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Carrie Lam policy address 2018
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A view of Hong Kong’s container port in Kwai Tsing in the New Territories. Photo: Roy Issa

Closer economic ties sought with overseas markets such as Britain, Hong Kong leader says, amid US-China trade war impact

City leader acknowledges challenges while detailing further investments in innovation and technology to spur growth

Hong Kong will seek to form close alliances with overseas markets such as Britain to open up more economic opportunities as the US-China trade war grinds on, the city’s leader has announced.
Chief Executive Carrie Lam Cheng Yuet-ngor conceded in her annual policy address on Wednesday the city was facing many challenges that warranted more free trade agreements and further investments in innovation and technology to spur growth.
Almost half of Chinese goods shipped to the US via Hong Kong have been hit by the tariffs. Photo: K. Y. Cheng

The impact of the trade war on a tax-free port such as Hong Kong would be especially “visible”, she said, but the local economy would still manage to grow between 3 and 4 per cent this year. Economic growth in the first half of 2018 stood at 4 per cent.

“The economy producing the largest trade surplus for America is Hong Kong,” Lam added. “I told President [Donald] Trump when I met him at Apec last year, and he said he was quite pleased.

Lam then added: “So, it would be untenable and unfair to try to threaten us with that sort of language.”

She noted Hong Kong was a staunch supporter of free trade, saying: “Trade must be beneficial to both sides.”

Blaming Beijing for creating a huge trade surplus vis-à-vis the US, Trump launched a series of punitive tariffs on Chinese goods over the past few months. The latest involved 10 per cent tariffs on US$200 billion worth of Chinese goods from last month. The tariffs will be raised to 25 per cent on January 1, 2019.

Almost half of Chinese goods shipped to the US via Hong Kong have been hit by the tariffs. The US is the city’s second-largest trading partner.

Lam said during her address that forging free-trade deals would be a priority.

The Hong Kong and British governments would explore the possibility of such an agreement in future, she explained, based on a joint statement earlier this year agreeing to closer economic ties.

Other candidates for free-trade deals would include Chile, Colombia, Mexico and Peru – the four-member trade bloc in Latin America called the Pacific Alliance.

Donald Trump: China is not ready to make a deal to end trade war

Hong Kong signed three such agreements in the past 12 months, taking its total to seven.

In addition, to build a new economic engine for the city, Lam promised to invest HK$4 billion (US$510,000) in the local industrial sector.

A HK$2 billion fund was proposed for launching a “Re-industrialisation Funding Scheme” to help manufacturers set up smart production lines in the city.

Manufacturers could use the facilities for smart production at a manufacturing centre in Tai Po industrial estate and at another centre to be completed in Tseung Kwan O.

The facilities are managed by the IT park operator, Hong Kong Science and Technology Parks Corporation.

Meanwhile, an extra HK$2 billion was set aside for the corporation to identify suitable land in industrial estates for building manufacturing facilities.

A container ship sailing off Lamma Island in Hong Kong waters. Photo: EPA-EFE

Industrial sector lawmaker Jimmy Ng Wing-ka welcomed the HK$2 billion allowance, but said he would need to review the screening criteria.

“If the government can lower the barriers to entry and quicken the process, it would be helpful.”

If the government can lower the barriers to entry and quicken the process, it would be helpful
Jimmy Ng Wing-ka, lawmaker

Ng voiced encouragement over the government’s move to ask the corporation to find suitable sites in industrial estates. He said he believed this process would be faster than officials doing it on their own, claiming the company had less red tape.

Another highlight among Lam’s IT measures was her initiative setting up two clusters at the Science Park in Sha Tin with a HK$10 billion fund. One would focus on health-care technologies and the other on artificial intelligence and robotics technologies.

The money was planned for the two platforms for 10 to 15 years, a source said.

The Institut Pasteur of France, the Guangzhou Institute of Bio-medicine and Health, and the Institute of Automation in Beijing have each expressed interest in joining the clusters as the first batch of institutions to collaborate with local universities and institutions.

Officials aimed to have the laboratories of the first batch set up from the latter half of next year.

Sources said the schools and institutions could freely form partnerships under the scheme, but they would need to submit their research proposals to the Innovation and Technology Commission, which would then pass their plans to a governing committee to conduct a screening.

Lam further revealed her administration’s intensifying efforts to create a smart city for Hongkongers.

‘You are stopping Hong Kong from becoming a smart city’

All government departments need to roll out their annual open data plans by the end of this year.

Artificial intelligence and chatbot functions will be added to the government portal in 2019 to facilitate searching and access to public services.

A smart government innovation lab will also be introduced inviting the technology sector to put forward proposals for public services. Trials and technology testing will be arranged for suitable suggestions, allowing government departments to enhance their services.

This article appeared in the South China Morning Post print edition as: Opportunities to be sought for city caught in the crossfire of trade war
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