By Alex Pigman

The US House of Representatives overwhelmingly approved a bill on Wednesday that would force TikTok to divest from its Chinese owner or be banned from the United States.

The legislation is a major setback for the video-sharing app, which has surged in popularity across the world while causing nervousness about its Chinese ownership and its potential subservience to the Communist Party in Beijing.

The lawmakers voted 352 in favor of the proposed law and 65 against, in a rare moment of unity in politically divided Washington.

The warning shot against the app caught many by surprise as both Republicans and Democrats risked the wrath of TikTok’s passionate young users in an election year when the youth vote will be key.

“Today’s bipartisan vote demonstrates Congress’ opposition to Communist China’s attempts to spy on and manipulate Americans, and signals our resolve to deter our enemies,” Republican House Speaker Mike Johnson said after the vote.

“I urge the Senate to pass this bill and send it to the President so he can sign it into law.”

But the fate of the bill is uncertain in the more cautious Senate, where some are apprehensive of making a drastic move against an app that has 170 million US users.

President Joe Biden will sign the bill, known officially as the Protecting Americans from Foreign Adversary Controlled Applications Act, into law if it came to his desk, the White House has said.

“This process was secret and the bill was jammed through for one reason: it’s a ban,” said a spokesperson for TikTok in a statement.

“We are hopeful that the Senate will consider the facts, listen to their constituents, and realize the impact on the economy, 7 million small businesses, and the 170 million Americans who use our service,” the spokesperson added.

Majority leader Chuck Schumer, who will need to back the bill, remained non-comital saying only that the Senate “will review” the legislation when it comes over from the House.

The measure, which only gained momentum in the past few days, requires TikTok’s parent company ByteDance to sell the app within 180 days or see it barred from the Apple and Google app stores in the United States.

It also gives the president power to designate other applications to be a national security threat if they are under the control of a country considered adversarial to the US.

The renewed campaign against TikTok came out of the blue to the company, the Wall Street Journal reported, with TikTok executives reassured when Biden joined the app last month as part of his campaign for a second term.

TikTok CEO Shou Zi Chew is in Washington, trying to stop progress on the bill.

The Trump factor

China warned on Wednesday that the move will “inevitably come back to bite the United States.”

“Although the United States has never found evidence that TikTok threatens US national security, it has not stopped suppressing TikTok,” foreign ministry spokesperson Wang Wenbin said, condemning it as “bullying behavior.”

Republican lawmakers approved the bill, in an unusual act of defiance against Donald Trump.

In a turnaround from his earlier stance, Trump on Monday said he was against a ban, mainly because it would strengthen Meta, the owner of Instagram and Facebook, which he called an “enemy of the people.”

When Trump was president, he attempted to wrest control of TikTok from ByteDance, but was blocked by US courts.

“I think it will die in the Senate,” said representative Nancy Mace, a Trump ally. “This is not our job to do this.”

Other efforts to ban TikTok have failed, with a bill proposed a year ago getting nowhere largely over free speech concerns.

Similarly, a state law passed in Montana banning the platform was suspended by a federal court on the suspicion that it violated constitutional free speech rights.

TikTok staunchly denies any ties to the Chinese government and has restructured the company so the data of US users stays in the country with independent oversight, the company says.

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By Holmes Chan

Hong Kong carrier Cathay Pacific on Wednesday reported its first annual net profit in four years, citing a surge in demand as it emerges from the impact of the financial hub’s Covid isolation.

Hong Kong’s aviation sector has struggled to fully recover from the impact of pandemic-era policies, which imposed strict rules on travellers and kept the city internationally isolated before they began to be lifted in late 2022.

“In 2023, we finally left the Covid-19 pandemic behind us,” Cathay chair Patrick Healy said, adding that it was “our first profitable year since 2019”.

“The year was characterised by a notable surge in travel demand following three years of pandemic-related restrictions.”

And CEO Ronald Lam said in the statement: “To our stakeholders, thank you for standing by us and motivating us to be the company of choice. We are ready to unleash the potential and innovation of our next exciting phase of development -– Cathay is back!”

While airlines around the world had been hit by the impact of travel restrictions, Cathay’s recovery has been slower than regional rivals such as Singapore Airlines.

The airline said profit surged to US$1.25 billion last year, compared with a loss of US$847 million in 2022, after hitting its target of operating at 70 percent of pre-pandemic passenger flights.

It carried 18 million passengers in the 12 months, up from 2.8 million in 2022.

Cathay also posted an operating profit of US$1.9 billion in 2023, the highest on record, according to Bloomberg News, and announced its first dividend payment since 2019, at HK$0.43 per ordinary share.

“In 2023, we finally left the Covid-19 pandemic behind us,” Healy said.

The firm’s share price jumped 5.5 percent on the news in Hong Kong afternoon trade.

Total revenue surged 85 percent to US$12 billion, though cargo revenue fell 16.2 percent to US$3.3 billion.

Cathay earlier vowed to return to 100 percent pre-pandemic passenger flight levels by the end of 2024, but on Wednesday pushed back the target by up to three months.

The company said it was working to address the effects of “truly significant” challenges facing the aviation industry, in areas including “recruitment, training and supply chain shortages”.

It added that it planned to expand its workforce this year by around 20 percent, or 5,000 people.

Cathay saw a spate of flight cancellations during the Christmas and New Year holidays, which the company attributed to underestimating the pilot levels needed during the seasonal flu peak in Hong Kong.

“This incident has negatively impacted our brand reputation and the confidence that Hong Kong people and our customers have in Cathay,” Lam said in an internal memo at the time.

In January, Cathay said it had signed up 100 cabin crew via its first recruitment drive in mainland China.

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Moody’s has downgraded one of China’s largest housing developers’ credit rating, as woes in the country’s property sector show no sign of abating.

China’s real estate market is grappling with unprecedented challenges, with some developers on the verge of bankruptcy and lower property prices deterring consumers from making investments.

Vanke — long considered to be financially stable — is one of several major Chinese developers to run into trouble, with Moody’s on Monday downgrading its rating to “Ba1”, indicating it has “substantial credit risk”.

It said the firm’s contracted sales had fallen around 40 percent — to 34.5 billion yuan (US$4.8 billion) in just the first two months of the year.

“Moody’s expects volatile operating and funding conditions for China’s property sector to continue to drag on China Vanke’s contracted sales, access to funding and liquidity,” the rating agency said Monday.

The hurdles facing the firm would continue for “the next 12-18 months”, it added.

It did not rule out further downward revisions to Vanke in the future.

Vanke was the second-largest developer in China last year in terms of sales, according to specialist firm CRIC.

It is part-owned by the city government of Shenzhen in southern China — once seen as a guarantee of its solidity.

But setbacks make it the latest Chinese developer to be caught up in a mounting crisis within the real estate sector, following Evergrande and Country Garden.

The industry, which once experienced two decades of meteoric growth as living standards rose across China, has long accounted for more than a quarter of the country’s GDP.

In a bid to revive activity, authorities have introduced various incentive measures and made announcements of state support.

But such efforts have so far had little impact on the ailing sector.

Chinese Housing Minister Ni Hong acknowledged the difficulties in stabilising the market during a press conference on Saturday.

Real estate companies that “need to go bankrupt should go bankrupt, and those that need restructuring should be restructured”, he said.

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By Jing Xuan Teng

Chinese consumer prices rose in February for the first time since August, data showed Saturday, bucking a months-long stretch of deflation that compounded the country’s myriad economic woes.

The world’s second-largest economy posted some of its lowest growth in decades last year and is battling a prolonged property sector crisis and soaring youth unemployment.

But in a rare bright spot, official statistics Saturday showed the consumer price index rose 0.7 percent last month, according to Beijing’s National Bureau of Statistics (NBS) — the first increase since August.

The figure was higher than a 0.3 percent rise analysts surveyed by Bloomberg had expected and a sharp increase on the 0.8 fall seen in January, their sharpest drop in more than 14 years.

The positive data comes as senior officials meet in Beijing for the annual “Two Sessions” of China’s parliament and its top political consultative body, in gatherings that have been dominated by the economy and national security.

On Tuesday, Premier Li Qiang told that gathering the country would seek five percent growth in 2024 — an ambitious goal that he acknowledged would be “not be easy” given the headwinds facing the economy.

High among those issues has been deflation, which China entered last July for the first time since 2021.

Apart from a brief rebound in August, prices had not risen until last month.

Consumer prices traditionally see a boost during the Chinese New Year period, also known as Spring Festival, which fell in February this year.

“It was primarily food and service prices that rose more,” NBS statistician Dong Lijuan said in a statement.

“During the Spring Festival period, consumer demand for food products grew, in addition to rainy and snowy weather in some regions affecting supply,” Dong said.

Demand remains weak

China’s sinking prices are in stark contrast with the rest of the world, where inflation remains a persistent bugbear, forcing central banks to ramp up interest rates.

While deflation suggests goods were cheaper, it poses a threat to the broader economy as consumers tend to postpone purchases, hoping for further reductions.

A lack of demand can then force companies to cut production, freeze hiring or lay off workers, while potentially also having to discount existing stocks — dampening profitability even as costs remain the same.

Given the holiday factor, one analyst cautioned against seeing Saturday’s figures as suggesting China was no longer struggling with deflation.

“I think it is too early to conclude that deflation in China is over,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said.

“Domestic demand is still quite weak. Property sales of new apartments have not stabilised yet,” he explained.

And producer prices continued to fall in February, dropping by 2.7 percent, the NBS said.

“Affected by the Spring Festival holiday and other factors, industrial production was in its traditional off season,” Dong said.

Investors have called for much greater action from Beijing to shore up the flagging economy.

But despite calls for broader stimulus measures Beijing indicated this week it was unlikely to resort to big-ticket bailouts, setting a fiscal deficit-to-GDP target of three percent, similar to last year.

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By Jing Xuan Teng

China’s leaders on Monday wrapped up a week-long key conclave at which they admitted more was needed to revive a sluggish economy battered by an ailing housing market, poor domestic demand and record-high youth unemployment figures.

Top officials have been upfront about the myriad challenges China is facing, admitting that a modest five percent growth goal will not be easy and that “hidden risks” are dragging the economy down.

But details of how they plan to tackle the problems have been scant. They have also simultaneously moved to deepen powers to deal with threats to their rule and tightened a veil of secrecy around policymaking, scrapping a traditional annual press conference and vowing to include national security provisions into a raft of new laws.

Delegates to the National People’s Congress (NPC), China’s parliament, gathered at Beijing’s Great Hall of the People to rubber-stamp legislation at 3:00 pm local time (0700 GMT) as the conclave came to an end.

Among the legislation approved was a revision to the Organic Law of the State Council, China’s cabinet, which state media has said will aim to deepen the “leadership” of the ruling Communist Party over the government.

They also approved the country’s state budget and the national economic and social development plan for 2024.

Only a handful of the body’s almost 3,000 delegates voted against any of the motions.

The tightly choreographed event capped a week of high-level meetings that have been dominated by the economy, which last year posted some of its slowest growth in years.

On Saturday, ministers pledged to do more to boost employment and stabilise the country’s troubled property market.

“Workers face some challenges and problems in employment, and more effort needs to be made to stabilise employment,” Wang Xiaoping, minister of human resources and social security, told a press conference.

And housing minister Ni Hong added that fixing the property market — which long accounted for around a quarter of China’s economy — remained “very difficult”.

More action needed

Despite official pledges of fresh support, analysts say they are yet to see the kinds of big-ticket bailouts the flagging economy needs if it is to rebound.

“Reviving the economy requires boosting household wealth and income, something China’s leaders clearly aren’t yet ready to do,” said analysts at Trivium, a research firm specialising in China, in a note.

And throughout the “Two Sessions”, officials have appeared reluctant to face questioning about the myriad economic headwinds China is confronting.

Last week, they broke a decades-long tradition by scrapping a press conference by the premier — long a rare chance for foreign media to question the country’s number-two official.

