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Chen Maobo said that Hong Kong will run a deficit budget in the next four years.
Hong Kong announced its second budget for the 2019 novel coronavirus (COVID-19) epidemic. Finance Secretary Chen Maobo expects the government has yet to compile a deficit budget for four consecutive years.
Affected by the epidemic, Hong Kong’s economy will experience negative growth of 6.1% in 2020. However, when Chen Maobo announced his budget in the Legislative Council on Wednesday (February 24), the SAR government will implement 120 One billion Hong Kong dollars (15.48 billion US dollars) countercyclical measures to stabilize the economy, and Hong Kong will achieve 3.5% to 5.5% growth in 2021.
China enacted and implemented the “Hong Kong National Security Law” in late June last year. This year’s budget document first appeared at 8 billion Hong Kong dollars to maintain spending on national security, but did not specify the details of the spending. that attracted public opinion. Commentators pointed out to the BBC’s Chinese reporter that this allows mainland China’s official culture to be reflected in Hong Kong’s national security spending.
The budget also proposes to increase the stamp tax rate on stock transactions from 0.1% to 0.13%. The Hong Kong stock market reacted strongly as the Hang Seng index plunged more than 3% at noon on Wednesday, peaking at 1,100 points. The Hong Kong Stock Exchange was disappointed with the Hong Kong government’s decision, but said it understood that the stamp duty on shares is the main source of public finance.
Chen Maobo replied that the competitiveness of a stock market is, of course, related to cost considerations, but this time the increase was not high and the adjustment range of other stock markets in the Asia-Pacific region on Wednesday was “Similary”. He said the RAE government will closely monitor the impact of tax increases on warehouse income and the stock market.
ING Bank Greater China economist Dr. Peng Aixuan believes that the increase in the stock stamp tax is unlikely to affect trading volume. He smiled at the Chinese BBC reporter: “The market reaction is so cute!”
Zhang Huafeng, a member of the financial services sector of the Hong Kong Legislative Council and a member of the Hong Kong People’s Economic and Livelihood Alliance of the established political group, criticized that the financial industry remains “a hen that can lay eggs. “according to the epidemic of the new crown. Zhang Huafeng said that the Hong Kong financial industry expressed strong dissatisfaction with this.
Some bars in Hong Kong were unable to operate under the new corona virus epidemic prevention ban. As a result, they began trading with flower growers who had nowhere to sell flowers due to the reduction of the Lunar New Year Fair.
Post-epidemic economy
In addition to the epidemic’s impact on Hong Kong’s economy last year, there were also sanctions imposed by the Trump administration in response to the enactment of the “Hong Kong National Security Law,” resulting in related trade disputes between China. and the US.
Chen Maobo did not mention the influence of the United States in his speech. He said: “The world is undergoing major changes that have not been seen in a century. The economic center of gravity is shifting from west to east, and the political landscape has also undergone subtle changes. The overall national strength of the country has increased considerably. , and other Asian developing countries have flourished. But unilateralism has been like this in recent years. The rise, together with the misunderstanding of Hong Kong’s development in some Western countries, has added difficulties. The epidemic has increased the consideration of security and development in several countries, or has further increased protectionism. Some countries encourage or even require companies to relocate to their home countries, which affects global industries Development and arrangement of the chain ” .
The HK $ 120 billion counter-cyclical measures proposed by the Hong Kong government include:
- Personal income tax or wage tax and industrial and business income tax reductions of up to HK $ 10,000
- Provide the unemployed with a personal preferential loan with an annual interest rate of 1%, which can be repaid to the government in up to five years.
- Registration subsidy and registration fee
- Issue a total of HK $ 5,000 consumer e-vouchers to 18-year-old Hong Kong permanent residents and newcomers in installments
- A total of HK $ 934 million was allocated to support the tourism industry, including the establishment of local tourism projects and support for the Tourism Development Board.
