Hong Kong's financial secretary warns about rising political tension in budget speech

Hong Kong Financial Secretary John Tsang addresses the annual budget report at the Legislative Council in Hong Kong on Feb 24, 2016.
Hong Kong Financial Secretary John Tsang addresses the annual budget report at the Legislative Council in Hong Kong on Feb 24, 2016.PHOTO: REUTERS

Hong Kong Financial Secretary John Tsang has sounded a dire warning about the mounting political tension and turbulence in the city, saying that there is today "not even room for dialogue in our society".

"Many of us feel suffocated by, and indeed, helpless with the tiresome confrontations day in and day out," he said on Wednesday (Feb 24).

And the disputes will intensify in the coming months, he predicted, with a contentious parliamentary by-election on Sunday and a general election in September.

In laying out the city's annual budget for the coming year - traditionally a dry affair that focuses on the nitty gritty of the government's spending- Mr Tsang did not mince his words as he called on the society to look squarely at the reasons for the political conflicts.

"If we allow the situation to get worse, what lies in store for Hong Kong will be even greater chaos, and our future generations will grow up in the midst of hatred and malice."

It is, to date, the harshest and most frank assessment of Hong Kong's political situation made publicly by a senior government leader.

The unprecedented focus on politics in the budget speech comes some two weeks after the city was shocked by violent clashes between protesters and police in Mongkok on the first day of the Chinese New Year.

While critics including Chief Executive Leung Chun Ying denounced the clashes as the work of hooligans, others called for a hard look at the underlying factors that gave rise to the riot.

While ostensibly about defending illegal street hawkers against enforcement authorities, the protest, allegedly led by radical localist group Hong Kong Indigenous, degenerated into a free-for-all fracas.

The young protesters claim that within Hong Kong's circumscribed political system, they have no choice but to use violence to "safeguard" the city's identity - even to the extent of provoking harsh police actions.

Meanwhile, some observers say there is a need to examine what lies behind the youths' anger, including uninspired governance that has left unresolved stagnating social mobility and unaffordable housing.

On Wednesday, Mr Tsang did not specify what he thought were the reasons behind Hong Kong's political conflicts.

But he said there was certainly a price to be paid, especially in an already challenging economic environment.

"Political volatility will unavoidably impact on our economy."

Specifically, he lambasted localist protesters for hurting Hong Kong's tourism industry which saw visitor arrivals drop 2.5 per cent last year. These protesters target mainland day-trippers who cross over from Shenzhen to buy essential goods by heckling them and kicking their suitcases.

"These destructive acts have not only damaged the economy but have also severely tarnished Hong Kong's reputation as a hospitality city internationally," said Mr Tsang.

"While some have claimed that the acts were committed out of concern for 'local' interests, their actions are in fact not the kind of behaviour that reflects love for Hong Kong," he added.

Tourism contributes five per cent of Hong Kong's Gross Domestic Product. The overall economy grew 2.4 per cent last year - the fourth consecutive year that saw growth lower than the past 10-year average of 3.4 per cent.

Looking ahead, it will grow 1 to 2 per cent this year, Mr Tsang predicted.

The financial secretary - whom some have touted as a possible contender to Mr Leung in next year's chief executive race - laid out various measures to boost the economy.

They include attracting more high-spending overnight visitors through new events such as the Formula E championship for electric car racing and promoting Hong Kong's natural scenery.

Seeking to address criticisms that the government did not go far enough to diversify the economy beyond finance and tourism, Mr Tsang announced a slew of innovation policies including promoting advanced manufacturing industries using robotics and IT at the Tseung Kwan O Industrial Estate.

This will also ready Hong Kong for what he called a "new economic order" as global economic gravity shifts to the east and IT developments change the way people live and work.

Investments in Hong Kong's young - those born in the 1980s and 1990s - will also be made, he said.

Besides improving the quality of education, there will be more internship and exchange opportunities. Aside from trips to mainland, which some viewed as a political tool to inculcate greater understanding of China among students, a similar scheme with Asean countries will be expanded.

Mr Tsang also hoped that negotiations with Asean to sign a free trade pact will conclude this year.

Concluding his speech, Mr Tsang appealed to Hong Kongers to "set aside short term political considerations in favour of the long-term overall interests of Hong Kong".

This way, he said, "we shall have a chance to return to rationality".