The topic was swiftly removed from search results on Chinese social media giant Weibo, as was a hashtag declaring “middle-class children have no future”.

Lawmakers have also vowed to adopt wide-ranging security laws in 2024 to “resolutely safeguard” the country’s sovereignty, further expanding the Communist Party’s powers to punish threats to its rule.

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By Xinqi Su and Holmes Chan

As Hong Kong fast-tracks a new national security law, the legislation and questions about its implementation have raised fears among the business community.

The draft bill, introduced at the city’s legislature on Friday, includes major offences such as treason and insurrection, which could be punished with life imprisonment.

The government has said it intends to pass the bill as soon as possible to plug legislative gaps left by an existing national security law imposed on Hong Kong by Beijing in 2020 after the finance hub saw massive pro-democracy protests.

Authorities also say it is their constitutional responsibility to enact homegrown national security legislation according to Hong Kong’s Basic Law — a mini-constitution governing the city since it was handed back to China from Britain in 1997.

But the city is entering “untested, uncharted waters” with the proposed law, said Kristian Odebjer, chairman of the Swedish Chamber of Commerce in Hong Kong, speaking to AFP before the draft bill was unveiled.

Its offences include treason, insurrection, espionage and theft of state secrets, sabotaging national security, and external interference.

But the definitions are “vague”, said Odebjer, particularly for the theft of state secrets — which, according to the draft bill, includes defence intelligence but also encompasses information about the city’s economic, social and technological developments.

“This could have a negative impact on… activities that some of our members engage in like research and due diligence activities,” Odebjer told AFP.

These activities “contribute to, or are necessary even, for a functioning financial centre and a market economy like Hong Kong”, he said.

However, city leader John Lee, a Beijing-picked ex-security chief sanctioned by the United States, said the proposed national security law — known as Article 23 — would act as “an effective lock to prevent burglars”.

It will exist alongside the Beijing-imposed national security law, which covers four major crimes: secession, subversion, terrorism and collusion with foreign forces.

AFP sought comments from members of the business and diplomatic communities during a one-month public consultation period.

In the draft bill introduced Friday, a “public interest” defence to the state secrets offence was added.

It means a person accused of such a crime could argue their action was in the “public interest” and outweighs the alleged threat to national security — though the bill did not define “public interest”.

‘Red line’

For an economist working for an international bank, the biggest risk “is that increasingly sometimes you don’t really know where the red line is”.

Banks, firms and investors regularly rely on research, economic data and due diligence reports which could fall under the purview of “state secrets”.

The economist, who declined to be named for fear of repercussions, told AFP there could be a situation where a published analysis would affect investors’ sentiment in Hong Kong.

“Will they (the authorities) come back to me?” he questioned. “Is (the report) a threat to so-called economic security?”

The Law Society of Hong Kong, a statutory body all solicitors must join, has recommended the government ensure that “legitimate commercial secrets… will not inadvertently fall within the ambit” of the state secrets offence.

It also provided a fictitious example of research done by a private company into “booster fuels” for vehicles, which later discovered it could be used in rockets and missiles.

“Should (the firm) continue to possess these secrets, knowing that unlawful possession of state secrets is an offence under the proposed ordinance?” the society asked.

‘Worst’ of all worlds

A previous attempt in 2003 to introduce a national security law triggered massive pushback.

Half a million Hong Kongers protested against what they regarded as an erosion of the liberties Beijing promised Hong Kong would have for 50 years post-handover under the “one country, two systems” doctrine.

Today, four years since Beijing’s national security law was enacted, much of the city’s opposition bloc and democracy activists have been arrested, silenced or fled Hong Kong.

Britain has called on the government to reconsider the legislation, while the United States said the new law “risks compounding the 2020 National Security Law that has curtailed the rights and freedoms of people in Hong Kong”.

“Basically they took the worst of mainland China’s criminal law, they took the worst of post-9/11 English-speaking countries’ anti-terrorism laws and they took the worst of colonial law,” a diplomat told AFP, requesting anonymity due to the sensitivity of the matter.

He added that the decision for international firms to set up in Hong Kong was because of the “one country, two systems” doctrine, which allows the city to be governed under British common law instead of mainland China’s opaque legal system.

“Now it seems that the border between the ‘two systems’ is becoming… smaller and smaller,” the diplomat said.

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The Hong Kong government has announced it will cut funding for major NGOs starting from 2025 amid two straight years of budget deficits over HK$100 billion.

Labour and welfare chief Chris Sun told reporters on Thursday the cutback would affect 59 large NGOs which currently received more than HK$50 million per year each, local media reported.

Funding for each affected group will be reduced by two per cent for the fiscal year 2025-26 and further decreased by three per cent for 2026-27. Another 118 mid-sized and small NGOs will not be affected.

“We’ve considered it thoroughly. While our financial situation is tight, we hope to help those NGO whose capability [for fundraising] is not so strong and do not have much room for manoeuvre,” Sun said in Cantonese, adding that he met executives of the affected NGOs on Wednesday to explain the cutbacks.

“We hope those groups can understand the government’s work, ” Sun said.

Hong Kong’s government has faced deficits since the fiscal year 2019-20. The city logged a shortfall of HK$122 billion in 2022-23. Presenting his latest budget in late February, financial chief Paul Chan said Hong Kong expected a HK$101.6 billion deficit in 2023-24 as land sales revenue dipped.

Chan said in the Legislative Council in late December that all government bureaus and departments would have to cut recurrent spending by one per cent in the coming two fiscal years.

More patriotic, more funding?

In another development the Social Welfare Department, which assesses and approves funding for NGOs, has rolled out new measure to encourage them to host more patriotic activities.

Ming Pao reported on Monday that the department had added new criteria for assessing funding applications – whether the applicants had hosted any activities to support or respond to government’s policies.

It said these included celebrations of the city’s handover to Beijing, events to mark the founding of the People’s Republic of China, or support for government social welfare policies.

The department confirmed the new measure with Ming Pao, adding that the new measure would ensure social welfare services were provided by patriotic and pro-government groups, a move which would benefit the general public and the disadvantaged.

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Bonds issued by the government will not be used to cover recurrent costs, Secretary for Finance Paul Chan has said, after his predecessor warned that the consequences of doing so would be borne by “generations to come.”

Chan told Metro Radio on Monday that Hong Kong would balance the books within three years, a day after former finance minister John Tsang said on Facebook that the government had fallen into structural deficit.

“It is undeniable that Hong Kong has fallen into an era of structural deficit,” Tsang wrote in Chinese, adding that the government needed to cut costs and consider new revenue streams.

Delivering his budget speech last Wednesday, Chan said Hong Kong expected to record a deficit of HK$101.6 billion for the current fiscal year.

Tsang said it was impossible to envision any measures to boost revenue that would not “bring great pain.”

‘A drop in the bucket’

Measures introduced last week, including a two-tier salaries tax system and progressive rates on residential property, would only bring in around HK$2 billion, Tsang said, calling the amount “a drop in the bucket” compared to the tens of billions needed to break even.

Rather than being used to cover the government’s recurrent costs, bonds should only be issued to finance large-scale development projects that yield economic returns, Tsang said. Given the high interest environment, residents would rather put their money in the bank than buy government bonds, he added.

“If bonds are issued year after year… it won’t be long before Hong Kong’s wallet dries up,” Tsang, who was the city’s financial secretary from 2012 until 2017, said. “To pay off interest on the debts, tax and fee hikes followed by drastic cuts to public services will be borne by generations to come.”

The government needed to cut recurrent costs and “keep an eye” on non-recurrent spending, “otherwise, there is no way out of the structural fiscal deficit,” Tsang said.

Investing in development

Chan said on Monday that the HK$120 billion bond issuance unveiled in last week’s budget would “definitely” not be used to fund recurring expenditure, and would instead finance infrastructure projects.

That would include the Northern Metropolis scheme and the Hung Shui Kiu Ha Tsuen New Development Area, the Financial Secretary’s Office told local media on Sunday.

Chan said the government’s operating account would be brought back to black in two years, and the consolidated account in three, adding that there was “no need to worry” about a structural deficit.

He said investing in development projects would ensure sufficient land and housing, adding that home prices tripled between 2007 and 2016 because the government underinvested in infrastructure and did not make enough land available.

“We will definitely take control of land supply and at the same time, we have been closely monitoring the property market to ensure an adequate supply of residential flats,” Chan said.

Echoing development minister Bernadette Linn’s remarks on Saturday, Chan also said the delayed Kau Yi Chau artificial islands project would not have an effect on land and housing supply.

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Hong Kong will have to be prudent when selling land in the coming fiscal year, development minister Bernadette Linn has said, as the government announced eight residential sites, six of which were rolled over from last year’s programme.

Linn announced the land sale programme at a press conference on Thursday, saying the eight residential sites would provide about 5,690 flats.

Two commercial sites in Kai Tak and Sha Tin would provide about 120,000 square metres of gross floor area, and a site designated for industrial use would provide a floor area of 544,000 square metres.

The eight residential sites would include two new sites in Siu Lek Yuen in Sha Tin, and six unsold ones located in Kai Tak, Sai Kung, Stanley, Cheung Sha, Tung Chung and Tuen Mun rolled over from the current fiscal year’s programme.

See also: Hong Kong suspends residential, commercial land sales amid sluggish market

The first residential site to go up for tender in the first quarter of the 2024-25 fiscal year will be one of the Siu Lek Yuen sites, which is capable of providing some 280 flats, according to the Development Bureau.

The government “will continue to provide land to the market for economic and housing development in a prudent and paced manner, in order to maintain a sustained and steady land supply,” Linn told reporters in Cantonese on Thursday.

Last year, the government planned to sell 12 residential sites, three commercial plots and three areas designated for industrial use.

But the city saw a record six failed land tenders amid high interest rates and a bleak property market outlook that curbed developers’ appetites for new plots, as home prices fell 23 per cent from the peak in September 2021, according to official figures.

Finance minister Paul Chan said on Wednesday that the HK$19.4 billion the government made in land sales revenue was “substantially lower” than the original projection of HK$65.6 billion.

The government recorded an estimated deficit of HK$101.6 billion for the 2023-24 fiscal year.

Prime site excluded

Linn also said a commercial plot at Queensway Plaza would not be included this year, citing weak market sentiment. She called it a prime “treasure” site that the government was not prepared to include in the upcoming land sale programme.

With the eight residential sites, the MTR Corporation and the Urban Renewal Authority (URA) will produce a total of about 15,150 flats in the coming fiscal year, exceeding the government’s annual supply target of 13,200 flats.

The railway operator plans to put a residential development project at Tung Chung East Station up for tender in the coming year, providing about 1,200 flats. The URA, meanwhile, plans to provide 2,680 flats in Kowloon City, Mong Kok, and Kwun Tong, with an additional 5,400 units to be redeveloped by the private sector.

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Factory activity in China contracted for the fifth straight month in February, official figures showed Friday, as sluggish demand in the world’s second-largest economy continues to drag on growth.

The purchasing managers’ index (PMI) — a key measure of factory output — came in at 49.1 percent in February, according to China’s National Bureau of Statistics (NBS).

A PMI figure above 50 percent indicates an expansion in activity, while below indicates a contraction.

China’s monthly PMI has only registered in positive territory twice throughout the last year, most recently in September.

Factory activity has consistently contracted since then, with February marking the fifth consecutive month of decline.

Analysts polled by Bloomberg had expected a PMI figure of 48.8 percent in February.

In December 2022, Beijing abruptly lifted draconian Covid-19 control measures that had weighed heavily on the economy for nearly three years, raising expectations for a sustained recovery.

But such hopes have been dampened by a lack of consumer and investor confidence, unprecedented turmoil in the property sector and soaring youth unemployment.

A global slowdown, meanwhile, is weakening demand for Chinese products overseas.

