Blog
Consolidating Economic Recovery and Opening Up New Horizons
In August, many of us are spending our summer vacation in the Mainland or overseas for pleasure and relaxation; and Hong Kong is also seeing more visitors on the streets, in busy districts and at tourist attractions. They have injected energy to our local retail, catering and tourism sectors. As a cosmopolitan city, Hong Kong has always been an open metropolis with multi-directional flows of business travellers, which serves as a key driver for our sustained economic development.
The Government recently released the report on the economy for the first half of this year and the outlook for the second half of the year. Private consumption and inbound tourism are expected to remain the major growth drivers in the second half of the year. Private consumption expenditure grew by 8.2% year-on-year in real terms in the second quarter after increasing by 13.0% in the first quarter. On a seasonally adjusted quarter-to-quarter basis, private consumption expenditure also increased by 3.9% compared to the first quarter. This shows that though affected by negative factors such as the uncertain external environment, rising interest rates, pressure on asset prices, etc., local private consumption is still growing steadily, supported by policy measures such as consumption vouchers and the launch of the “Happy Hong Kong” campaign, as well as a surge in tourist arrivals.
Among others, the performance of the retail and catering industries in Hong Kong also improved in the second quarter. The value of total retail sales and total restaurant receipts rose by 17.6% and 24.3% year-on-year respectively, recovering to more than 85% and 95% of the level of the same period in 2018 respectively. The above figures show that while Hong Kong residents increased their spending in places outside Hong Kong in the second quarter, their spending in Hong Kong also rose.
Entering the second half of the year, the recovery of Hong Kong’s tourism industry is on an accelerating trend. The number of visitor arrivals in July was approximately 3.6 million, i.e. around 116 000 per day, representing an increase of over 30% from the previous month. In particular, the Mainland and Southeast Asian markets have been recovering faster. In July, the number of visitor arrivals from the Mainland reached about 70% of the pre-pandemic level, while the number from Southeast Asian countries like the Philippines even surpassed that before the pandemic. For visitor arrivals from Thailand, the figure reached over 90% of the pre-pandemic level in July. For the first ten days in August, the average daily visitor arrivals exceeded 130 000.
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Although the number of visitor arrivals to Hong Kong is rapidly resurging, we must continue to enhance our competitiveness and attractiveness. Surveys conducted by the Hong Kong Tourism Board (HKTB) indicated that the spending habits of Mainland visitors have changed, as the proportion of those primarily visiting for shopping had decreased as compared to the pre-pandemic level. However, new patterns and changes bring new opportunities. Many visitors, especially those of the younger groups, are visiting Hong Kong to take part in arts and cultural activities, exhibitions, and major concerts. Taking the recent Hong Kong Ani-Com & Games Expo as an example, many Mainland and Southeast Asian visitors came to Hong Kong specifically for the event. Some exhibitors told me that visitors were very willing to buy creative products with special characteristics. What can be learnt from such change in travel and spending pattern is that we must understand and grasp what customers now value: uniqueness, creativity, quality, and user experience of products and services.
We must seize opportunities to promote a more diverse, high value-added and sustainable development of Hong Kong’s tourism industry. In this regard, organisation of mega events, international conventions and exhibitions are crucial to drawing high value-added visitors. It is also a segment of the tourism industry in which destinations around the world are striving to establish a foothold. This year’s Budget has earmarked $100 million for attracting more mega events with significant visitor appeal and tourism promotional effects to be staged in Hong Kong, so as to enhance the city’s international image; provided over $250 million funding to HKTB to sustain its efforts in organising various major tourism events, including the Hong Kong Wine & Dine Festival, Hong Kong Cyclothon, Hong Kong WinterFest, etc., which will be staged in the second half of the year. We have also allocated resources to secure the staging of more international conferences and exhibitions of various types and industries in Hong Kong so as to consolidate Hong Kong’s position as the premier MICE (meetings, incentive travels, conventions and exhibitions) destination in the region. For instance, a number of large-scale conferences on Web 3.0 and artificial intelligence have been held in Hong Kong for the first time, attracting tens of thousands of attendees; the Asia Fruit Logistica 2023 and Vinexpo Hong Kong will return to Hong Kong in September this year and in May next year respectively.
