Hong Kong's economy may start to improve in the second half of this year, helped by the expected US recovery and China's entry into the World Trade Organization (WTO), said a Hong Kong-based chief economist of Standard Chartered Bank.
Considering the after-effect of US monetary and taxation policies, "most analysts are now looking at the US economy picking up a little in the second half and possibly gathering momentum at the beginning of next year," said Kwok Chuen Kwok at a business luncheon Tuesday.
The US economy is beginning to show signs of recovery, he said. This would help Hong Kong's export, he noted.
Standard Chartered Bank has put its forecast of Hong Kong's economic growth this year at 3 percent.
Development on the mainland, however, means more to Hong Kong, Kwok said.
China's WTO entry, expected later this year, would trigger more trade, which would benefit Hong Kong's re-exports, transshipments and companies with export-oriented manufacturing bases on the mainland.
WTO entry would also help with local employment, with Hong Kong companies requiring staff when they start positioning themselves for upcoming changes on the mainland and implementing their mainland strategies, Kwok said.
Hong Kong companies would have a lot of opportunities in opening up the mainland market for themselves and helping foreign investors enter the market, he said.
Hwok added that Hong Kong's niche lies in the financial sector, trade and logistics, and tourism.
Hong Kong could become a fund management centre in the region, with its low tax regime, free capital movement and security of its financial system.
With banking deposits much larger than those in Shanghai and Shenzhen, and the banking sector developing at a faster pace, Hong Kong's position in commercial banking would not be replaced by the two mainland cities in the near future.
However, Hong Kong's investment banking sector would face more challenges.
The size and turnover of the stock markets in Shanghai and Shenzhen combined have become close to those of Hong Kong.
If the south would continue to be a major manufacturing centre of China, trade growth and logistics for goods movement would remain substantial for Hong Kong.
Kwok looked at ports of Hong Kong and Shenzhen as partners instead of competitors.
As for tourism, Kwok said with increasing numbers of foreigners visiting the mainland, more of them would stop over in Hong Kong.
Hong Kong has to work with the mainland authorities to ease the quota on mainland visitors to Hong Kong, he said.
(China Daily HK Edition 07/11/2001)