In recent months, authorities have announced a series of targeted measures as well as a major issuance of sovereign bonds to boost infrastructure spending and revive economic activity. But results have been mixed.

China’s weeklong Lunar New Year period — the longest annual public holiday — occurred in February this year, also partially explaining the slowdown in activity.

China’s non-manufacturing PMI — which takes into account the services sector — remained in positive territory in February at 51.4 percent, up from 50.7 percent the previous month, the NBS said Friday.

The latest figure came in higher than expected for analysts polled by Bloomberg, who had predicted it to stand at 50.2 percent.

China is gearing up to unveil official economic goals for the current year on Tuesday, including the highly anticipated GDP growth target — expected to be among the lowest in three decades.

The country notched GDP growth of 5.2 percent last year, according to an official figure that many economists consider to be an overestimate, despite already representing the lowest expansion since the 1990s apart from the pandemic years.

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Hong Kong finance chief Paul Chan on Wednesday delivered his eighth budget, scrapping long-standing property taxes to revive a depressed housing market and scaling back relief measures for residents against a deficit that exceeded HK$100 billion for the second consecutive year.

Following the budget speech, Chief Executive John Lee said he shared Paul Chan’s “confidence and optimism in Hong Kong’s future,” while the city’s no. 2 official Eric Chan hailed the fiscal blueprint as “steadfastly seeks progress while ensuring stability.”

At the opposition-free legislature, lawmakers praised the budget as providing a timely intervention to stimulate the property market. But, outside the chamber, one remaining opposition party and NGOs raised concerns about the fiscal plan’s lacklustre support for residents facing economic hardship.

HKFP rounds up some of the reactions to the latest budget from major political parties and NGOs.

‘Appropriate and pragmatic’

The pro-Beijing Democratic Alliance for the Betterment and Progress of Hong Kong (DAB), the largest political party at the legislature, said on Wednesday that Paul Chan’s budget was “appropriate” and “pragmatic,” with measures to boost the economy and support businesses under a ballooning fiscal deficit.

“The latest budget is appropriate to the current situation, pragmatic and proactive,” said Gary Chan in Cantonese, DAB’s chairperson and a lawmaker.

He said the fiscal plan had adopted suggestions put forth by the DAB, including the move to scrap extra stamp duties and relax mortgage rules. He said it will create “favourable conditions” for reviving the housing market.

See also: Extra stamp duties axed in bid to revive housing market

Hong Kong’s housing market has slumped over the past three years, with property sales plunging from around 74,000 units in 2021 to 43,002 last year, according to the Land Registry. The government’s home price index fell for nine consecutive months to 306.4 in January, reverting to levels seen in 2016.

Paul Chan on Wednesday announced that extra stamp duties – the Special Stamp Duty on properties resold within 24 months, the Buyer’s Stamp Duty on non-locals, and the New Residential Stamp Duty on second-home buyers – would be axed with immediate effect.

Regina Ip, chairperson of the New People’s Party and the convenor of the Executive Council, also expressed support for the move, saying she believed more Hongkongers would be able to become homeowners after the withdrawal of property cooling measures.

Meanwhile, lawmakers from the Business and Professionals Alliance for Hong Kong celebrated the move to scrap the extra stamp duties – known colloquially as the “spicy measures” – by chopping prop chillies at a press briefing following the budget speech.

Relief measures reduced

Separately, Gary Chan said that the city’s financial situation did not allow for large-scale one-off relief measures, given the consecutive deficit and a dwindling fiscal reserve.

But Paul Chan still offered sweeteners totalling around HK$115 million in this year’s budget. Salaries and profits tax reductions were capped at HK$3,000, half of last year’s HK$6,000, though the consumption voucher scheme was scrapped.

Gary Chan said the priority should be put at boosting overall economic development so that residents could enjoy the profits of growth.

See also: No consumption vouchers as relief measures scaled back

Holden Chow, the DAB’s vice-chairperson, added that the government should be careful in planning its expenditure, and should ensure that the budget does not significantly increase the burden residents’ livelihoods.

But the opposition Democratic Party questioned why the government did not consider reducing the salaries of principal officials so as to demonstrate a spirit of togetherness with residents facing hardship.

“If officials can demonstrate an attitude of riding out the storm together with residents, people could feel that the government is addressing the situation in a concerted effort,” said chairperson Lo Kin-hei. “It’s a shame that the government did not mention [about official salary cuts], we are very disappointed.”

The Society for Community Organisation on Wednesday also said the relief measures were insufficient for the city’s low-income residents.

The anti-poverty NGO said the extra allowances provided for the elderly, disabled, and residents living on social security, do not fully cover the city’s underprivileged population, especially working class families with children.

It urged authorities to consider an additional HK$5,000 cash handout for low-income residents.

On tobacco tax

Also on Wednesday, the pro-business Liberal Party expressed “disappointment” with the increase in tobacco tax. Its chairperson Peter Shiu said the party supported people who wish to quit smoking, but it should be achieved through publicity work and education.

Paul Chan announced on Wednesday that the duty on cigarettes would rise by 80 cents per cigarette, or HK$16 for a pack of 20, with immediate effect. The move takes the price of a pack of cigarettes to around HK$96.

See also: Tobacco tax rises for second consecutive year to put public off smoking

“The significant increase in tobacco tax this time may lead to more illicit cigarettes in the market. It also adds more burden on low-income individuals,” Shiu added.

Additional reporting: James Lee & Kelly Ho.

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Hong Kong is expected to log a shortfall of HK$101.6 billion in the current fiscal year ending in March, almost double the forecast given by the government last year.

Financial Secretary Paul Chan unveiled the new estimated deficit, when he delivered the annual budget for the upcoming fiscal year at the Legislative Council.

The minister had predicted the city would record a deficit of HK$54.4 billion during last year’s budget, but he updated the figure to HK$101.6 billion on Wednesday. The government’s revised revenue stood at HK$554.6 billion, which was HK$87.8 billion – or 13.7 per cent – lower than the original estimates.

“Revenue from land premium is HK$19.4 billion, substantially lower than the original estimate by HK$65.6 billion and also far lower than the previous year,” he said.

Chan estimated another deficit for 2024-25 of HK$48.1 billion.

Covid and stamp duty

Chan warned in October last year that the city might face a fiscal deficit exceeding HK$100 billion citing slow post-pandemic recovery and reduced revenue from land sales and stamp duty.

The government would have HK$733.2 billion in fiscal reserves by the end of March this year, the financial chief said on Wednesday.

The total government expenditure for the current financial year was revised to HK$727.9 billion, which fell by 10.2 per cent compared to the spending in the previous year. The figure was also HK$33.1 billion – or 4.3 per cent – lower than the original estimates.

The government is expected to spend more in the financial year of 2024-25, Chan predicted, with the estimated total expenditure standing at HK$776.9 billion. The government would also raise its recurrent spending to HK$580.2 billion, of which HK$343.7 billion would be earmarked for healthcare, social welfare and education.

The financial chief estimated that the government would earn HK$633 billion in the next fiscal year, with HK$71 billion of revenue expected from stamp duty.

A “zero-growth” approach would continue to be adopted by the government to retain the current size of the civil service establishment, which would have around 194,000 posts by the end of March next year.

“Departments will enhance their effectiveness and efficiency through prioritisation, internal redeployment and streamlining of work processes in taking forward different new policies and initiatives of the government,” he said.

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Hong Kong’s economy grew by 3.2 per cent in 2023 after the city lifted stringent Covid-19 restrictions, but the “difficult external environment” continued to limit the pace of growth, the city’s finance chief has said.

Economic activity in Hong Kong showed an immediate improvement after anti-epidemic measures were axed early last year, Financial Secretary Paul Chan said on Wednesday when he presented the annual budget for the next fiscal year in the legislature.

The income of the general public grew last year, Chan said, while private consumption expenditure increased by 7.3 per cent with the support of the consumption voucher scheme and initiatives including “Happy Hong Kong” and “Night Vibes Hong Kong,” the minister said.

‘Moderate’ inflation

Inflation in Hong Kong remained moderate in overall terms, Chan said on Wednesday, with the inflation rate standing at 1.7 per cent last year after excluding the effects of one-off government measures.

“While prices of individual items such as energy, clothing and footwear, as well as meals out and takeaway food, rose visibly, price pressures faced by other major components were largely contained,” he said in Cantonese.

Hong Kong growth forecast

The finance minister predicted that Hong Kong’s economy will grow between 2.5 to 3.5 per cent in the upcoming fiscal year, taking into account the global financial situation and China’s expected growth.

International trade and capital flows would continue to be affected by geopolitical tensions, Chan said, while the growth rate of advanced economies would be constrained by the “sharply tightened financial conditions” over the past two years.

China is expected to record economic growth this year, with its measures for boosting the economy “progressively taking effect,” Chan said. The US economy may record slower growth compared to last year due to the effects of rate hikes, but the economy would receive some support if the Federal Reserve begins reducing interest rates, he said.

Although Hong Kong’s export of goods would continue to feel pressure from the external environment, performance may improve as the global financial situation may “ease progressively” over the course of the year, Chan said.

The financial chief predicted that Hong Kong will see more visitors in the coming year, thus boosting the growth in the export of travel and other related services. The income of the general public is also expected to rise, which will support private consumption, he said.

‘Solid development’

The city’s economy will see “sustained and solid development” in the medium-term despite geopolitical tensions and the expansionary fiscal and monetary policies adopted by most economies, Chan said.

The finance chief vowed that Hong Kong would have “ample room to grow” with China’s focus on promoting high-quality development. The city would continue to leverage its unique advantages under One Country, Two Systems and proactively integrate into the overall national development, Chan said.

“[Hong Kong] continues to perform the role of an important node in the domestic and international dual circulation of our country,” he said.

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The Hong Kong government has announced the introduction of a tiered salaries tax regime from the 2024-25, which will see earners whose annual net income exceeds HK$5 million pay more.

The financial secretary Paul Chan announced on Wednesday that taxpayers whose net income exceeds HK$5 million will be subject to an increased tax rate of 16 per cent on earnings over HK$5 million. Their first HK$5 million will be charged the standard rate of 15 per cent.

Chan said the new regime would affect 12,000 taxpayers, or just 0.6 per cent, and predicted that the move would raise HK$910 million per year for the government.

“Even with the two-tiered standard rates regime above in place, the new tax rates will still be lower than those of other advanced economies, ” Chan said in Cantonese when he delivered the budget address for the 2024-25 fiscal year.

Currently, salaries tax in Hong Kong is calculated at progressive rates from 2 per cent to 17 per cent on taxpayers net chargeable income or at a standard rate of 15 per cent on net income, whichever is lower. The standard rate is normally adopted for high earners.

Chan previously said in a blog in early January that authorities should take appropriate measures to increase revenue but also need to take the actual circumstances and current development into account.

“We need to maintain the advantages of our simple and low tax regime and bear in mind the burden on our residents,” Chan said.

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Hong Kong is axing all extra stamp duties from Wednesday onwards in a bid to revive the city’s housing market, finance chief Paul Chan has said following pressure to lift long-standing property cooling measures.

“After prudent consideration of the overall current situation, we decide to cancel all demand side management measures for residential properties with immediate effect, that is, no Special Stamp Duty, Buyer’s Stamp Duty, or New Residential Stamp Duty needs to be paid for any residential property transactions starting from today,” Chan said in Cantonese as he delivered his annual Budget to the city’s legislature.

“We consider that the relevant measures are no longer necessary amidst the current economic and market conditions,” Chan added.

The move comes after a nine-month house price losing streak and mounting pressure to lift all property cooling measures. The government’s home price index fell for nine consecutive months to 306.4 in January, a 23 per cent drop from the peak in September 2021 according to official figures.

Since 2010, authorities have imposed extra stamp duties to curb property speculation and prevent home prices from soaring. Among them, a Special Stamp Duty was levied on properties resold within 24 months, a Buyer’s Stamp Duty on non-permanent residents and businesses, and a New Residential Stamp Duty on second-home buyers.

