigger”. Efforts to revive tourism in the post-pandemic era should focus on improving the city’s services in two ways.
First, Hong Kong must create new sightseeing spots to boost its allure to tourists. Long queues were spotted in front of the Hong Kong Palace Museum and M+ in the early morning on April 30; the management team had to put in place crowd control measures. Statistics revealed that the Palace Museum received nearly 7,300 visitors on that day, a record since its opening in July 2022; M+ received nearly 19,000 visitors on the same day, an all-time high since its launch in November 2021. Many of those were identified as mainland tourists.
This phenomenon reflects an obvious change in the preferences of mainland tourists, who now have a much stronger appetite for cultural heritage sites. Data also point to a rising ratio of young people among mainland visitors, as well as the growing popularity of “immersive tourism”. Hong Kong, therefore, has to create more and various types of tourist spots to meet the diversifying demands of mainland visitors.
Second, there is a need for Hong Kong to create a more convenient shopping experience for tourists. While the competitive pricing of international brands in Hong Kong retains its appeal to mainland visitors, they have grown accustomed to online shopping, a very popular means of consumption on the mainland, which is made convenient with e-payments, home delivery services, and customer-friendly sales-return policies.
In terms of creating a convenient shopping experience, Hong Kong needs to catch up with the mainland. Some local shopping arcades are cramped and understaffed; customers always need to wait in line for payment. There is also a pressing need for Hong Kong retailers to improve their e-payment systems and home delivery services, which are less sophisticated than those of their mainland counterparts.
Historically, any major event that shakes up the world will inevitably usher in changes to the global economic structure. The COVID-19 pandemic was such an event and has engendered a huge economic adjustment and an opportunity for strategic change. Under such circumstances, Hong Kong should focus on the big picture and find more ways to propel economic growth
Boosting domestic consumption with multipronged approach
Although domestic consumption picked up in the first quarter, it was merely a rebound after removing all quarantine restrictions, rather than real growth from pre-pandemic levels. A lot more effort needs to be made to substantially stimulate domestic consumption.
First, stimulating consumption should be carried out in tandem with promoting employment. Thanks to an improving economic situation, Hong Kong’s jobless rate dropped from 3.5 percent in the fourth quarter of 2022 to 3.1 percent in the first quarter of 2023. The Hong Kong Special Administrative Region government should extend some of the employment promotion programs introduced during the pandemic, or launch new policies to encourage hiring; for instance, offering tax reductions or subsidies to companies creating more jobs.
Second, the government should support the development of new businesses. The pandemic has led to a change in consumption demands of local residents, who have become more mindful of their health, air quality, water quality, food quality, work-life balance, exercise, etc, which resulted in the emergence of new businesses.
Expanding professional services by cooperating with mainland
On May 13, the Ningxia Hui autonomous region organized a trade fair in Hong Kong to promote its wine products. There is great potential for the two places to cooperate in the wine industry, as Hong Kong is one of the world’s major wine-trading hubs. When the country set off on its reform and opening-up process, Hong Kong and Guangdong province’s Pearl River Delta worked together to forge the “front shop, back factory” model of division of labor, which has since expanded to areas beyond the Pearl River Delta. This model is now applied in the collaboration between the wine industries of Hong Kong and Ningxia.
Conceivably, there is a lot of room for cooperation between Hong Kong and other parts of the mainland. Endowed with rich resources, inland provinces, especially the vast central and western regions, have a huge production capacity for industrial and agricultural goods. Nevertheless, they are newcomers and have yet to establish their brands in the international market. Hence, they urgently need a partner like Hong Kong to expand their brands’ global reach. Brand building is just one of the areas offering great potential for Hong Kong and the mainland to join forces. “Integration into the overall development of the country” is not a political slogan; if the two sides can work in concert with each other to discover and tap more collaborative opportunities in the future, economic growth will surely result for both sides.
Augmenting potential by tapping Belt and Road markets
The Belt and Road Initiative covers a broad market that will usher in fresh development opportunities following the resumption of economic, trade and personnel exchanges in the post-pandemic era.
As a “superconnector”, Hong Kong not only bridges the Chinese mainland and the rest of the world but should also connect world economies with various advantages, such as substantial cash reserves, abundant resources, large consumer markets, robust production capacities, first-class innovation, and technology capabilities. Hong Kong’s world-class financial business and professional services will handily serve the needs of all parties and will benefit Hong Kong’s economy in return.
Previously, Hong Kong was focused on the European and US markets. While growth in Europe and America is sluggish now, emerging markets — particularly countries involved in the BRI — are witnessing robust expansion. Hong Kong should, therefore, adjust its strategies, and seek new partners in these markets to expand its development potential.
Historically, any major event that shakes up the world will inevitably usher in changes to the global economic structure. The COVID-19 pandemic was such an event and has engendered a huge economic adjustment and an opportunity for strategic change. Under such circumstances, Hong Kong should focus on the big picture and find more ways to propel economic growth.
The author is vice-chairman of the Committee on Liaison with Hong Kong, Macao, Taiwan and Overseas Chinese of the National Committee of the Chinese People’s Political Consultative Conference, and chairman of the Hong Kong New Era Development Thinktank.
The views do not necessarily reflect those of China Daily.
HONG KONG NEWS