(Bloomberg) — Hong Kong’s leader is expected to lay out a policy agenda focused on boosting the city’s economy during his third annual address on Wednesday, including a potential cut to a liquor tax.
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Chief Executive John Lee will deliver the speech at the Legislative Council at 11 a.m. with the theme, “Reform for Enhancing Development and Building Our Future Together.”
Lee has set his sights on boosting the almost $400 billion economy after cementing Beijing’s authority over the former British colony with a national security law, a move Western governments criticized for muzzling open discussion in the Asia finance hub.
The city’s economy has grown in the first six months within the official forecast range of 2.5% to 3.5% thanks to strong exports, although falling real estate prices and sluggish consumption have weighed on sentiment.
Seeking to burnish its reputation as a premier destination for nightlife and dining, Hong Kong plans to lower the amount of tax it levies on spirits, Bloomberg News previously reported. If implemented, the move may help rekindle sales for restaurants and retailers struggling with the drop in consumption, which makes up more than half of economic growth.
China’s slowdown and geopolitical uncertainties also cast a cloud on Hong Kong’s growth outlook. The recent stimulus bonanza by Beijing, alongside the US Federal Reserve’s interest-rate cuts, may provide some relief.
To support the real estate market, Lee’s administration has over the past year removed most home purchase curbs and cut property buying taxes. Prices picked up slightly earlier this year before continuing a decline to the lowest since 2016.
A wave of bankruptcies points to eroding business finances. Retail sales and tourist arrivals remain below levels before the pandemic, a period that saw the city’s image take a hit from draconian quarantine measures and a crackdown on the pro-democracy political opposition.
Lee will look to attract more investors by revamping a HK$2 billion ($258 million) Innovation and Technology Venture Fund, according to the South China Morning Post. The newspaper, citing unidentified sources, also reported additional measures to diversify the economy with measures including boosting the medical and biotechnology sector.
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