But the housing market has slumped over the past three years. Property sales plunged from around 74,000 units in 2021 to 43,002 last year, according to the Land Registry.

According to government figures, stamp duties brought in some HK$50 billion in revenue last year, a shortfall of HK$35 billion compared to the original estimate.

Demand for housing remained low, a government source told HKFP on Wednesday. In 2023, short-term transactions made up only 0.9 per cent of total residential property transactions, compared to 20 per cent before the introduction of the Special Stamp Duty, the source said.

Non-local individuals and businesses made up 0.8 per cent of total transactions in 2023, compared to 4.5 per cent prior to the Buyer’s Stamp Duty, he said.

Also in 2023, 97 per cent of buyers did not already own a property, compared to 75 per cent logged before the New Residential Stamp Duty was introduced, he added.

Chief Executive John Lee announced a partial easing of extra stamp duties during his second Policy Address last October. The period of the Special Stamp Duty – designed to combat speculation – was shortened from 36 to 24 months, meaning that only those who sell their property within two years after their purchase would have to pay the extra tax.

Stamp duty paid by second-home buyers and non-locals were also halved, down from a maximum 30 per cent to 15 per cent.

Following Lee’s Policy Address, property sales increased from 2,123 units in October to 3,477 units last month.

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Hong Kong’s finance chief Paul Chan delivered the budget for 2024 on Wednesday, February 28 at the legislature. He predicted a shortfall of HK$101.6 billion in the current fiscal year ending in March, almost double the forecast provided last year. Meanwhile, the economy grew by 3.2 per cent in 2023, whilst inflation remained “moderate,” Chan said. Hit refresh for latest.

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Hong Kong has long been renowned for its huge fiscal reserves and prudence in public spending.

Ahead of the Covid-19 pandemic, in January 2020, the government had nearly HK$1.2 trillion in fiscal reserves, the equivalent of 22 months of public expenditure. It had recorded 15 years of budget surpluses before the economy was hit by the 2019 pro-democracy protests and unrest and then by Covid.

By March, the reserves had shrunk to an estimated HK$817.3 billion – meaning that over HK$300 billion had drained away in just three years.

The ramifications for future government policies remain unclear. For this year, Financial Secretary Paul Chan proposed to maintain “zero-growth” in the civil service workforce and make no change to the profit and salary tax rates.

Chan disclosed hours after he introduced the 2023-24 budget that he had considered raising both taxes but “the timing is not right.”

In addition to the sharp drop in the reserves, the city has recorded rare budget deficits after many years of surpluses.

While there was a surplus of HK$29.4 billion in 2021-22, the shortfall was over HK$233 billion in 2020-21 and HK$140 billion in 2022-23.

Taking into account the proceeds from government bonds of about HK$65 billion, the forecast deficit for 2023-24 is HK$54.4 billion.

Balanced budgets are not just a desired fiscal policy but an obligation under the Basic Law constitution which came into force after the 1997 handover.

Article 107 says Hong Kong “shall follow the principle of keeping the expenditure within the limits of revenues in drawing up its budget.”

The government shall “strive to achieve a fiscal balance, avoid deficits and keep the budget commensurate with the growth rate of its gross domestic product (GDP).”

The Basic Law requirement

The principles of sound budgeting and minimal intervention in the private sector date back to British colonial rule.

Sir Philip Haddon-Cave, who was financial secretary from 1971-81, introduced the idea of “positive non-interventionism.” This recognised that the government had a responsibility to intervene in the operation of market forces, but within a limited scope.

The prudent fiscal philosophy was passed on to Hong Kong’s future rulers. The first public draft of the Basic Law published in April 1988 proposed tighter controls over the public finances than those later accepted.

The draft called for the city to “measure expenditure by revenues” when planning its budget.

It proposed a “basic balance” between revenue and spending, with growth in either not to exceed the rate of growth in gross domestic product “over a number of fiscal years taken as a whole.”

However, the proposal came under fire from the business sector for putting the Hong Kong government “in a straitjacket.”

The Business and Professional Group of the Basic Law Consultative Committee raised the issue that only one balanced budget had been tabled to the legislature between 1946 and 1988, whereas 21 budgets predicted a deficit and 20 a surplus.

It added that it would be “virtually impossible” for the authorities to draw up the budget based on GDP, as there would at least a two-year time gap between published GDP data and the government’s fiscal proposals.

During the public consultation period that followed, there were also requests for clarifications on what was meant by “measuring expenditure by revenue.”

The final draft of the Basic Law used more flexible wording, allowing future post-Handover administrations to introduce their own interpretations.

Terence Chong, executive director of the Chinese University of Hong Kong’s Lau Chor Tak Institute of Global Economics and Finance, told HKFP that the constitutional restriction was decided during negotiations between Britain and China in the 1980s.

“It is to prevent Hong Kong from making overly large expenditures… to the extent that it does not know how to repay,” said the associate professor.

How much has changed?

The four post-Handover financial secretaries preceding Chan – Donald Tsang, Antony Leung, Henry Tang and John Tsang – used different wording to describe their fiscal measures but all defended the minimal intervention approach.

After public expenditure rose to 22 per cent of GDP in 2001-02, the then financial chief Antony Leung announced in his 2002-03 budget that the government’s target was containing spending to 20 per cent of GDP or below in five years.

“The growing share of public expenditure in the economy consumes scarce resources that could otherwise be used by the private sector more efficiently,” Leung told the legislature at that time.

The idea of keeping public spending under the 20 per cent threshold persisted until Carrie Lam took office as chief executive in 2017, pledging a “new fiscal philosophy.”

Chan announced in the 2018-19 budget that public spending would be “slightly higher than 21 per cent of our GDP” in subsequent years, “in the face of various development needs of society and the economy.”

But even with the increase in public spending, Chan maintained a surplus until the city was hit by the 2019 pro-democracy protests and unrest and the start of the Covid pandemic the following year.

Why is Hong Kong so prudent?

Apart from the constitutional constraints, Chong said Hong Kong’s economic structure also caused the government to strive to avoid budget deficits.

While other developed economies such as the UK, the US and Japan could tolerate debts almost equal to or even double their GDP, Hong Kong lacked the means to repay such a sum.

Currently the Hong Kong government’s outstanding debts only account for four per cent of GDP, whereas data by the World Economics Research show that regional rival Singapore had a debt-to-GDP ratio of 127.8 per cent.

“As Hong Kong is not a sovereign state, it cannot print money to repay debts,” Chong said.

Higher taxes were also not an option. Chong said Hong Kong’s wealth was mainly derived from capital outside the city through finance and entrepôt trade, instead of local business activities or natural resources.

“To a large extent, we depends on outsiders to bring money to us. There is no reason to raise taxes and drive your guests away,” he said.

Why is our book in the red?

Presenting his latest budget, Chan said the decline in revenue from tax incomes and land sales, as well as “huge expenditure” on Covid, were the main reasons for the red ink.

He said the city had spent over HK$600 billion in anti-epidemic and relief measures over the past few years.

Chong agreed with the financial secretary that the budget deficits were mainly due to the pandemic.

“The most important issue is whether you can cut back the amount you previously spent,” the professor said, adding that government spending on healthcare had ballooned in the past two years and accounted for 20 per cent of its recurrent expenditure.

Chong said that as long as the authorities could cut back special funding to public hospitals instated during the pandemic, the deficits would not be structural.

He said the government’s options were limited if it wanted to raise tax income. An increase in salaries tax “would not be of much help” as that was not the main source of revenue, whereas increasing profits tax might drive businesses away from Hong Kong.

Revenue from land sales and the current profits tax would recover in line with the economy.

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Beijing’s top official overseeing Hong Kong’s affairs has reassured businesses that investments and assets will be protected, the head of the city’s largest commerce group has said.

Betty Yuen, chairperson of the Hong Kong General Chamber of Commerce (HKGCC), addressed reporters after a meeting on Monday with Xia Baolong, the director of the Hong Kong and Macao Affairs Office (HKMAO), local media reported.

“[Xia]… said Hong Kong’s ‘One Country, Two System’ has been effective and that there was no need to change it,” Yuen said, referring to the governance system that accords the city a degree of autonomy from mainland China.

“Investment and assets in Hong Kong will be protected and [he] told us to rest assured to invest and to boost Hong Kong’s prosperity,” Yuen said. She added that Beijing would roll out more measures to support Hong Kong.

The business group head also said that Xia repeatedly mentioned Chinese leader Xi Jinping in his discussion.

The top Beijing official arrived in Hong Kong last Thursday for a week-long visit to understand Hong Kong’s economic development and district administration matters, according to a statement from the HKMAO. The city’s leader John Lee was seen alongside Xia throughout his time in the city.

The meeting with commerce representatives, which was also attended by the heads of the Austrian and Malaysian commerce chambers, was among a number of sessions Xia attended on Monday. In the morning, he met with representatives from the finance sector, and later had lunch with the city’s financial regulators.

The city’s leader Lee told reporters on Monday that topics such as attracting foreign investment to the Greater Bay Area and boosting tourism were discussed, HK01 reported.

Lee mentioned that some commerce representatives asked Xia questions about the impending national security law, which Hong Kong is obligated to pass under Article 23 of the Basic Law, according to HK01. Lee said the representatives generally supported the legislation.

Xia’s visit was met with a protest by pro-Beijing activist Chan Ching-sum on Monday morning, who urged the official for clarification on “soft resistance” and the “bottom line” of the national security law. Chan said Hongkongers were afraid to speak up due to a lack of certainty around what was legal.

The activist planned to deliver her petition outside Beijing’s Hong Kong Liaison Office in Sai Ying Pun. However, she said police “suggested” that she do so near the MTR station instead, about an eight-minute walk from the Liaison Office.

After a 10-minute demonstration, in which she read out a statement to Xia, Chan submitted two letters to a man who refused to reveal his identity.

A ‘tough time’

Beijing’s visiting official met with district officers, the heads of the city’s 18 District Councils and some district councillors last weekend to understand matters of local administration, according to a government statement last Saturday.

Xia also met Hong Kong’s hometown associations on Monday evening, groups representing people from different parts of China. Irons Sze, chairperson of pro-establishment group the Federation of Hong Kong Beijing Organisations, said on Monday that Xia had asked all the associations to unite together to support the government.  

“[Xia] said that ‘Lee is having a tough time now,’ and the whole society is working hard. Hometown associations and people from all walks of life need to support [Lee], especially in terms of boosting the economy and improving people’s livelihood,” Sze said in Cantonese.

On Tuesday, Xia went to the West Kowloon Cultural District in the morning, where he visited the Hong Kong Palace Museum and exchanged views with around 30 young people, local media reported. He then met with finance experts in the afternoon.

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Thousands of cars from China’s BYD rolled off a ship in the German port of Bremerhaven on Monday, as the world’s biggest electric carmaker brought its challenge directly to Europe’s auto making powerhouse.

The delivery was made by the BYD Explorer No.1, the first of eight cargo ships specially commissioned by the Chinese group to expand its export operations.

The arrival of the shipment could become a further headache for established European auto giants, who have trailed upstart rivals in the switch from combustion engines to batteries.

BYD overtook US carmaker Tesla as the biggest maker of battery electric vehicles by volume at the end of last year, delivering over 500,000 units in the last quarter of 2023.

After stopping off in the Dutch port of Vlissingen, the BYD Explorer No.1 docked in Bremerhaven on Sunday, a spokeswoman for the German port told AFP.

Some 3,000 vehicles were unloaded on Monday from the vessel, which carries the carmaker’s own livery, the spokeswoman said.

BYD began life in 1995 as a battery manufacturer, and later turned its attention to producing plug-in hybrid and all-electric vehicles.

Vehicles produced by the Shenzhen-based company compete against Tesla on price inside China and in Europe.

