Hong Kong’s economy has steadily improved since the start of the year, with spending rising to 90% of pre-Covid levels, according to its finance chief

Hong Kong’s economy has steadily improved since the start of the year, with consumer spending returning to 90 percent of pre-pandemic levels in the first nine months, the city’s finance chief said.

Finance Minister Paul Chan Mo-po also said on Sunday that the city’s attractiveness to foreign companies had increased despite escalating geopolitical tensions, noting that more than 76 European firms had opened offices in the financial hub so far this year, a Increase of 7 percent over the same year corresponds to the period in 2022.

“Since the beginning of 2023, Hong Kong’s economy has continuously improved,” Chan said in a radio broadcast.

Finance Minister Paul Chan said the city’s economy had steadily improved since the start of the year. Photo: Handout

Visitor numbers in the first three quarters had reached around 80 percent of the numbers in the corresponding period in the years before the pandemic, while private consumption had risen again to 9.1 billion Hong Kong dollars (1.2 billion US dollars) – more than 90 percent of last year -Covid values, he said.

But the finance chief warned that external factors such as high interest rates in the United States and global geopolitics would continually impact the city’s relatively small economy.

The government had previously revised its full-year growth forecast to 4 to 5 percent from 3.5 to 5.5 percent, predicting that a weaker global trade environment would further weigh on exports.

Hong Kong is revising the city’s economic forecast as weak global trade takes its toll

Authorities said in August that tourism and private spending would continue to drive the recovery, while also announcing that the economy grew 1.5 percent year-on-year in the second quarter.

However, a consumer confidence index released by City University on Sunday showed a decline and stood at 86.8 in the third quarter, down 2.3 percent from the previous quarter but up 35.2 percent from a year ago.

“The sub-indices for commodity prices, property purchases and stock investments are below 80, indicating a lack of confidence among Hong Kong consumers,” the report said.

The index uses a scale from 0 to 200, with the highest value indicating “complete trust” and any value below 100 indicating a lack of trust.

Despite the economic uncertainties, foreign companies still favored Hong Kong, seeing it as a springboard for expansion into the Greater Bay Area, the rest of mainland China and elsewhere in Asia, Chan said.

Consumer spending reached 90 percent of pre-pandemic levels in the first nine months. Photo: Xiaomei Chen

The Bay Area refers to Beijing’s plan to integrate Hong Kong, Macau and nine mainland cities into one economic hub.

“We have also noticed that more talent and foreign companies that had left Hong Kong are returning to the city since March, and this trend has increased in recent months,” Chan said, without providing data.

Chief Executive John Lee Ka-chiu said earlier that 140,000 workers left the city between the second quarter of 2020 and the same period in 2022.

30 companies are investing HK$30 billion in Hong Kong to “drive the city’s emergence as an I&T hub”.

Chan said InvestHK, the government department responsible for foreign direct investment, helped 300 companies set up offices in the city in the first nine months of the year.

The government said last Wednesday that more than 30 foreign and mainland companies had pledged to invest about HK$30 billion in the city. Among them are British pharmaceutical giant AstraZeneca and US-based biomedical company Sirnaomics.

“Foreign companies have recognized the advantages of Hong Kong as the most open and international city in China thanks to the principle of ‘one country, two systems’ and its high level of rule of law,” Chan said.

The finance chief also hinted that more good news was on the horizon, with the Office for Attracting Strategic Enterprises (OASES) having been in contact with around 200 companies in the last six months and some discussions having reached “advanced stages”.

Recalling his recent trip to Britain, France and Germany, Chan said he noticed that many misconceptions about Hong Kong persist due to biased foreign media reports and fewer contacts between the city and the countries amid the pandemic.

He revealed that the government will continue to organize events to attract foreign investors to counter negative views.

Hong Kong will host the Global Financial Leaders’ Investment Summit in November, bringing together 300 top executives, including more than 90 group chairmen or CEOs, from leading global financial institutions.