‘I’m still somewhat optimistic about Hong Kong’: Nobel Prize-winning economist urges city to diversify investment portfolio, take full advantage of unique status

‘I’m still somewhat optimistic about Hong Kong’: Nobel Prize-winning economist urges city to diversify investment portfolio, take full advantage of unique status

Hong Kong should diversify its investment strategy and take full advantage of its unique status within China to explore new development opportunities, a Nobel Prize-winning economist has said, expressing an optimistic outlook for the city’s future.

Joseph Stiglitz, a professor at Columbia University, also suggested that the Hong Kong government should invest more in the education and healthcare sectors in order to “de-risk” amid growing geopolitical tensions.

“I am still somewhat optimistic about Hong Kong,” Stiglitz told audiences on Thursday during an online appearance at the Future of Hong Kong Economy conference organised by the University of Hong Kong’s business school.

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Nobel laureate Joseph Stiglitz says the Hong Kong government should make the knowledge sector a larger part of the city’s economy. Photo: EPA

The American economist attributed his confidence to Hong Kong’s achievements over the past 56 years since his first visit to the city, as well as a sense of civic pride among residents.

“But if I were from the outside advising Hong Kong, I would say diversify your portfolio,” he said. “Also think about some of the new potential for Hong Kong in its very special role, assuming that [it] keeps [its] special place economically and with self-rule in many areas.”

Stiglitz called on the administration to make the knowledge sector, mainly universities in the city, a larger part of Hong Kong’s economy.

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The education sector would play an increasingly significant role in Hong Kong’s economy, with the city’s English-speaking universities being considered a major advantage as it transitions towards a knowledge- or innovation-based economy, he explained.

Stiglitz also pointed to the global healthcare sector, saying investing in it was important as the world was marching towards an ageing society.

Hong Kong’s financial secretary will deliver the city’s budget blueprint on February 28 amid a ballooning deficit which is expected to exceed HK$100 billion (US$12.8 billion) due to massive government spending during the Covid-19 pandemic.

Accounting giant PwC has estimated that the city’s fiscal reserve will shrink to HK$724.8 billion as of March 31 this year, from HK$834.79 billion in 2023.

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Economist Richard Wong Yue-chim, provost and deputy vice-chancellor at the University of Hong Kong, at the conference on Thursday said the city would continue to be an international trade centre, providing value-added services to link mainland China with the rest of the world, and vice versa.

He said the city had long been at the centre of many foreign countries’ trading systems, managing global supply chains, despite de-risking strategies adopted under the current global economy to avoid risks amid the changing geopolitical landscape.

“I would think Hong Kong will continue to have a very important and innovative role in trying to reconfigure global supply chains in a riskier world,” he said.

Wong also called for “visionary strategies” to attract entrepreneurial talent and the need to address challenges posed by an ageing society in the coming budget or policy address.

It is estimated that 2.74 million Hong Kong residents, excluding domestic helpers, will be aged 65 or above in 2046, accounting for 36 per cent of the population. The estimate in 2017 was 2.59 million, or 34 per cent of the population.

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