As well as shipping large numbers of cars to Europe, BYD has plans to establish its own factory in the region, much like Tesla, which operates a plant near Berlin.

BYD said in January that the planned base in Hungary would begin operations in three years’ time.

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Dior has postponed a fashion show set to be held in Hong Kong next month, a city official confirmed Saturday, dealing a blow to the financial hub’s ambitions to boost its economy through major events.

Hong Kong is courting top international celebrities and brands in the hope of rebooting its reputation, which had been battered by years of social unrest and strict pandemic curbs.

The Dior fashion show — meant to feature artistic director Kim Jones and the men’s autumn collection — was to be one of a number of “mega events” touted last month by Hong Kong’s culture, sports and tourism chief Kevin Yeung as part of the city’s drive to become an event capital.

But Yeung’s office confirmed to AFP on Saturday that it had “just been notified” by organisers that the fashion show would not go ahead as scheduled on March 23.

“Large-scale events are postponed from time to time, and we continue to welcome large-scale events to take place in Hong Kong,” a spokesperson for Yeung’s office added.

Dior said the show had been “postponed indefinitely” without giving specifics, according to a company statement quoted by the South China Morning Post.

According to SCMP, the event was expected to cost about HK$100 million (US$12.8 million) and draw nearly 1,000 attendees.

Louis Vuitton in November held its men’s pre-fall 2024 show in Hong Kong, led by creative director Pharrell Williams and drawing celebrity guests from China and South Korea.

The much-hyped runway show was seen as a boon to Hong Kong’s international image and a sign of the luxury giant’s commitment to Asian markets.

LVMH, the world’s largest luxury goods group and parent company of both Dior and Louis Vuitton, last month posted record sales and profits in 2023 — though growth slowed in the second half.

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By Matthew Walsh

Tiny electric cars weave through traffic in southern China, their cheap and cheerful designs bringing a touch of colour to the EV revolution in the country’s overlooked cities.

China is the world’s largest market for electric vehicles (EVs), with premium models by Tesla and homegrown giant BYD a common sight in the nation’s affluent megacities.

But in a growing number of less-developed areas, the face of greener transport is the Wuling Hongguang Mini — a dinky two-door runaround that sells for a fraction of the price.

China’s most popular EV to date, it has sold more than 1.2 million units, often to consumers with lower incomes in provincial cities and smaller towns.

“This car is small and convenient, easy to park and charge, and it’s cheap — that’s why I chose it,” a driver surnamed Cao told AFP as she loaded shopping bags into her vehicle in Liuzhou, in the southern Guangxi region.

“(It is) mainly used for picking up the kids, grocery shopping and work commutes,” the 47-year-old said.

Liuzhou, a city of around four million people, is more famous in China for misty mountains and pungent river-snail noodles than advanced technology.

But its locally made mini-EVs are proving a breakout success, and authorities have responded by providing charging stations, discounted parking spots and preferential policies for buyers.

Driver Tang Wenhui said he barely considered the environmental benefits when he and his family paid around 60,000 yuan (US$8,300) — the equivalent of a year’s wages — for a new Wuling a year ago.

“I just wanted something to get me around town… not necessarily to travel long distances,” the 23-year-old programmer told AFP.

“As a fresh graduate, it’s just made life a bit easier.”

‘Style accessory’

According to company specifications, the latest Hongguang Mini is around three metres (9.8 feet) long and less than 1.5 metres wide, seats four people and contains a lithium battery that runs for up to 215 kilometres (134 miles) on a single charge.

Prices start at 41,800 yuan (US$5,800), but older editions sell for around 30,000 yuan –- an eighth of what Tesla’s flagship Model 3 costs.

Wuling is not the only player in the sector, with domestic automakers Dongfeng Motor, Chery and Geely all producing their own miniature EVs.

But Wuling has given itself some staying power by nurturing a devoted community of younger female fans calling themselves “Wuling girls”.

The cars embrace cuteness with pastel-pink and lemon-yellow bodywork, with editions named after French pastries and Japanese gaming consoles.

And many buyers spend additional sums to personalise their motors with brightly coloured polka dots, racing stripes and anime cartoons.

Cao’s ruby-red car is adorned with a large white decal in the shape of Mickey Mouse alongside smaller stickers of other cartoon characters.

“I feel it’s cute,” the Liuzhou resident told AFP as she recharged her car near the riverside, adding that her friends had done the same.

Tu Le, founder of consultancy Sino Auto Insights, said the affordability meant “many people in smaller cities tend to treat them less as a vehicle and more as a style accessory”.

“That’s why it’s popular to purchase aftermarket products to decorate them and make them more unique,” he said. “But they are still able to provide transportation to their buyers for their daily commute.”

Leading the charge

China views new-energy vehicles as a critical emerging industry and has ramped up state support as it seeks to make its economy more self-sufficient and based on high-end manufacturing.

The sector is also an important component of Beijing’s pledge to bring emissions of planet-warming carbon dioxide to a peak by 2030 and reduce them to net zero by 2060.

The domestic industry hit an inflection point when homegrown giant BYD dethroned Elon Musk’s Tesla as the world’s top EV seller in the fourth quarter of last year.

But lower-end cars like the Hongguang Mini are “extremely important for the China market”, said Tu of Sino Auto Insights.

Online, some prospective buyers voice concern that the cars may not be safe, pointing to their lightweight construction and the lack of airbags and other features in older models.

A lack of charging infrastructure in many smaller cities and long-running struggles by some automakers to make the cars profitable also cloud the sector’s future.

Still, Tu said, the cars help to rein in a global trend towards bigger, gas-guzzling cars that make traffic and pollution worse.

And they “create options for those that wouldn’t otherwise be able to afford their own transportation”, he told AFP.

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China’s new year holiday spending last week surged past pre-pandemic levels, official figures showed, a rare bright spot for an economy struggling with sluggish consumption and deflation.

Domestic spending on entertainment, dining and travel soared during this year’s “Golden Week”, which officially ended on Saturday, according to a statement from Beijing’s Ministry of Culture and Tourism on Sunday.

Chinese travellers made 474 million trips across the country during the eight-day break, up 19 percent from 2019, the ministry said — the world’s largest annual migration.

And domestic spending on tourism came in at 632.7 billion yuan (US$87.9 billion), up 7.7 percent from 2019, the ministry said.

See also: Hong Kong sees more than 1.25 million mainland Chinese visitors over Lunar New Year holiday

This year’s new year holiday was the country’s second after the abrupt scrapping in late 2022 of China’s strict zero-Covid pandemic policy, which depressed consumer spending and hit business confidence through snap lockdowns and lengthy quarantines.

Mainland Chinese markets rose at the open on Monday after the holiday break, with the Shanghai Composite Index up 0.28 percent and the Shenzhen Composite Index on China’s second exchange adding 1.16 percent.

‘Pent-up demand’

The latest holiday data showed that “there was substantial pent-up demand to be released”, Ting Lu, chief China economist at Nomura, said in a note on Monday.

But he warned against reading too much into the strong spending figures, as “we need to take into account the very low base from last year during the height of the Covid ‘exit wave'”, referring to a rapid surge in infections across the country in December 2022 and January 2023.

While total spending was up, the average spending per trip was down 9.5 percent from 2019, according to Nomura calculations.

And analysts at Goldman Sachs also pointed to the “slightly longer-than-usual” holiday period this year, which they said “contributed to the record cross-region passenger flows and encouraged more long-haul travels”.

The national holiday in 2019 was seven days long, compared to this year’s eight.

The holiday data comes after months of struggle by officials to kickstart growth in the face of a prolonged property-sector crisis, soaring youth unemployment and a global slowdown that is hammering demand for Chinese goods.

Policymakers have in recent months announced a series of targeted measures as well as a major issuance of billions of dollars in sovereign bonds, aimed at boosting infrastructure spending and spurring consumption.

But that, and recent announcements including central bank interest rate cuts and measures to boost lending, have had little impact so far, with consumer prices falling in January at their quickest rate in more than 14 years.

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Part of our Place Names series.

Hong Kong’s daily life continues to reflect its historical maritime trade roots. Whether it’s the journeys made possible by companies like Star Ferry (Wharf) and Cathay Pacific (Swire), or the everyday convenience offered by 7-Eleven (Jardines) and Watsons (CK Hutchison, formerly Hutchison Whampoa), or even the awkward phrase “I have PayMe-d you” (HSBC), these companies, all with maritime connections, continue to shape the city’s identity.

Making waves

Hong Kong’s strategic location near China has made it one of the world’s largest ports. Initially trailing behind Shanghai, Hong Kong’s fortunes changed with the 1848 gold rush, which turned it into a pivotal point for Chinese migrants bound for the United States and Australia.

Despite criticism, the controversial coolie trade further fuelled shipping activities, before relocating to Macau and elsewhere.

Between the 1860s and the early 1900s, Hong Kong’s shipping industry experienced remarkable expansion, witnessing a more than fourfold increase in the number of ships.

This growth was fuelled by factors such as population growth, the opening of the Suez Canal, and the establishment of new trade routes. By 1899, Hong Kong had secured a significant 40 per cent of China’s total trade, solidifying its position as a key player in global maritime trade.

The early birds

Following the British occupation of Hong Kong in January 1841, foreign merchants and missionaries in Macau flocked to the newly acquired territory.

By April of the same year, basic structures such as matsheds and rudimentary godowns began dotting the city.

A mere seven days after Captain Charles Elliot declared Hong Kong a free port in June 1841, the first land sale took place, preceding the Treaty of Nanking which formalised the cession of Hong Kong Island the following year.

Foreign trading houses, known as hongs, acquired land lots along the Wan Chai and Central waterfront. Notable buyers included Jardine Matheson & Co. (Jardine) and Dent & Co., both prominent British opium merchants of the time, who secured land to establish their headquarters in Hong Kong.

Building empires

After the auction, Jardine started constructing warehouses, wharves, offices, and residences, in East Point, now Causeway Bay, establishing one of the first brick and stone structures in the city. Jardine’s Bazaar (渣甸街), Jardine’s Crescent (渣甸坊), and Yee Wo Street (怡和街), named after Jardine’s romanised Chinese name “Ewo” (怡和), were among the first streets built in the area.

Jardine’s executives, known as taipans, held esteemed positions in Hong Kong and the former concessions of Shanghai, with many serving on the Executive or Legislative Council of Hong Kong. Several streets in Causeway Bay bear the names of these individuals, including Matheson Street (勿地臣街), Irving Street (伊榮街), Percival Street (波斯富街), and Keswick Street (敬誠街).

Beyond shipping and trade, Jardine also delved into local industries, investing in ventures such as the China Sugar Refining Company and the Hong Kong Cotton Spinning, Weaving, Dyeing Co.

Both enterprises failed, resulting in the conversion of the former into the residential Sugar Street (糖街), while the latter’s land was sold to French Catholics for the construction of the St. Paul’s Convent School complex. Only a small road known as Cotton Path (棉花路) remains from that time.

Post World War II, economic shifts prompted Jardine to sell or redevelop holdings, resulting in developments like Paterson Street (百德新街), named after a former taipan, and streets like Houston Street (厚誠街), Cleveland Street (加寧街), and Kingston Street (京士頓街), named after North American cities with trade ties to Jardine.

Dent & Co., Jardine’s main competitor, took a different path. It secured land in Central during the initial auction and erected a building at the crossroads of Pedder Street and Praya Central, now part of The Landmark complex.

In Wan Chai, Dent & Co. constructed piers and warehouses, engaging in trade with Chinese ports like Xiamen and Shantou. This development led to the establishment of Amoy Street (廈門街) in the former and Swatou Street (汕頭街) in the latter after the area was reclaimed. Dent’s opulent residence, complete with a spring fountain, left behind Spring Garden Lane (春園街).

With a penchant for fountains, Dent also generously donated them to the old City Hall and Beaconsfield House in Central during the 1860s. However, the financial crisis of 1866 spelled disaster for several hongs, including Dent & Co.

