This paper reviews the economic policy since the handover. Evidence is presented and the case is argued that the serious recession and fiscal problems in 1998 were essentially a result of misguided housing policy. Hong Kong’s subsequent recovery and return to fiscal health, too, were essentially a result of a bold effort to reverse that misguided policy in late 2002. The paper commends the SAR government for its pragmatism and courage in the “incursion” in the stock market in the summer of 1998. CEPA was of course a great achievement for both Hong Kong and the Mainland, and Hong Kong’s future definitely is closely tied to the future course of the Mainland economy. Tighter integration with the Mainland is therefore both necessary and logical. However, CEPA played only a minor role in the recovery. The many “structural problems” often alluded to by commentators similarly had little to do with Hong Kong’s difficulties from 1998 to 2003. The best proof is that Hong Kong has managed to recover without a major surgery to its economic policy. Still, with widening income disparity and many Hong Kong people in dire poverty, Hong Kong does need a major rethinking of its economic policy if the prosperity and stability of the society are to be sustained.
Ho, L. S. (2007). The economy (CAPS Working Paper Series No.180). Retrieved from Lingnan University website: http://commons.ln.edu.hk/capswp/7
CAPS Working Paper Series No.180 (Feb 07)