The Hong Kong government is keeping an open mind to additional measures that will help support the city’s economy, Edward Yau, the city’s secretary for commerce and economic development, said on Thursday.
“Hong Kong is of course hit doubly by a sort of twin cycle — U.S.-China trade war and also the local unrest; I think the enterprises are hard hit,” Yau told CNBC’s “Street Signs.”
Yau added that the Hong Kong government has been rolling out support measures for businesses even before the social unrest started this year to help enterprises cope with the fallout of the U.S.-China trade war.
“In addition to these, I think we are having an open mind and we will constantly talk to various trades and see how best we can soldier on and ride our storm,” Yau added.
The Hong Kong government on Wednesday announced an additional 4 billion Hong Kong dollars ($511 million) in economic stimulus, bringing the total relief offered to 25 billion Hong Kong dollars (about $3.2 billion).
It was the city’s fourth economic support package, much of which goes to help the tourism, retail and transport industries.
A Riot Police is seen pointing inside a shopping mall during an Anti-Government Protest in Sha Tin District in Hong Kong, China. November 3, 2019.
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Hong Kong, a former British colony that returned to Chinese rule in 1997, has seen widespread demonstrations since June, some of which have led to violent clashes between protesters and the police. The protests were initially sparked by a proposed law that would have allowed extradition to mainland China, but the unrest later morphed into broader anti-government demonstrations that include demands such as greater democracy and universal suffrage.
In October, retail sales fell 24.3% from a year ago, according to preliminary Hong Kong government data. The city’s government said that slump is the worst on record.
Tourist arrivals slumped 43.7% in October from a year ago to 3.31 million, according to the Hong Kong Tourism Board. Mainland Chinese visitors fell 45.9% in October from a year ago.
The Asian financial hub slid into a recession for the first time in a decade in the third quarter, with the GDP contracting 2.9% in the July to September period from a year ago.
In response to questions about the Hong Kong Human Rights and Democracy Act that was signed into law by U.S. President Donald Trump last week, Yau said the city’s government doesn’t want trade and economic policies to be swayed by politics.
As a special administrative region of China, Hong Kong is governed under the “one country, two systems” principle. Under that structure, Hong Kong is given self-governing power, a largely separate legal and economic framework from China, and various freedoms including limited election rights.
Such a system underpins Hong Kong’s status as a global financial and business center, especially as a middleman between China and the world. The city’s autonomy from China is also a reason why the U.S. treats it differently from other Chinese cities. For example, elevated U.S. tariffs imposed on China in the trade war don’t apply to Hong Kong.
Losing that special treatment would damage the city’s economy, and its repercussions could potentially feed through the global financial system.
“We respect different countries may have their own policies toward others, but … any trading relationship must be built on mutual interest,” Yau said, citing U.S. trade surplus with Hong Kong that is gained from the city’s open and free economy.
“There is every interest for Hong Kong to maintain our autonomy under the ‘one country, two systems,’ that is given in our constitution by the central government,” he added. “There is no reason why we should depart from that.”
— CNBC’s Yen Nee Lee contributed to this report.