Acting on early warnings, Jardine managed to avert calamity by withdrawing its balances from a failing bank. Following Dent & Co.’s collapse in 1867, half of its Pedder Street land was sold to the Hongkong Hotel, the city’s first luxury hotel, which succumbed to fire in 1926.

While Dent & Co. left little mark in that particular area, Glenealy (己連拿利) in Mid-Levels is named after the residence of Dent & Co.’s partner.

Little docks in Little Bay

Before 1841, Hong Kong did not have any shipyards or berth facilities. The closest option was the Peninsular and Oriental Steam Navigation Company (P&O) shipyard in Whampoa, Canton. P&O, which initiated monthly sailings to Hong Kong in 1845, later set up its headquarters in an ornate cast-iron verandah-style building. This establishment earned the company its Chinese name, “tit hong” (鐵行), which translates to “iron house.” Tit Hong Lane (鐵行里) in Central is named after this historical connection.

A pivotal moment for Hong Kong’s shipbuilding industry came with the construction of the Celestial vessel in 1843, transforming Wan Chai (灣仔) (“Little Bay” in Chinese) into a hub for small shipyards and warehouses.

Emery & Frazer pioneered a slipway, which eventually evolved into the Victoria Foundry by 1868. George Fenwick, a retired British Navy engineer, co-founded Fenwick & Morrison Engineering Co. and acquired the Victoria Foundry in 1880. Fenwick Street (分域街) honoured Fenwick’s contributions when the Praya East waterfront was completed in the early 20th century.

Timber yards were also present in the area, with streets like Burrows Street (巴路士街), named after Burrows & Sons, which was once a timber yard, and Mallory Street (茂蘿街), named after timber merchant Lawrence Mallory.

Warehouses owned by hongs, including Augustine Heard & Co. and McGregor & Co., inspired the naming of streets like Heard Street (克街) and McGregor Street (麥加力歌街). Notably, McGregor & Co. built Hong Kong’s first timber pier, replacing the earlier bamboo piers.

Jardine, which had many properties scattered throughout the area, influenced the naming of streets such as Landale Street (蘭杜街), Anton Street (晏頓街), and Gresson Street (機利臣街), all named after the company’s taipans.

Despite the changes brought about by reclamation over the years, remnants of Wan Chai’s original coastline can still be seen in several streets named after vessel types like Ship Street (船街), Schooner Street (捷船街), and Sam Pan Street (三板街).

Dock wars

During the 1860s, Hong Kong’s dockyard landscape transformed from small private docks to larger facilities capable of accommodating substantial vessels. This shift saw the establishment of Lamont Dock and Hope Dock in Aberdeen.

The emergence of Whampoa Dock Co. Ltd. and Union Dock Company, and their subsequent merger, played a pivotal role in reshaping the maritime industry in Hong Kong.

Whampoa’s path to monopoly

In 1863, Douglas Lapraik, a Scottish watchmaker turned shipping agent, teamed up with fellow Scot, Thomas Sutherland of P&O to establish the Hong Kong & Whampoa Dock Company (HKWDC) – the first registered company in Hong Kong. Streets such as Douglas Street (德忌利士街), Douglas Lane (德忌利士巷), and Sutherland Street (修打蘭街) were named in honour of the co-founders.

Whampoa’s developments led Dent & Co. to partner with American companies Heard and Hunt. This partnership formed the Union Dock Company (UDC), which had shipyards in Wan Chai and Hung Hom.

However, intense competition between the two resulted in a merger in 1870. The merger with UDC, the acquisition of the Sands Slip in Kennedy Town (which Sands Street (山市街) was named after), and the Cosmopolitan Dock in Tai Kok Tsui solidified HKWDC’s position as a frontrunner in the local dockyard industry.

By the 1880s, the company had expanded its operations across Hong Kong, including the Kowloon Docks, which operated for over a century until closing in 1980. The legacy of Kowloon Docks lives on in Hung Hom, reflected in Whampoa Street (黃埔街) and Dock Street (船澳街). Streets like Gillies Avenue North (機利士北路), Gillies Avenue South (機利士南路), Dyer Avenue (戴亞街), and Cooke Street (曲街) are named after the company’s taipans.

Taikoo’s Industrial Empire

In the early 1900s, Taikoo Dockyard emerged as a major player in the shipbuilding industry.

The roots of Taikoo Dockyard trace back to 1872 when Butterfield & Swire Co. established The China Navigation Company. Capitalising on a surge in raw cane sugar trade, Taikoo Sugar Refinery was established in Quarry Bay, leaving behind Tong Chong Street (糖廠街), which translates as Sugar Refinery Street.

The area near the foot of Mount Parker, known as Kornhill (康山), named after Ferdinand Korn, became the site of the company residence for the senior manager of the refinery.

In response to the increasing need for their fleet, Taikoo Dockyard was built in 1907 adjacent to Taikoo Sugar Refinery. Street names like Taikoo Shing Road (太古城道), Taikoo Wan Road (太古灣道), and Shipyard Lane (船塢里) reflect the dockyard’s legacy, while Finnie Street (芬尼街), Greig Road (基利路), and Greig Crescent (基利坊) were named after the dockyard’s managers.

After World War II, a shift towards property development prompted the merger of Taikoo Dockyard and Whampoa Dockyard, forming Hong Kong United Dockyards in Tsing Yi. Both the Kowloon and Taikoo Docks closed in the 1970s and 1980s and were transformed into large private housing estates – Whampoa Garden and Taikoo Shing.

The legacy of Sir Catchick Paul Chater

As the maritime trade continued to flourish in Hong Kong, the development of wharves and godowns played a pivotal role in supporting the bustling port activity. In 1886, Sir Catchick Paul Chater founded The Hongkong & Kowloon Wharf & Godown Co. in Tsim Sha Tsui. With godowns acquired from Jardine and P&O, the company established facilities in Wan Chai, Sheung Wan, and the Western District. 

Born into an Armenian family in Calcutta in 1846, Chater was an influential figure in Hong Kong’s history, playing a crucial role in shaping the city. Starting as a bank assistant, he established his own bills and bullion brokerage business with the support of the Sassoon family.

Chater later contributed to the founding of the Star Ferry Company, Dairy Farm, Hongkong Electric Company, and Hongkong Land. He also transformed Hong Kong’s waterfront by reclaiming land along the shore of Central, creating 65 acres of new land. Catchick Street (吉席街) in Kennedy Town, Chater Road (遮打道), and Chater Garden (遮打花園) in Central were named in his honour.

The inbetweeners

In the era dominated by foreign hongs in maritime trade, Chinese businessmen in Hong Kong primarily engaged in three key industries associated with international trade: compradores, transfer houses, and Nam Pak Hongs.

Derived from the Portuguese word for “buyer,” compradores (買辦) served as intermediaries between foreign hongs and the Chinese business community. They earned commissions while shouldering responsibilities for bad debts and risks.

Typically held by individuals proficient in both English and Chinese, these roles were mainly occupied by Chinese or Eurasians, many of whom later established their own businesses and held prominent positions in society.

Kwok A-Cheong (郭亞祥) (also known as 郭甘章、郭松), hailing from Canton’s boat-dwelling community, stood as one of the earliest prominent figures in Chinese business. Beginning as a comprador for P&O, he ascended to oversee P&O’s shipwright and engineering department, eventually forming his own fleet of steamships.

Establishing Fat Hing Hong (發興行), a merchant house in Sheung Wan, Kwok expanded his landholdings significantly. By 1876, he ranked as Hong Kong’s third-largest ratepayer, following Douglas Lapraik & Co. and Jardine, Matheson & Co.

Kwok capitalised on the Second Opium War, supplying the British forces and reaping substantial profits. Beyond business, he served as a respected advisor to the government on Chinese community matters and was an original director of the Tung Wah Hospital. While Kwok Chung Lane (郭松里), dedicated to his memory, has been demolished, his legacy endures through Fat Hing Street (發興街) in Sheung Wan, named after his company.

Sir Robert Hotung, among Hong Kong’s wealthiest individuals, hailed from a compradore background. Born in Hong Kong to a Dutch father and Chinese mother, he identified strongly with his Chinese heritage. After serving as Jardine’s head compradore in 1894, Hotung embarked on an extraordinary entrepreneurial journey thereafter.

Upon leaving Jardine, he built a vast business empire spanning Hong Kong, China, Southeast Asia, Europe, and North America. His ventures encompassed real estate, shipping, food, finance, trade, insurance, entertainment, and hotels. By 1938, he held shares in one fifth of all companies listed in Hong Kong.

See also: Historian Vaudine England delves into Hong Kong’s lesser-known origin story

Beyond business, Hotung was a generous philanthropist, serving on several influential charitable boards. He received knighthood twice, from King George V and Queen Elizabeth II, a unique honour in Hong Kong’s history. Ho Tung Road (何東道) in Kowloon Tong was named after him in recognition of his role in rescuing the Kowloon Tong development project after it went bankrupt in 1928.

Sir Boshan Wei Yuk (韋寶珊) (also known as 韋玉) was another notable figure with a compradore background, and was one of the first Chinese individuals to pursue studies in Britain.

Educated in England and Scotland, he assumed his deceased father’s role as compradore for the Chartered Mercantile Bank of India, London and China in 1879.

Wei emerged as a pivotal supporter of the Chinese community in Hong Kong, holding positions such as chairman of the Tung Wah Hospital board, co-founder of the Po Leung Kuk, and contributing significantly to various committees. He served on the Legislative Council from 1896 to 1917 and became the third Chinese individual in the colony to receive knighthood.

Wei’s astute business acumen led him to recognise the financial opportunities presented by the British acquisition of the New Territories in 1898. He was an early advocate for a railway connecting Hong Kong and Canton, now Guangzhou, which eventually materialised as the Kowloon-Canton Railway. Po Shan Road (寶珊道) in Mid-Levels was named after him.

Pot Of Gold

During the gold rush, Chinese laborers flocked to San Francisco, known as “Old Gold Mountain” (“舊金山”), and Melbourne, dubbed “New Gold Mountain” (“新金山”). This surge in migration fuelled demand for Chinese goods abroad, prompting the establishment of Gold Mountain House (金山莊) in Sheung Wan. These transfer houses provided essential services like lodging, ticketing, and remittance for workers, while also trading in food, medicines, and local products.

Conversely, Nam Pak Hongs (南北行) (South-North Houses) emerged to facilitate trade between Southeast Asia (South) and the Chinese mainland (North), aiding Chinese merchants in exchanging Chinese products and importing foreign goods into China. Concentrated around Bonham Strand East and West in Sheung Wan, these businesses shaped the area’s identity and economic activity.

Li Sing (李陞) (also 李璿), a Guangdong native, was a prominent 19th-century businessman. Fleeing the turmoil of the Taiping Rebellion in 1857, he settled in Hong Kong where he co-founded a shipping business catering to passengers bound for California and Australia.

Initially involved in then-legal activities like the trade of opium and labourers, at the time called coolies, he later expanded into recruitment and import-export trading in Nanyang.

Shifting his focus to property development, Li capitalised on Governor Kennedy’s urban development initiatives, acquiring significant land in Sheung Wan and the Western District.

In addition to real estate and trading, Li ventured into modern enterprises. He founded the On Tai Marine Insurance Company, the first Chinese enterprise to join the Hong Kong General Chamber of Commerce, and invested in telegraph and mining businesses. Li also co-founded institutions such as the Tung Wah Hospital and the Po Leung Kuk. Upon his death in 1900, his estate was valued at HK$6 million, three times the annual revenue of the colonial government.

Li Sing Street (李陞街) and Ko Shing Street (高陞街) in Sai Ying Pun honour the contributions of Li Sing.

