HK pledges HK$10b in economic relief amid unrest

Hong Kong

HONG Kong chief executive Carrie Lam on Tuesday pledged HK$10 billion (S$1.7 billion) in relief measures to prop up the economy as it grapples with months of anti-government protests that have hurt business confidence in the global financial hub.

Hong Kong sank into recession for the first time in a decade in the third quarter as the sometimes violent protests forced businesses to shut and scared away travellers.

The proposed new spending brings the Chinese-ruled city's total stimulus to HK$35 billion since this summer, when protests escalated.

The measures target the elderly, unemployed and low-income residents, with plans to provide cash handouts among other benefits.

The protests flared in June over a now-withdrawn extradition bill that would have allowed criminal suspects in Hong Kong to be sent to mainland China for trial in courts controlled by the Communist Party.

The demonstrations, which have escalated into calls for greater democracy, have also been powered by a broad perception that Beijing is meddling in the former British colony's affairs, despite a guarantee of wide-ranging autonomy when it returned to Chinese rule in 1997, and by complaints of police brutality.

Beijing denied interfering. Police said they have exercised restraint in the face of escalating violence.

On Monday, Mrs Lam joined other government officials at a regional financial forum in praising Hong Kong's resilience as a financial hub, saying its "strengths and resilience, just like our financial systems, have not been undermined despite (the fact) that we experienced considerable social unrest and challenges".

The Hong Kong government said it also aims to increase statutory holidays from 12 to 17 days, subject to discussions with the business sector.

Economists said that while the initiatives may help some affected by the city's downturn, they likely will not provide much of an economic boost.

"The changes in requirements for elderly subsidies and the additional unemployment benefits make sense from a social welfare perspective, but I won't expect them to have visible impact on the economy," said Tommy Wu, a senior economist with Oxford Economics.

Raymond Yeung, chief Greater China economist at Australia & New Zealand Banking Group in Hong Kong, said the statutory days off will essentially align "the holidays enjoyed by white-collar versus blue-collar" workers.

"The impact will primarily be very micro, if you think about how big the size of the population that will be affected by alignment," he said. "Is there any real impact in terms of the macro economy? I'm not sure."

The holiday initiative had not been discussed with the business community, Mrs Lam said at a news conference outlining the measures. She added that the plan may incur extra operating costs for businesses but they could adjust in the longer term.

The government is willing to take the lead, and even lean towards the side of labour on measures related to worker rights, Mrs Lam said.

Financial Secretary Paul Chan, in an interview with Bloomberg Television last week, cooled talk of a cash handout in his upcoming budget, slated to be released on Feb 26. He said the government would "spend boldly" to help the disadvantaged.

The latest round of stimulus adds to the HK$25 billion in spending announced by the government since the start of protests in June, which economists have criticised as amounting to "peanuts" relative to the economy's size and Hong Kong's ample fiscal reserve. REUTERS, BLOOMBERG