- Negotiate with suitable regions to establish an “air tourism bubble”
- HK $ 175.5 billion green bond issuance over the next five years
- Issue at least HK $ 24 billion in silver bonds (pension bonds)
- Fully implement the first “10-year Hospital Development Plan” launched by the Hospital Authority in 2016 and actively prepare for the second 10-year plan, including the pre-configuration of equipment in selected wards of newly built hospitals so that they can be changed to infection in any time isolation room
On the other hand, the SAR government will buy a total of 22.5 million doses of new vaccines against the coronavirus, worth 8.4 billion Hong Kong dollars.
After 15 consecutive years of fiscal surplus, Chen Maobo claimed that Hong Kong’s fiscal deficit for 2020 will be a record HK $ 257.6 billion, and the forecast deficit for 2021 will be HK $ 101.6 billion, which is equivalent to 3.6% of the gross value. domestic product (GDP). He explained that this is mainly due to the introduction of countercyclical fiscal measures and the continuous increase in current spending, it is expected that there will be deficits for the next four consecutive years.
ING Bank’s Peng Aihui believes that the measures in this year’s Hong Kong Budget are not pending, but the economic growth forecast presented by the Hong Kong government is within an acceptable range, mainly due to negative growth in 2020. , which lowered the base. . ING Bank predicts that Hong Kong’s economic growth rate for the full year will be 4.0%.
However, Peng Aixuan has reservations about unemployment loans that will be fully guaranteed by the government, and questioned whether it will eventually evolve towards free cash payments from the government, and why the SAR government insists on not establishing a program of help unemployment. He also does not support the 5,000 yuan electronic consumer coupon that everyone shares and advocates other ways to help people in need.
Reuters quoted Lai Zhiwen, chief economist at Daiwa Capital Asia, as saying that this budget looks generous, but is actually heading towards austerity, and overall spending has actually been reduced compared to the previous fiscal year.
Guoan Fee Debut
Hong Kong National Security Law: Will Hong Kong lose its status as an Asian financial center?
Chen Maobo did not mention national security spending in his speech, but in the budget details document “Spending Budget Summary”, the revised budget for fiscal year 2020-2021 included 8 billion Hong Kong dollars of “non-recurring expenses”, which indicates that for national security reasons.
The document states: “In accordance with the Law of the Hong Kong Special Administrative Region of the People’s Republic of China on the Maintenance of National Security, with the approval of the Chief Executive, the Finance Secretary of the Government of the Special Administrative Region of Hong Kong will allocate special funds from general government revenue to pay for the maintenance of national security and staffing involved in the approval is not restricted by the relevant laws and regulations in force of the Hong Kong Special Administrative Region. This allocation of 8 billion yuan is the previous -special fund mentioned to pay the maintenance of national security in the coming years.
Chen Maobo was subsequently questioned by journalists at a press conference if he intentionally concealed it. He explained that there was no such appropriation in the fiscal year 2021 budget, so it was not mentioned in the speech. However, the corresponding budget was sent to the SAR’s National Security Committee for approval. The appropriation was paid in December 2020 and the quarterly government was announced in early February. The accounts have been “clearly numbered”.
Regarding the detail of spending, Chen Maobo said it is “inconvenient to say more,” saying that it is not only used for the police, but also for other government departments. In the future, it will provide details to the Legislature. Council in accordance with the requirements of the Department of Homeland Security.
Liu Ruishao, a leading China current affairs commentator, told the BBC Chinese reporter that such a formulation of Guoan’s budget seemed ambiguous and “gave an impression of mainland culture.”
“It is difficult to say that Hong Kong’s 8 billion dollars is more or less. Also, is this a real figure? Like China’s military spending, many expenditures are not directly calculated into military spending, such as development. arms and national defense science and engineering research spending. Go to military spending. “
“Similarly, the cost of dealing with social incidents is also so illusory. It’s only known as the ‘stability maintenance fee’ in China. When it’s still public in 2008, the figure is even higher than the expense. military”.
