25 January 2020
Facing mounting anger in the wake of the extradition bill crisis, the Hong Kong government is said to be mulling some financial sops to citizens. But experts doubt if such strategy will work. Photo: Bloomberg
Facing mounting anger in the wake of the extradition bill crisis, the Hong Kong government is said to be mulling some financial sops to citizens. But experts doubt if such strategy will work. Photo: Bloomberg

Financial sweeteners no solution for political crisis

Almost two months into the anti-extradition bill movement, Hong Kong is still gripped by political turbulence and social unrest. And it appears the crisis isn’t going to show any signs of easing off.

Amid the ongoing turmoil, there is talk that the government may announce a set of relief measures, perhaps as soon as this week, under which grassroots citizens will be offered some “sweeteners” in a bid to soothe their anger.

Recently, Executive Councilor and New People’s Party chairperson Regina Ip Lau Suk-yee told the media that she had suggested that the government should offer a one-off HK$8,000 cash handout to all local permanent residents aged 18 or above.

However, the administration has no intention of adopting that proposal as it feels that sectors like retail and catering industries may not actually benefit from the cash-handouts, according to sources.

Rather than spend locally, many citizens may utilize the extra cash for travel, opting for visits to places such as Japan, opponents of the cash-handout suggestion are said to argue.

Whatever the truth, what is undeniable is that any financial sweetener, be it direct cash-handouts or other measures, at this point in time would create an impression in society that the government is desperately attempting to win back public support by means of “bribery”.

And it is doubtful if such approach will even work, or if it will instead backfire on the administration. After all, there is a huge question mark hanging over whether political issues can be resolved by livelihood measures.

Nonetheless, some government sources say the “sweeteners”, if they materialize, will be aimed at resuscitating the economy, which has been hit by the Sino-US trade war, rather than winning over the public.

According to government figures, retail sales in Hong Kong plummeted 6.7 percent in June in a five-month losing streak, far worse than the market expectations for 1.9 percent decline.

What is worrying is that the continuously shrinking retail sales might prompt businesses to further cut costs and eventually result in industry-wide lay-offs across the territory.

Besides, the anti-extradition bill movement has taken a significant toll on consumer spending in the city, and things aren’t looking good in the coming days.

As such, the government believes it has to devise special measures to rescue the economy, the sources say.

It is expected that the administration will announce a raft of relief measures soon, particularly targeting grassroots families so as to put more money in their hands for purchases of daily necessities.

Suggestions proposed in recent days by the Democratic Alliance for the Betterment and Progress of Hong Kong (DAB) and the Hong Kong Federation of Trade Unions (HKFTU) to Financial Secretary Paul Chan Mo-po may perhaps give us a hint of what the government’s relief measures may deliver.

Among other things, the DAB and HKFTU are said to have suggested that the government provide back-to-school allowances for children, re-launch the electricity charges subsidy scheme for households, provide a two-month rent waiver for public rental housing flat tenants, as well as offer a one-month extra payment for recipients under the Comprehensive Social Security Assistance (CSSA) scheme.

The two pro-establishment parties are believed to have urged the government to devise the measures “as soon as possible” in order to “comfort” the public.

It remains to be seen if the relief measures, if they indeed come about, will help boost the prospects of the pro-establishment camp, which has taken a lot of heat in recent months in the wake of the extradition bill crisis, in the District Council election scheduled for November.

While we can only wait and watch as to how the situation will unfold, there is one thing, that I had stressed over and over again, that’s worth bearing repetition: it is better if political issues are sought to be resolved politically, rather than through other means.

This article appeared in the Hong Kong Economic Journal on Aug 3

Translation by Alan Lee

[Chinese version 中文版]

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Columnist of Hong Kong Economic Journal.