HONG KONG – Rising political turmoil in Hong Kong could hurt economic growth in the freewheeling southern Chinese business hub, the city’s finance chief said as he unveiled measures Wednesday to counter the impact of global weakness.
Financial Secretary John Tsang’s blunt comments in his annual budget speech highlight simmering tensions in Hong Kong, which has been increasingly polarized following the unsatisfactory resolution of pro-democracy street protests in late 2014.
“Acute social conflicts will add uncertainties to the already adverse economic environment” in Hong Kong, he said.
Tsang said tensions would remain high as Hong Kong prepares for Legislative Council elections later this year and a byelection in four days, which will pit pro-democracy candidates against Beijing supporters for seats in the former British colony’s legislature.
“We anticipate that political disputes will only intensify over the coming months,” he said. “Politics and economics are closely intertwined. Political volatility will unavoidably impact on our economy.”
To bolster flagging growth, Tsang rolled out 38.8 billion Hong Kong dollars ($5 billion) in relief measures for businesses and tax cuts.
Tsang said he was “shocked” by a riot during the Lunar New Year holiday earlier this month which left 130 people hurt, including 90 police officers. There were 72 arrests from the confrontation, with activists’ angry over authorities’ attempts to crack down on holiday food vendors selling fishballs and other local delicacies. Protesters viewed the clampdown as an assault on local culture and evidence of Beijing’s tightening hold on the city.
“Many of us feel suffocated by and, indeed, helpless with the tiresome confrontations day in and day out,” Tsang said. “Confrontations have not eased, and worse still, our society has become even more polarized. Political disputes are spreading both inside and outside the Council Chambers, setting off a spiral of intensifying struggle between rival factions.”
He warned that if the problems are not resolved, there will be “greater chaos, and our future generations will grow up in the midst of hatred and malice.”
Tsang said the city’s economy expanded 2.4 per cent last year, its fourth straight year of below-average growth, weighed down by a slowdown in mainland China, weak global conditions and rocky financial markets.
He forecast that Hong Kong’s economy, a major hub for trade with China, would grow 1-2 per cent in 2016, which would be the lowest rate since 2012, when it expanded by 1.7 per cent.
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