Budget move shows streetwise senseEditorial | Mary Ma 16 Aug 2019
Financial Secretary Paul Chan Mo-po is dishing out some budget sweeteners early.
Yesterday, he announced a basket of extra budget measures worth some HK$19.1 billion to provide relief for small businesses, along with more generous student subsidies and goodies for poor households.
That’s a drastic and urgent move by the administration in an attempt to restore stability in society, amid mounting fears that Beijing may order its paramilitary forces to cross the border to crush local anti-government protests.
It would be too early to say if the fiscal package -- including additional tax relief, electricity subsidies and one more month of welfare payment -- would immediately change the course of events. However, they will certainly help reduce some public anger.
Chan insisted the fiscal relief is unrelated to the current political crisis. That can't be true, as the central government liaison office director Wang Zhimin had sounded it out recently, predicting a bucket of gold for everybody. Chan's announcement served as confirmation.
Then it would be wrong to stop there. The administration should sustain the fiscal measures with new steps to address outstanding concerns voiced during the often violent demonstrations.
According to Chan, the new relief measures will cost HK$19.1 billion in additional spending, on top of the HK$42.9 billion already committed in his 2019/2020 budget speech.
It was unprecedented for a financial secretary to resort to such dramatic action without waiting for the next budget that, in the current case, won’t be due until early 2020. But in light of the emergency situation, it was wise for Chan to act sooner rather than later.
Otherwise, the authorities would very likely miss the opportunity to stabilize the crisis situation by the time the next budget rolls around, although acting now may also mean the next budget will be less generous.
Meanwhile, Bloomberg carried a report yesterday, counting how the ongoing anti-extradition protests have been taking their toll on Hong Kong's economy.
According to its count, the stock market, for instance, has lost more than HK$600 million of its market value. Even though GDP continued to expand in the second quarter, it was extremely small -- just 0.6 percent. It’s also warned the city would be in danger of recession if the unrest continues.
Initial responses to Chan's additional fiscal relief were generally positive. Nonetheless, it would be absolutely foolish to think of it is an all-purpose cure.
Over the past few days, local business leaders have shifted to high gear to air concerns about violent clashes, while expressing support for the administration and police.
Their actions may have been triggered by angry comments by mainland state-owned media that local business leaders hadn't been vocal enough about the protests.
It's also highly likely they know the economy is at risk. If official statistics are often behind the curve, business leaders always stay ahead of the curve, as they understand business better than anyone else.
The SAR’s economy could be heading for a crash if the anarchic situation continues, just as the Sino-US trade war escalates.
Hong Kong is capable of self-reliance to save the city from the dark abyss. It's absolutely unnecessary for the mainland to interfere with military intervention that would make matters worse.