Troubled by years of turmoil and China’s economic downturn, the leader of Hong Kong unveiled their yearly policy vision on Wednesday, emphasizing the need to revive the faltering real estate sector while strengthening national security regulations.
According to Bloomberg, the second policy framework that Chief Executive John Lee has released since taking office comes at a crucial time for Hong Kong, a former British colony administered by the Chinese, as it attempts to recover from the unrest of the previous few years.
One of Asia’s liveliest cities has lost vitality due to large-scale pro-democracy demonstrations in 2019, the Covid lockdown, tens of thousands of citizens emigration, and anxiety over a national security crackdown.
In a three-hour address, Lee—a former police officer—outlined measures ranging from cutting geopolitical fees to granting cash incentives to local parents to have more children.
“Hong Kong has many strengths. We should treasure them, without inflating our ego. In face of competition, we should never be complacent; we should not be frustrated or doubt ourselves when we lag behind,” Lee said.
Lee’s main goals were to revive Hong Kong’s economy, which shrank by 3.5% the previous year, and to attract foreign investors and cash when the region’s stock market was volatile. Many families had sold their apartments and relocated overseas.
However, Lee—who faced sanctions from the US government for his part in repressing liberties following the 2019 demonstrations in support of democracy—also emphasized the importance of enhancing national security, which is a top concern for Chinese President Xi Jinping.
“External forces continue to meddle in Hong Kong affairs,” he said, adding that fresh security legislation, including laws to counter alleged espionage activities, known as Article 23, would be enacted by the end of 2024.
“We should pay particular attention to those anti-China and destabilising activities camouflaged in the name of human rights, freedom, democracy and livelihood,” he said.
According to Lee, Hong Kong would implement “patriotic” education in neighborhood schools to strengthen Chinese national identity and solidarity.
He added that to safeguard vital infrastructure, and cybersecurity would be reinforced.
It is challenging for some observers to reconcile Lee’s aspirations for security and economy.
“The Hong Kong business environment is already facing challenges due to an unwelcoming atmosphere and a repressive political climate,” said Sunny Cheung, an exiled activist and visiting fellow at Johns Hopkins University in Washington, DC.
Assets and shares
Regarding the real estate market, Lee announced that stamp duty will reduce in half for buyers of second homes and non-citizen buyers from 15% to 7.5% to stimulate a sector that is essential to the economy.
Additional changes enabled homeowners to sell their residences after two years without paying heavy duties.
Lee added that the government would make more land available for private and public housing.
Shares of Sun Hung Kai Properties and Henderson Land, two significant developers of residential real estate, closed down 0.5% and 0.7%, respectively, reflecting the lackluster response from investors.
During the roughly 300% increase in housing prices in the ten years leading up to 2019, Hong Kong attempted to calm the real estate market. Prices have dropped by 13% since then.
Property values fell to a seven-month low in August, and real estate agents predict a 5% decline by the end of 2023.
“The relaxation of cooling measures is only a band-aid solution that is unlikely to reverse the downward trend of home prices,” said Joseph Tsang, chairman of property consultancy JLL in Hong Kong, citing the global economic downturn and interest rate hikes as lingering factors weighing the market.
Lee said that stamp taxes on stock transactions would drop from 0.13% to 0.1% to increase market liquidity in Hong Kong. Later this year, market data fees will also decrease to support brokerages.
He said that Hong Kong would work to improve programs to draw in foreign talent, expand its position as an offshore hub for yuan, and increase its financial relations with China.
Troubled by years of turmoil and China’s economic downturn, the leader of Hong Kong unveiled their yearly policy vision on Wednesday, emphasizing the need to revive the faltering real estate sector while strengthening national security regulations.