Overall, taking into account the actual outturn of the economy in the first half of the year and the situation in the second half, we have revised the economic growth forecast for the whole year to 4.0% to 5.0%, narrowed by 1 percentage point from 3.5% to 5.5% in the round of review in May.
In the short term, we will also need to work with the industry to revitalise Hong Kong’s evening economy, to better consolidate the various recovering economic segments, and maintain the momentum of recovery. In the medium to long term, we will continue to create strong impetus for Hong Kong’s development. The current-term Government is determined to promote the development of innovation and technology (I&T) as an important engine to promote the high-quality development of Hong Kong’s economy.
In recent years, the United States has used various excuses and tactics to suppress our country's I&T development. Such unreasonable and hegemonic suppression will only strengthen our determination to go forward in I&T and open up more new race tracks for our own economy, while at the same time assisting our country in achieving greater self-reliance and strength in science and technology.
In recent years, economies across the globe all strive to develop their digital economies in order to boost economic growth. Artificial intelligence (AI) is one of the key drivers in the process. The AI industry over the past year has been developing rapidly in terms of its wide application. The advent of Generative AI has also triggered heated debates in different sectors. According to a research report by an investment bank, AI could help upgrade industries, with the potential to raise the global GDP by 7% in ten years and boost productivity by 1.5%. Our country’s AI industry ecosystem is also developing vibrantly. Based on the estimates by the China Academy of Information and Communications Technology, the scale of China’s AI core industry reached RMB 508 billion in 2022.
To drive the development of AI industry, data, computing power and algorithm are the three core elements. On data, under the “One Country, Two Systems” principle, Hong Kong allows free flow of information and possesses a sound legal system, which are conducive to the convergence of global information and data. Meanwhile, following the signing of the Memorandum of Understanding on Facilitating Cross-boundary Data Flow Within the Guangdong-Hong Kong-Macao Greater Bay Area with the Cyberspace Administration of China in end-June, Hong Kong seeks to facilitate the safe and orderly cross-boundary flow and use of Mainland data within the Greater Bay Area. Hong Kong is set to leverage the unique advantage of “dual convergence” of data from the Mainland and overseas, thus providing important raw ingredients for AI development.
As for computing power, we have commenced in May a consultancy study on establishing an AI Supercomputing Centre and its related operational model, with a view to completing it in 2023. In terms of enhancing algorithmic capabilities, the current-term Government, apart from continuing to nurture local start-ups, is also stepping up efforts to attract key I&T enterprises to set up or expand their business in Hong Kong. Many of them possess cutting-edge technologies in AI, large-scale modelling, supercomputing and chip research and development. Their landing in Hong Kong will accelerate the formation of an AI industry ecosystem here.
In terms of clustering more capital and talents to support I&T, as an international financial centre, Hong Kong has a diversified source of capital and a pool of international enterprises and talents. Experience suggests that for international investors, the choice of where to invest ultimately depends on the availability of quality investment opportunities and investment returns. We will continue to welcome more investors and capital, and make good use of the financial strengths of the HKSAR Government to leverage private sector capital through various forms of co-investment to help promote Hong Kong's I&T development.
During my visit to the Middle East last year, the political and business communities there generally expressed interest in expanding their investment scope and projects, with China and Asia topping their list of markets. Following my visit to Saudi Arabia, we were able to secure the hosting of a regional version of the Future Investment Initiative (FII), a large-scale summit held annually in Saudi Arabia, in Hong Kong this December. Moreover, as Hong Kong will organise the Global Financial Leaders’ Investment Summit again in November as well as other international conferences, we will bring together a large number of world-leading investment institutes and leaders, enabling them to better understand and grasp the investment opportunities in Hong Kong and our country.
August 13, 2023
