On Dec 13, accompanied by three Politburo members, President Xi Jinping received a report on his annual performance from Hong Kong Chief Executive John Lee Ka-chiu. In a brief press statement, President Xi gave full recognition to Lee for accomplishing the historic task of enacting local legislation to implement Article 23 of the Basic Law. President Xi also highlighted other significant aspects of Lee’s work, including reinvigorating the economy, spurring development, striving to resolve housing, improving on health and other livelihood issues, strengthening external engagement and cooperation, and enhancing Hong Kong’s international influence. The Hong Kong Special Administrative government’s progress in consolidating a positive trend was appreciated, he said.
It is significant that international engagement and enhancement of Hong Kong’s international influence were recognized as important areas of the government’s work. The HKSAR as a whole has indeed accomplished much in reclaiming its pivotal position as an international meeting place. Government agencies and nongovernmental organizations have joined hands to bring reputable international bodies and global leaders to Hong Kong to engage in dialogues on a wide gamut of financial, economic, technological, environmental and geopolitical issues. Xi’s words are a timely reminder that Hong Kong must not lose sight of its unique international character.
The messages embedded in paragraph two of the statement encapsulate the essence of the central government’s expectations. In line with the resolution adopted at the third plenary session of the 20th Communist Party of China Central Committee on further deepening reform comprehensively to advance Chinese modernization, Hong Kong must grasp the historic opportunity to fully utilize its advantages under “one country, two systems”. In particular, Hong Kong was urged to implement reform to align its development with national strategies. Reshaping the economy and unleashing more new productive forces were identified as priority tasks.
The call for reform is not new. During his meeting with business leaders in Shenzhen on Nov 10, Xia Baolong, director of the Hong Kong and Macao Work Office of the Communist Party of China Central Committee, warned that Hong Kong could not expect to continue relying on the old playbook. The HKSAR must accelerate reform to enhance its tourism appeal and grow its tech-based industries, and its traditional advantages as a maritime, aviation and urban hub must be preserved, he said.
The importance of strengthening Hong Kong’s financial services, and trade and logistics sectors cannot be over-emphasized. Research by a leading State-owned bank estimates that in 2022, the two sectors accounted for 45 percent of Hong Kong’s GDP. The contribution of the tourism sector is much lower on a per capita basis, but it provides large numbers of low-skilled jobs. Inbound tourism is also vital for boosting the local retail and catering industries.
Since Hong Kong’s post-pandemic re-opening in February 2023, a combination of factors including changing lifestyles, a strong local currency, and Hong Kong residents’ love of outbound travel have combined to dampen the tourism industry’s recovery. Weak retail spending and restaurant receipts have caused Hong Kong’s economic growth rate to slow to an estimated anemic 2.6 percent.
It is significant that international engagement and enhancement of Hong Kong’s international influence were recognized as important areas of the government’s work. The HKSAR as a whole has indeed accomplished much in reclaiming its pivotal position as an international meeting place
Xia’s comments laid bare the central government’s anxiety about Hong Kong’s slow progress in technological development and lack of innovation in tourism promotion. Against this background, and the need to safeguard Hong Kong’s traditional position as a leading maritime, aviation and transport hub, on Dec 5, Lee dropped a bombshell by announcing the replacement of the two bureau directors responsible for tourism and transport and logistics with younger and more dynamic officials.
Under the political appointment system introduced in 2002, the replacement of bureau directors assessed as under-performing has not been uncommon. Yet this time round, it is evident that a conscious decision was made to appoint veteran civil servants to take the helm. The promotion of women is significant. Even though the HKSAR government does not have an affirmative action program to promote women or minorities for greater diversity, with the appointment of Mable Chan Mei-bo and Rosanna Law Shuk-pui as bureau directors by dint of their hard work, seven out of the 15 bureau director positions, or more than 46 percent, are now filled by women, the largest proportion since 1997.
The appointments have largely been welcomed by the community and the media. There is a general feeling that meritocracy is back. The business community wants leaders who are decisive in implementing reform and supporting industry. The inadequate attention paid to the maritime sector has long been a sore point. With the completion of the third runway, stronger support for the aviation sector is required. Revitalizing the tourism sector also needs bolder initiatives, better judgement and speedier responses. Officials who can communicate with the media and show a common touch are particularly welcome. The two women directors are in their honeymoon period. The first hundred days will test their ability to survive and thrive.
Leadership makes a difference, but the HKSAR government faces other formidable hurdles in its drive to rebuild the economy. The building out of the Northern Metropolis is taking too long and costing too much. The government pins high hopes on the construction of the San Tin Technopole, a 540-hectare tech park that would help propel and integrate Hong Kong’s tech development with the Chinese mainland. Stage one of the works alone, which consists of site formation and provision of roads and other infrastructure, will cost over HK$27 billion. The site will not be ready for occupation until 2031 at the earliest. Given the rapid pace of technological development, Hong Kong will have a lot of catching up to do when the tech park opens.
It is also time for the government to face its fiscal challenges head-on. The government faces a fiscal deficit for the current financial year in the order of HK$100 billion, and by some accounts, including debt issued, of around HK$200 billion. The government needs to bite the bullet and put forward a concrete plan for restoring fiscal balance.
The author is convener of the Executive Council and a legislator.
The views do not necessarily reflect those of China Daily.