Ko Shing Street was named after Ko Shing Theatre 高陞戲院, Hong Kong’s second indoor theatre owned by Li Sing. Li Sing’s family legacy includes Li Po Lung Terrace (李寶龍臺), named after his fourth son, Li Chit Street (李節街) in Wan Chai after his brother and business partner, and The Li Po Chun United World College after his youngest son.

The first street in colonial Hong Kong named after a Chinese individual honours Toishan merchant Lee Yuk Tong (李煜堂). He was a pivotal figure in foreign trade and co-founded the Bank of Canton, the city’s first Chinese-owned bank.

After growing up in San Francisco, Lee migrated to Hong Kong and established Kam Li Yuen (金利源), importing Chinese medicine from North America during the Gold Rush. In 1902, he founded The China Hong Nin Life Insurance Company Limited, paving the way for multiple insurers and popularising life insurance among the Chinese, challenging foreign insurance monopolies and earning him the title of the Insurance King.

Lee’s influence extended beyond commerce. He played a crucial role in revolutionary movements, notably the Xinhai Revolution and the boycott of American goods. Joining the Tongmenghui in Hong Kong, he operated his shop as a clandestine liaison office for revolutionary activities.

In 1894, Lee invested in newly reclaimed land in Central, shaping the area that eventually became Li Yuen Street East (利源東街) and Li Yuen Street West (利源西街), named after Lee’s businesses.

Wong Yiu Tung (黃耀東), another emigrant from Toishan, had a significant impact on Kowloon’s urban development. After making his fortunes working in a transfer house, Wong ventured into various businesses such as gold and silver trading, ice production, timber, shipbuilding, restaurant and theatre. His extensive investments in Sham Shui Po earned him the title Sham Shui Po Emperor.

In 1936, he funded the construction of the Sham Shui Po Chinese Public Dispensary, located on Yee Kuk Street (醫局街), and co-established a steamship route linking Sham Shui Po to Central, enhancing connectivity with Hong Kong Island.

Wong also sponsored schools for underprivileged children and made significant donations to secondary education. He served as chairman of Po Leung Kuk for four terms and was appointed a Justice of the Peace. In honour of his contributions, Yiu Tung Street (耀東街) was named after him.

Banking beginnings

When Hong Kong became a free trading port, no local currency was available for everyday circulation. Instead, people used a mix of foreign currencies like Indian rupees, Spanish and Mexican reales, Chinese cash, silver taels, and British pounds. It wasn’t until 1863 that coins specifically for Hong Kong were minted by London’s Royal Mint. These coins bore the portrait of the reigning monarch and came in silver and bronze.

In the late 1860s, there was an attempt at local coin production at the Hong Kong Mint in Causeway Bay, but it didn’t gain much traction. The Mint closed in 1868, and its site was later acquired by Jardine Matheson, eventually becoming the China Sugar Refinery Co.

Despite Royal Mint Street disappearing by the 1890s, an inconspicuous street named Pennington Street (邊寧頓街) commemorates this overlooked history. James Pennington, despite his significant contributions to banking, monetary policy, and international trade, is relatively unknown today. His work addressed issues like coin shortages and gold overvaluation, as well as analysing currency systems in British colonies.

As shipping and trade grew, so did related industries like bullion brokerage, insurance, and banking. At first, only foreign bank branches existed in Hong Kong but with increased trading activities, the demand for a local bank in Hong Kong became clear.

In mid-1864, The Hongkong and Shanghai Banking Corporation, now known globally as HSBC, traces its origin to a group of British financiers in Bombay who aimed to establish a new bank in Hong Kong.

Upon hearing this, Thomas Sutherland of P&O and lawyer E.H. Pollard spearheaded the drafting of a prospectus for a competing bank in Hong Kong. They received support from influential figures such as Douglas Lapraik and the taipans of Dent and Co., Augustine Heard, John Burd & Co. and Gilman & Co., the latter two the namesakes of Burd Street (畢街), Gilman Street (機利文街), and Gilman’s Bazaar (機利文新街).

A Provisional Committee of 13 managed to raise US$5 million within a week, marking the inception of HSBC and the early downfall of its competitor bank. Initially, Jardine Matheson abstained due to its reluctance to collaborate with Dent & Co., its main rival, and to safeguard its foreign exchange business.

However, once HSBC had firmly established itself, a partnership was formed with Jardine Matheson in 1877. Notable figures from Jardine Matheson, including J.J Bell-Irving, James Johnstone Keswick, and David Landale, who are commemorated in the streets mentioned earlier, later became chairmen of HSBC’s board of directors. Notably, John Johnstone Paterson served three terms in this capacity.

Other roads with historical connections to HSBC include Forbes Street (科士街) in Kennedy Town, named after William Forbes, chairman of Russell & Co., who also served two terms as chairman of the HSBC board of directors. Additionally, Jackson Road (昃臣道) is named in honour of Thomas Jackson, who became the bank’s third chief manager at the young age of 35 in 1876.

The Bank of East Asia (BEA) was founded in 1918 by influential Chinese businessmen in Hong Kong, echoing the beginnings of HSBC. BEA aimed to merge Eastern and Western banking traditions by embodying the characteristics of a Chinese family-run bank while embracing modern accounting and banking methods.

The founders of BEA had strong ties to prominent companies like Nam Pak Hong, transfer houses, and various industry firms, which helped them establish a robust business network in Hong Kong. This network became pivotal to BEA’s success. By the late 1920s, BEA had expanded its footprint globally, with agents in cities such as Beijing, Tokyo, Singapore, Bombay, Sydney, London, Paris, New York, San Francisco, and Honolulu.

Among the co-founders, Sir Shousan Chow, a revered businessman and community leader, held a prominent role as the first Chinese member of the Executive Council. Chow, originally from Wong Chuk Hang, was part of the third group of Chinese students sponsored by the Qing government to study in the United States.

In addition to co-founding BEA, he occupied various diplomatic positions and served as a director for numerous companies, including the Hongkong Electric Company, Hongkong Telephone Company, Hongkong Tramways, A.S. Watson’s, and the Hongkong and Yaumati Ferry Company.

Notably, Chow played a significant role in the attempted development of the land that eventually became Kai Tak International Airport, collaborating with Sir Boshan Wei Yuk and other Chinese businessmen. Upon his retirement, the Hong Kong government honoured his dedicated service by naming the hill where his residence stood Shouson Hill (壽臣山) and the surrounding road Shouson Hill Road (壽山村道).

Take a look

Exploring Hong Kong’s maritime history reveals both its industrial development and the people who steered its course. Companies like Jardine Matheson and Swire left significant imprints on the cityscape, while compradores and transfer houses streamlined transactions, playing a crucial role in shaping early Chinese communities.

By tracing Hong Kong’s monetary history, from its diverse currency origins to the establishment of local banks such as HSBC and the Bank of East Asia, we uncover a story of perseverance. This history highlights not just economic growth, but also the enduring spirit of enterprise and cultural exchange that defines the city today.

Explore the map below to see how maritime trade and commerce have influenced our street names.

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China on Thursday urged companies not to be “blinded by lies” about its rights record in Xinjiang, after German automaker Volkswagen said it was discussing the future of its activities in the troubled region.

Rights campaigners have for years accused Beijing of a crackdown against Uyghurs and other Muslim minorities in Xinjiang, including through forced labour and detention camps.

Beijing denies allegations of abuse and insists its actions in Xinjiang have helped to combat extremism and enhance development.

Germany’s Handelsblatt financial daily reported this week that forced labour may have been used to build a test track for VW in Turpan, Xinjiang in 2019.

VW said Wednesday it had seen no evidence of human rights violations in connection with the project but vowed to investigate any new information that came to light.

In a statement sent to AFP, Beijing’s foreign ministry said allegations of abuses in the region were “entirely a lie concocted… with the aim of destabilising Xinjiang”.

It urged firms to “respect the facts, distinguish right from wrong, and not be blinded by lies”.

In an apparent sign of the growing pressure on VW over its presence in the region, the company said this week that it was in talks with its Chinese joint-venture partner SAIC “about the future direction of business activities in Xinjiang”.

“Various scenarios are currently being intensively examined,” VW said in a statement.

Beijing said Thursday that “the human rights of people of all ethnic groups in Xinjiang are protected to the maximum extent”.

Claims of rights abuses in the northwestern region, it added, were aimed at “discrediting and suppressing China”.

“Xinjiang currently enjoys social stability, economic development, ethnic unity, and religious harmony,” the foreign ministry said.

Rights concerns

Beijing stands accused of incarcerating over one million Uyghurs and other Muslim minorities in a network of detention facilities across Xinjiang.

Campaigners and Uyghurs overseas have said an array of abuses take place inside the facilities, including torture, forced labour, forced sterilisation and political indoctrination.

A UN report in 2022 detailed “credible” evidence of torture, forced medical treatment and sexual or gender-based violence — as well as forced labour — in the region.

But it stopped short of labelling Beijing’s actions a “genocide”, as the United States and some Western lawmakers have done.

Calls have grown louder for VW to reconsider its business activities in Xinjiang after German chemicals giant BASF announced last week that it would accelerate its exit from two joint ventures there.

Xinjiang is home to numerous factories that supply multinational companies, including big-name Western brands.

VW has long come under scrutiny over its factory in the city of Urumqi, which opened in 2013 and in which it has a stake via its partner SAIC.

An external audit commissioned by VW last year found no evidence of forced labour among the plant’s 197 employees.

But the consultancy that wrote the report acknowledged “the challenges in collecting data” for audits in China.

The Turpan test track was not part of the audit.

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The chairperson of Hong Kong’s bourse operator has defended the city’s stock market after a US economist wrote in the Financial Times that the Hong Kong market was “over”.

Outgoing chair of Hong Kong Exchanges and Clearing (HKEX) Laura Cha was speaking to reporters after a ceremony on Wednesday to ring in the first trading day of the Lunar New Year.

“I understand that people have seen the views of a few stakeholders who hold a pessimistic view towards the Hong Kong market, and that Hong Kong is ‘over’. I fully disagree,” Cha told reporters in Cantonese.

She was referring to remarks made by former chair of Morgan Stanley Asia Stephen Roach in a Financial Times opinion article titled: “It pains me to say Hong Kong is over”.

Cha said that the recent underperformance of the Hong Kong market was due to macroeconomic factors and a sluggish Chinese economy.

“I think when the macro situation changes, the investors will come back, and I’m sure that we will have a more lively market,” she said, speaking English. “Our fundamentals are strong, and the factors that have made Hong Kong great as a financial sector [haven’t] changed.”

In the Financial Times article published Monday, Roach wrote: “A city I once called home and have cherished as a bastion of dynamism has had the world’s worst-performing major stock market over the past quarter of a century.”

The Hang Seng index last month dropped below the 15,000-point mark, marking a 15-month low and a return to levels not seen since the city’s handover from Britain to mainland China in 1997.

The benchmark index closed at 15,943 points on Thursday.

‘Hong Kong is over’

The city’s “demise,” Roach said in the Financial Times, was a confluence of three factors: domestic politics, mainland China’s economy, and global developments.

“The wheels came off in 2019-20 when, under [then-chief executive] Carrie Lam, the Hong Kong leadership made the mistake of proposing an extradition arrangement with China that sparked massive pro-democracy demonstrations,” Roach said.

Beijing’s response, which was to unilaterally impose national security legislation in Hong Kong, “shredded any remaining semblance of local political autonomy,” he added.

“The Chinese economy has hit a wall,” Roach wrote, also pointing to the US-China rivalry, which he described as having “gone from bad to worse,” with “Hong Kong trapped in the crossfire.”

“Moreover, America’s ‘friendshoring’ campaign has… driven a wedge between Hong Kong and many of its largest Asian trading partners,” Roach said. “The stock market is likely to remain in the mire until we see convincing economic measures from Beijing.”

The Yale economist’s remarks come a little more than two weeks before Hong Kong’s finance chief Paul Chan delivers the government’s budget proposals on February 28 for the 2024-25 fiscal year.

