AMRO’s 2021 Annual Consultation Report on Hong Kong, China

Hong Kong’s economy has been rebounding strongly due to the progress in COVID-19 vaccinations, and recovering domestic and external demand, but targeted policy support to hard-hit sectors and supportive credit conditions remain important to safeguard the recovery.

It is important to continue to ensure that liquidity in the banking system is sufficient and conducive to further credit expansion. At the same time, the authorities should continue to closely monitor banks whose non-performing loans could surface more quickly once the forbearance measures and credit support are further phased out.

The authorities should maintain the current tight macroprudential policy stance for the residential property market, and could consider tightening measures if prices were to increase significantly faster in the short term.

In the long term, it is essential to enhance Hong Kong’s competitiveness, explore new growth areas, and ensure sustainable and inclusive economic development. Expanding economic and financial linkage with mainland China and a strong edge in trade-related and professional services, as well as establishing Hong Kong’s status as a global green financing and fintech center will bolster growth.

It is also increasingly crucial to strengthen policy measures to address the issues of an aging population, income inequality, and climate change to ensure sustainable and inclusive economic development.

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