CY Leung says Guangdong Free Trade Zone won’t hurt Hong Kong’s economy

Chief Executive Leung Chun-ying on Friday tried to assuage fears about the Guangdong Free Trade Zone’s impact on Hong Kong’s economy, saying that even though tax-free shopping would be available there, the impact on Hong Kong’s tourism and retail sectors would be minimal.

Those sectors are currently overextended thanks to the high number of mainland visitors entering the city each day, he said, so the tax-free shopping centres currently being built in Guangdong would serve to help normalise the situation in Hong Kong.

“Hong Kong’s tourism sector faces capacity problems, he told business participants in a seminar about the zone this morning. “Parallel trading by same-day visitors to Hong Kong is an abnormal activity.”

The city should not worry about a drop in mainland tourists who may decide to shop in Guangdong, he said. The Individual Visit Scheme, which allows mainlanders to visit Hong Kong on an individual basis, only covers 49 out of 660 mainland cities, meaning there is much potential to expand in the future.

Leung also disagreed that the launch of Guangdong free trade zone in March would erode Hong Kong’s economy.

Two key factors limit economic development, he said: Talent and land.