Hong Kong is facing its most difficult macroeconomic test in three years as a result of a terrible work of enormous deficits, with researchers urging the government to make prudent cuts as the country struggles.
After the Asian financial crisis in the late 1990s, there were a number of imbalances in the Chinese banking hotspot, but they were only small compared to the$ 252 billion ( US$ 32.4 billion ) gap in the fiscal year 2020 to 2021.
Official statistics show that Hong Kong has had monthly imbalances exceeding US$$ 20 billion in three of the previous four years.
A new budget released on Wednesday will tightly control public spending, according to the city’s finance chief Paul Chan on Sunday ( Feb 23 ), and that the deficits were the result of “multiple internal and external challenges.”
While Chan had previously predicted a deficit in” three or so times,” a former government minister claimed the current state is” not only due to economic processes” brought on by the coronavirus pandemic.
” If you look at Hong Kong versus other markets in the region, for example Singapore, those various markets have done much better”, said Anthony Cheung, who oversaw travel and housing plans.
The migration of high-paid workers and businesses as the city’s reputation abroad suffered after Beijing halted anti-government protests and enacted a comprehensive national security law in 2020 adds to the concern.
Due to the pandemic, Singapore and Hong Kong experienced astronomical shortfalls in 2020, but the past has been able to keep paying relative to income in control as businesses leave the Taiwanese capital, helping it surpass its fiscal goals.
The problem for Hong Kong is not just to compromise its books, but to get governmental sustainability amid US-China hostilities and a downturn in the nation’s second-largest business, Cheung said.
” In the past, we assumed that Hong Kong was geopolitically well-positioned… Now we have to be more vigilant about such assumptions”.
PLUNGING LAND Selling
Hong Kong’s mini-constitution mandates that it” strive to achieve a governmental balance,” a relic of British colonial rule that allowed the government to largely keep the market afloat.
After moving back to China in 1997, it kept its taxes low and refilled its finances by selling land to designers with large hands.