Blog

Battle against the pandemic

The COVID-19 pandemic situation in Hong Kong is worrying as the number of daily confirmed cases has exceeded 100 for more than ten days. To safeguard the health of the people, the top priority of our work is to break the chain of infection and bring down the number of confirmed cases quickly. Fighting against the pandemic and stabilising the economy are equally important to us. Nonetheless, given the latest situation, economic recovery will not be possible before the epidemic can be suppressed. Other economies around the world are seemingly facing a similar situation.

Globally there are currently more than 17 million confirmed COVID-19 cases, of which about 4.5 million are reported in the US, accounting for a quarter of the world’s total. As the outbreak there has shown no signs of abating, the US economy remains in deep recession. Real GDP contracted by 32.9% on an annualised quarter-to-quarter basis in the second quarter, after declining by 5% in the first quarter, marking the worst-performing quarter in history. The French and German economies recorded negative growth of 13.8% and 10.1% respectively from the first to the second quarter.

As for Hong Kong, the economic situation is worrying. After contracting by 9.1% year-on-year in the first quarter, real GDP plunged further by 9% in the second quarter. As for the "three locomotives" of our economy, private consumption expenditure fell by 14.5% year-on-year in the second quarter, 3.9 percentage points wider than that in the first quarter. Overall investment, as measured by gross domestic fixed capital formation, also recorded an enlarged fall of 20.6%. As for exports, the decline in total exports of goods narrowed from 9.7% in the first quarter to 2.1% in the second quarter. However, the tourism industry remained at a standstill amid disruptions caused by the pandemic, and exports of services plummeted by 46.6% in the second quarter. This notwithstanding, the decline in retail sales value narrowed from 32.9% in May to 24.8% in June as the epidemic eased somewhat and our daily routines partially resumed. These data suggest that the epidemic is the largest constraint on economic activities.

Hong Kong is seeing a third wave of the epidemic since July. For the period from July 8 to the end of July, there are 1850 confirmed cases, which is 40% more than the total number of cases reported in the first half of this year, while recent daily figures still exceed 100. Against this backdrop, it is likely that Hong Kong’s economy in Q3 will be facing even greater pressure.

While the US and the Europe were in deep recession, the Mainland economy already regained momentum, with real GDP growing by 3.2% year-on-year in the second quarter, reversing the 6.8% contraction in the first quarter. As we can see in the Mainland, even though there may be confirmed cases reported occasionally in individual cities, the strategy of "early identification, early isolation and early treatment" has effectively control the epidemic. We are now working hard to significantly enhance the testing capacity in Hong Kong, with a view to identifying COVID-19 patients, including those without symptoms early and providing them with suitable treatment, so as to safeguard the health of the patients, their families and friends, as well as the community. Coupled with social distancing measures, the above framework would allow us to suppress the epidemic more effectively, which in turn can facilitate the resumption of economic activities and normal daily life while ensuring public health and safety.

Thanks for the Central Government’s full support in providing Hong Kong with manpower and resources in fighting against the epidemic, such as the building of "mobile cabin hospital" or new temporary hospital, as well as the conducting of large-scale COVID-19 community testing. All these could help Hong Kong to control the epidemic as soon as possible.Some people may doubt or even resist the assistance provided by the Mainland. However, the anti-epidemic strategy and measures adopted by the Mainland have indeed achieved remarkable results. Zero cases have been reported in many Mainland cities, and people there are therefore allowed to resume normal daily activities while maintaining high vigilance in epidemic prevention. We have to learn from these useful experiences to suppress the epidemic in Hong Kong as quickly as possible, so that people do not have to over worry about the risk of infection and can resume their daily lives, travel and work.

The most imminent task for us now is to fight against the epidemic, while supporting the economy and people’s livelihood at the same time. During this testing time, the Government would consider how best we could support those affected by the pandemic. Nonetheless, with finite public resources, providing unlimited Government subsidies would not be a sustainable solution to the problem. In my view, we need to enable two "networks" in order to support people’s livelihood and stabilise the economy.

1. The internal network: first of all, we need to bring the epidemic under control and clear all cases, allowing people to resume normal daily lives and travel, so that the local economy could regain its momentum.
2. The external network: many places around the globe is still struggling with the pandemic, hindering the resumption of Hong Kong’s businesses, travel and other activities related to those places, whereas the epidemic in the Mainland has subsided and people can go out again. Once the epidemic is abated in Hong Kong , we can explore the setting up of "travel bubble" to allow people with a "health code" to travel between Hong Kong, Mainland and Macao for work and leisure. This could help our business activities to recover in full speed, which can in turn improve the income of employees in the relevant sectors such as tourism, retail and catering.

If we could enable this two "networks", and grasp the development opportunities brought by the Mainland’s vast market and the Guangdong-Hong Kong-Macao Greater Bay Area development, our economy will likely see an earlier recovery, thereby increasing the income of enterprises and employees, and improving people’s livelihood. Similar arrangement could also be gradually extended to other places in the Asia-Pacific region where the epidemic is under control, so as to facilitate further recovery in business and travel.

Facing this unprecedented pandemic, putting forward any measures in tackling the disease is not easy, or even controversial sometimes. One example is the decision of postponing the Legislative Council General Election. Though battling against the epidemic has always been difficult, it is of utmost importance for us to protect people’s lives and health. Any efforts that are conducive to controlling the epidemic should not be hindered by political conflicts. The virus can only be eliminated by effective anti-epidemic measures, but not political quarrels. I appeal to everyone to set aside our differences, stand united and work together to get through the epidemic.

August 2, 2020