Hong Kong's Strategic Fiscal Overhaul: AI at the Helm

Hong Kong plans a 7% cut in public spending and a major AI investment to tackle economic challenges. Financial Secretary Paul Chan emphasizes fiscal consolidation and growth projections amidst geopolitical tensions. An AI industry boost is part of aligning with China's strategic technological advancements.

In an assertive move to tackle rising fiscal challenges, Hong Kong announced its aim to reduce public recurrent expenditure by 7% through to 2027/28. The city's Financial Secretary, Paul Chan, highlighted this strategy in the latest budget release, emphasizing its vital role in restoring fiscal balance amid global economic uncertainties.

The budget also responds to the sharp decline in revenue from land sales during the last financial year. While GDP is expected to grow between 2-3%, Chan warned of ongoing geopolitical challenges impacting the economy. The fiscal consolidation initiative aims to provide a sustainable foundation for Hong Kong's future fiscal landscape.

Facing new economic hurdles, Hong Kong plans a substantial investment in artificial intelligence, dedicating HK$1 billion towards establishing an AI Research and Development institute. This aligns with China's broader technological ambitions, particularly in AI and robotics, and addresses the geopolitical stressors, including tariffs imposed by the U.S.

(With inputs from agencies.)