Diversify the economy

Updated: 2015-07-28 08:49

By Staff Writer(HK Edition)

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The Democratic Alliance for the Betterment and Progress of Hong Kong (DAB) released the results of its latest Consumer Confidence Index poll conducted in late June and early this month. They show local residents' confidence in the city's economy has improved significantly since the last poll in December 2014. But it is still well below the neutral point of 100, indicating Hong Kong people are not very optimistic about economic prospects.

The previous poll was done shortly after the highly disruptive and illegal "Occupy Central" movement ended. Many analysts agreed the chaotic political situation had a very negative impact on people's outlook on the local economy. The latest poll, meanwhile, was taken when most local residents were looking forward to the SAR government's efforts to boost economic development and improve people's well-being, after the constitutional reform bill was blocked by opposition members of the Legislative Council.

This poll is yet another reminder of how sensitive the Hong Kong economy is to local political development, as well as to changes in the regional and world economy. Given the dominant role of the financial and services industries in the city's economic growth, external factors will remain strong determinants in how the Hong Kong economy fares, as long as the current economic structure remains unchanged.

Incidentally, tourism-related services such as hotels and retailers have experienced a noticeable drop in business volume this summer, as the number of visitors has decreased. The number of tourists from the mainland showed the most shrinkage - by almost 40 percent in the first two weeks of July, compared with last year.

Market analysts say it is too early to tell whether this is a trend, but there is little doubt mainland residents now have more choices and Hong Kong is no longer the first pick of travel destinations for many if not most of them. News reports about bad attitudes by some local businesses and individuals to mainland visitors are also a reason why many mainlanders have second thoughts about coming here.

Admittedly, there are other factors that affect decisions when it comes to overseas travel. The number of visitors could rise again in the third and fourth quarters. But there is no question the Hong Kong economy should be more diversified for its own sake. To do so Hong Kong must reassess its own strengths as well as its place in national, regional and global economic development. Hong Kong is already an international financial center - but it can and should be more than this.

(HK Edition 07/28/2015 page8)