(Bloomberg) — Hong Kong’s leader is expected to unveil a policy agenda focused on boosting the city’s economy during his third annual speech on Wednesday, including possible alcohol tax cuts.
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Chief Executive John Lee will deliver a speech to the Legislative Council at 11 a.m. on the theme, “Transformation to Promote Development and Build Our Future Together.”
Lee is looking to boost the economy by nearly $400 billion after strengthening Beijing’s authority over the former British colony through a national security law, a move Western governments have criticized as an open meddling in Asia’s financial hub.
The city’s economy grew in the first six months between official forecasts ranging from 2.5% to 3.5% due to strong exports, although falling real estate prices and consumer spending weighed on sentiment.
Seeking to shed its reputation as a premier nightlife and dining destination, Hong Kong is planning to lower its spirits tax, Bloomberg News previously reported. If implemented, the move could help revive sales at restaurants and retailers that are struggling due to a slump in consumer spending, which accounts for more than half of the economy’s growth.
The economic slowdown and uncertainty in China are also putting a cloud on Hong Kong’s growth outlook. The latest stimulus bonanza by Beijing, alongside the US Federal Reserve’s interest rate cuts, may provide some relief.
In order to support the real estate market, the Lee administration last year removed many measures to buy real estate and reduced property taxes. Prices rose slightly earlier this year before continuing to decline to the lowest level since 2016.
A wave of bankruptcies points to the collapse of corporate finances. Retail sales and tourist arrivals remain below pre-pandemic levels, a period that has seen the city’s image affected by quarantine measures and a reduction in the number of pro-democracy political opposition.
Lee will look to attract more investors by reviving the HK$2 billion ($258 million) Innovation and Technology Venture Fund, according to the South China Morning Post. The newspaper, citing unidentified sources, also reported on further measures to diversify the economy in ways that include expanding the medical and biotechnology sectors.
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