Chan, at the Wednesday ceremony, said the mainland Chinese economy was “stable and improving.”

“It’s very challenging to forecast what will happen in one week, or in the next day… but I’m very confident that in the medium to long term, the characteristic of Hong Kong … will allow it to thrive as an international financial centre,” said HKEX CEO Nicolas Aguzin.

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The EU has proposed imposing export bans on firms in mainland China, India and Turkey accused of supplying Russia with military technology as part of a new round of sanctions over the war in Ukraine, according to a document seen by AFP.

Officials in Brussels are currently hammering out a 13th package of sanctions on Russia to coincide with the second anniversary of its all-out invasion of Ukraine in February 2022.

As part of the push, the EU’s diplomatic service has proposed adding around 20 firms, including three in mainland China, one in Turkey and one in India to an export blacklist of those providing support to Russia’s military.

That would mean firms in the 27-nation bloc would be prohibited from doing business with the companies as Brussels steps up efforts to crack down on the circumvention of its sanctions on Russia.

The EU has already placed similar export bans on over 600 firms, including three based in the Chinese territory of Hong Kong, and firms in countries including Armenia, the United Arab Emirates and Uzbekistan.

If EU members states agree to the proposal it will be the first time that firms in mainland China will be targeted for helping Russia get around sanctions on acquiring technology that can be used on the battlefield.

Brussels last year proposed putting five Chinese firms on the list but they were dropped in the face of opposition from Beijing and reluctance from some EU capitals.

An EU diplomat told AFP that so far this time only Hungary has expressed reservations about adding more firms from third countries to the blacklist.

The EU has already imposed 12 rounds of unprecedented sanctions on Moscow since it launched its invasion.

Officials say it is becoming increasingly difficult to agree on new sectors of the Russian economy to hit and increasing attention has focused on closing loopholes in the current measures.

The new sanctions being planned are also expected to see scores more Russian officials subjected to an asset freeze and visa bans in the EU.

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Lionel Messi’s no-show at a match in Hong Kong has triggered a surge of online outrage in the city and in mainland China, with the football superstar accused of seeking to embarrass Beijing — or even engaging in a sinister foreign plot.

The Argentine ace and his team Inter Miami sparked fury in Hong Kong from fans on Sunday when he did not play in a friendly, citing injury.

Enthusiasts who had splashed upwards of 4,800 Hong Kong dollars ($500) to see Messi chanted “Refund!”, gave thumbs-down signs and drowned out the team’s co-owner David Beckham with jeers as he tried to thank the crowd.

Just days later, however, he played 30 minutes of a friendly match in Japan — causing outrage and accusations that he had singled out China.

On Friday, Tatler Asia, the event’s organisers, said it was “deeply sorry” and promised those who had bought tickets a 50 percent refund.

But the outcry has led influential nationalist tabloid Global Times to suggest that sinister foreign forces had conspired to hurt the city’s reputation.

“One theory is that (Messi’s) actions have political motives, as Hong Kong intends to boost [the] economy through the event and external forces deliberately wanted to embarrass Hong Kong through this incident,” it said.

“Judging from the development of the situation, the possibility of this speculation cannot be ruled out.”

The Hong Kong government has demanded an explanation from the match’s organisers, who had sought public funding for the event, and said that they had been repeatedly assured Messi would play.

The Argentine player has said it was “bad luck” that he couldn’t play and that he hopes to return to the city.

But top Hong Kong government advisor Regina Ip has fumed that Messi should “never be allowed to return”.

“Hong Kong people hate Messi, Inter-Miami, and the black hand behind them, for the deliberate and calculated snub to Hong Kong,” Ip said on social media platform X, deploying a phrase commonly used by the city’s officials to allege sinister foreign interference.

“His lies and hypocrisy are disgusting,” she said.

On the mainland, Messi’s non-appearance has trended on the X-like Weibo platform all week.

A post by the footballer expressing regret for not being able to play was inundated with mocking comments and memes.

Some featured Messi as an Imperial Japanese soldier — a reference to his alleged preference for the country over China.

“Messi is very rude and arrogant, which is really annoying,” one user wrote.

Reflecting the sore feelings, Hong Kong actress Samantha Ko Hoi-ling was also forced to apologise on the platform after she told local media in the city that she “understood” his decision to skip the game.

But some suggested the reaction was overblown.

“Do we really need to turn it into a struggle session?” wrote one Weibo user in a reference to China’s bloody Cultural Revolution, when alleged enemies of leader Mao Zedong were forced into public confessions.

Hu Xijin, a prominent nationalist commentator, wrote that criticism should be “measured so as not to elevate his status”.

“As if a single careless manifestation of his could touch our great nation and hurt the feelings of our entire society.”

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By Oliver Hotham

Chinese consumer prices fell in January at their quickest rate in more than 14 years, data showed Thursday, piling pressure on the government for more aggressive moves to revive the country’s battered economy.

Officials have struggled for months to kickstart economic growth as they battle a range of headwinds, including a prolonged property-sector crisis, soaring youth unemployment and a global slowdown that is hammering demand for Chinese goods.

Policymakers have in recent months announced a series of targeted measures as well as a major issuance of billions of dollars in sovereign bonds, aimed at boosting infrastructure spending and spurring consumption.

But that, and recent announcements including central bank interest rate cuts and measures to boost lending, have had little impact so far.

And analysts warn a “bazooka” stimulus plan is needed to restore confidence.

“China needs to take actions quickly and aggressively to avoid the risk of deflationary expectation to be entrenched among consumers,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said.

January’s 0.8 percent drop in the consumer price index, announced by the National Bureau of Statistics, marked the fourth straight month of deflation and was much bigger than the 0.5 percent fall forecast in a survey by Bloomberg News.

The reading was the worst since the second half of 2009, during the global financial crisis.

And a 2.5 percent plunge in the producer price index — which measures the cost of goods leaving factories — signalled continued weakness.

China slipped into deflation in July for the first time since 2021 and, apart from a brief rebound in August, have been in constant decline since.

“The primary drag on inflation continued to be food prices, which fell by 5.9 percent year-on-year, the lowest level on record,” said Lynn Song, Chief Economist for Greater China at bank ING.

However, he pointed to figures showing costs rising month-on-month.

“While a far cry from the above-target inflation levels seen in many other economies, these numbers do not imply China is stuck in a deflationary spiral,” Song said in a note.

“We see a high likelihood that January’s data could mark the low point for (year-on-year) inflation in the current cycle.”

China’s sinking prices are in stark contrast with the rest of the world, where inflation remains a persistent bugbear, forcing central banks to ramp up interest rates.

While deflation suggests goods were cheaper, it poses a threat to the broader economy as consumers tend to postpone purchases, hoping for further reductions.

A lack of demand can then force companies to cut production, freeze hiring or lay off workers, while potentially also having to discount existing stocks — dampening profitability even as costs remain the same.

In reaction to the woes in the world’s number two economy, markets have been among the worst-performing globally in recent months.

On Wednesday, the chairman of China’s securities regulator, Yi Huiman, was replaced after overseeing a sell-off that has wiped trillions off companies’ valuations.

The losses have prompted pledges of support, with Xi Jinping also becoming more involved, though observers say the moves would not solve the country’s deeper economic problems, which needed to be addressed to fully restore optimism.

Bloomberg News contributed to this story.

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Organisers of a Hong Kong football match which drew boos after star man Lionel Messi failed to play said Monday they deeply regretted the no-show, and would withdraw a bid for a HK$16 million (US$2 million) government grant.

Tatler Asia’s CEO read out a statement Monday evening confirming Messi had been contracted to take the field, unless injured, in a pre-season friendly in Hong Kong.

Instead the eight-time Ballon d’Or winner, who has a leg muscle strain, stayed on the bench throughout Inter Miami’s 4-1 win against a Hong Kong select XI.

The match ended with Messi, his Inter Miami team and club co-owner David Beckham being booed off by nearly 40,000 irate fans who had shelled out large sums to see the World Cup-winning captain play.

Fans who had paid upwards of 1,000 Hong Kong dollars (US$125) to see Messi chanted “Refund!”, gave thumbs-down signs and drowned out Beckham with jeers as he tried to thank the crowd.

“Tatler Asia deeply regrets the disappointing ending to what was an exciting occasion,” said Michel Lamuniere, chairman and CEO, in the statement.

Tatler Asia "spent the second half urging the Inter Miami CF leadership to instruct Messi to address the fans, to no avail," he said. Video: Channel C. pic.twitter.com/DxD8rMH0iM

— Hong Kong Free Press HKFP (@hkfp) February 5, 2024

“(Tatler Asia) has decided to officially withdraw its application for… the HK$16 million government grant.”

Lamuniere said the organisers were made aware that Messi would not play only at half-time, after he had been named among the substitutes, and “Tatler Asia immediately informed the government”.

That appeared to contradict Hong Kong’s sports minister who told reporters earlier Monday that government officials had been repeatedly assured Messi would play, even after half-time.

It was not until 10 minutes from the final whistle that secretary for culture, sports and tourism Kevin Yeung said he and officials were informed that Messi’s injury — inflammation of an abductor muscle — would keep him out.

“We immediately requested (the organisers) to explore other remedies, such as Messi appearing on the field to interact with his fans and receiving the trophy,” Yeung said.

“Unfortunately, as you all see, this did not work out.”

Hong Kong’s consumer council said it had received 38 complaints from 29 residents and nine overseas visitors about the match by midday on Monday.

They involved a total of HK$216,964 spent, with the largest individual complaint amounting to HK$22,338.

“Most of the promotional materials were using photos of certain players… so it was reasonable for consumers to expect that player to participate,” the council said in a statement.

“Consumers can also seek independent legal advice on whether the incident is suspected of breaching a contract or could be subject to civil lawsuits.”

Inter Miami and Messi are due to play the final pre-season match of their tour against Japan’s Vissel Kobe in Tokyo on Wednesday. It is not clear whether Messi will recover in time.

The 36-year-old had played just six minutes in Miami’s previous match in Saudi Arabia. The new MLS season in the United States starts on February 21.

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The Island Evangelical Community Church (Island ECC) says it is purchasing North Point’s historic Sunbeam Theatre for HK$750 million.

Last November, The Standard reported that the King’s Road property had been sold for a reported HK$1 billion, though the buyer was not revealed.

“We first looked at this space 8 years ago, but it was not for sale,” Senior Pastor Brett Hilliard wrote in an email to supporters on Sunday. “It was also out of our budget, at HK$1.2 billion. But while we were slowly saving our money these past 8 years, the property market changed significantly, and the theatre was put back on the market. We were able to make the purchase at a significantly lower price, and will be able to renovate and move in within the next 18 months, Lord willing.”

The Sunbeam Theatre – encompassing the ground floor to the sixth floor – along with the rooftop of Kiu Fai Mansion were put up for tender by Savills last August. Hilliard expects the sale to be completed this week.

The King’s Road theatre opened in 1972 and was famed for its Cantonese opera shows and Chinese traditional art performances.

Hilliard wrote that the theatre seats 1,000 people and has a balcony capable of an additional 300 seats: “Along with the theatre, we will also redevelop the 6 floors surrounding it, which will provide us with more space than we currently have, and will also provide fantastic opportunities to bless the community with meaningful retail space, some limited housing, and great space for ongoing ministry 24/7.”

He added that they have secured bank financing to supplement their savings: “The fact that the church will actually own this property (as opposed to a long-term lease) also makes it advantageous for our long-term health and ministry to the city.”

When asked if any of the cultural history of the building would be presevered, a spokesperson for the church told HKFP on Monday that they “look forward to working with the local community to honour its cultural heritage.” They added that there were no plans to evict residents.

The theatre hit the international headlines in 2019 when it staged a Cantonese opera satirising the Donald Trump presidency.

Update 10:30am, 5.2.24: This piece has been updated to reflect the final sale price.

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