Having suffered from the grueling COVID-19 pandemic for three years, China’s economy is finally seeing light at the end of the tunnel as the Central Economic Work Conference held in Beijing last month sent out many positive signals that have raised public confidence in post-pandemic recovery.
While the conference did not directly touch on Hong Kong, it will still have an impact on the special administrative region, given that the economies on both sides have witnessed deep integration over the years.
The conference put an emphasis on stabilizing growth, employment and prices, facilitating a full economic recovery, and achieving high-quality growth at a reasonable pace.
The national economy attained a “reasonable” average growth rate of 6 to 6.5 percent for many years before the pandemic. After COVID-19 hit, however, the country attained a mere 2.3 percent growth in 2020 and 8.1 percent in 2021 from the previous year’s low base, and is estimated to have grown by 3 percent in 2022, all of which are rather unsatisfactory levels to say the least. Economic volatility, as a result of the pandemic, has taken a toll on employment and consumption. With empirical data showing that omicron’s morbidity and fatality rates have dropped below those of influenza, the central government promptly relaxed anti-COVID-19 restrictions, a move that has removed the major stumbling block to the country’s economic recovery and development. One can therefore reasonably expect that the mainland economy will take off again this year.
With most anti-pandemic measures having been rolled down, businesses no longer have their hands tied and economic recovery in the mainland is expected to be in high gear soon, which could facilitate a 5 to 6 percent growth this year, double that of last year.
With the resumption of quarantine-free travel between Hong Kong and the mainland, signs are emerging that mainland visitors will soon be pouring into Hong Kong, providing additional impetus to the Hong Kong economy. Cross-border business operations are also expected to spring back to normalcy soon.
Hong Kong, having been rated the best place to do business for 28 consecutive years, is well-positioned to help the country further its opening up. In doing so the city’s superconnector role will be enhanced, bring about more opportunities for its economic development.
The Economic Conference decided that national industrial policies should support both industrial development and industrial security, which entails the transformation and upgrading of traditional industries and the cultivation of strategic emerging industries, as well as strengthening weak links in the industrial chain. This requires a complete “technology-industry-finance” loop, which is an innovative concept aimed at unleashing the synergistic effect of the three sectors to achieve breakthroughs in core technologies and enhance industrial competitiveness.
The process is expected to create huge demand for Hong Kong’s financial services. As an international financial center, Hong Kong is well-placed to provide diverse superior financial services and products to meet insatiable demand from variegated industries on the mainland that aspire to move up the value chain. Hong Kong will be able to gain a foothold and tap into this enormous market as long as it stays at the forefront of research to obtain timely, first-hand information about industrial developments across the border.
The Economic Conference also placed an emphasis on expanding domestic demand and prioritized restoring and expanding consumption, which has been badly dented by COVID-19. This year is the best time for unleashing the growth potential of domestic consumption, bringing the megamarket back to normalcy from its dormancy.
Conceivably, the recovery of the mainland consumer market, particularly its outbound tourism, will give a much needed shot in the arm to Hong Kong’s retail, catering, hotel, transportation and other service sectors that have been hard hit by the loss of mainland visitors. The tourism boom of the old days will return when cross-border quarantine-free travel is in full flow. Moreover, the mainland’s economic recovery will also provide a huge market for Hong Kong companies as well as opportunities for companies on both sides to collaborate in providing mainland investors with more innovative financial products and platforms for investment.
For many years, mainland residents have had only a few investment options other than real estate. Hong Kong should look for ways to expand their investment portfolios with financial assets. On the premise of not creating any systemic risk, Hong Kong’s financial institutions should cooperate with mainland counterparts in providing more innovative financial services and products to mainland investors by leveraging the city’s advantages.
The Economic Conference also decided to devote further effort to the country’s opening up. For instance, it emphasized the need to broaden market access and further open up the modern service industry, offer national treatment to foreign-funded enterprises, and ensure foreign-funded enterprises have equal opportunities to participate in government procurement, bidding and standard setting in accordance with the law.
The desire of mainland enterprises to go global has been pent up for too long because of the COVID-19 pandemic — so has the eagerness of foreign firms to access and invest in the mainland market. The reopening of quarantine-free travel will create huge opportunities for Hong Kong — a “two-way channel” for foreign capital to enter the Chinese mainland and for mainland enterprises to go global.
The Economic Conference signaled that efforts to attract foreign investments will focus on two aspects: further broadening market access and opening up the modern service industry; and promoting institutional openness by aligning with international high standards. These are essentially intended to promote high-level opening up.
Hong Kong, having been rated the best place to do business for 28 consecutive years, is well-positioned to help the country further its opening up. In doing so the city’s superconnector role will be enhanced, bring about more opportunities for its economic development.
The author is a Hong Kong member 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.