Hong Kong’s chief executive, John Lee, announced several major tax cuts during his annual policy address yesterday (Wednesday).
The city’s status as East Asia’s premier business hub has been in question since (if not before) Beijing started openly consolidating power over Hong Kong in 2020. And its economy has taken a hit:
- 📉 Trading volumes at Hong Kong’s stock exchange have slumped for three straight years as foreign investors withdraw, and
- 🏠 House prices have slipped 15% from their 2021 peak.
So Lee’s hoping to turn things around with some targeted tax cuts.
Intrigue’s take: There are lots of ways to imagine Hong Kong’s future, but here are two:
☝️ Scenario 1: The city is just in a transition period. There might be an exodus of Western companies, but they’ll soon be replaced by firms from the mainland plus China’s new partners in the Gulf and beyond.
✌️ Scenario 2: As Beijing erodes the city’s unique legal status, it also erodes the thing that’s long made Hong Kong thrive, leaving it the poorer, integrated cousin among China’s ‘Greater Bay Area’ of cities like Shenzhen.
Lee seems to be banking on scenario 1, but it’s not really his call.
Also worth noting:
- Lee’s address lasted 3 hours and 22 minutes and included 60 references to the “Bay Area”.