Hong Kong is betting on mobility: $25 billion for new infrastructure projects

Hong Kong is dealing with a recession that threatens to plunge the city’s economy into a crisis. To fight it, the government has launched an infrastructure spending plan and approved consumer stimulus measures.

Hong Kong is the home of Victoria Peak, dotted by the headquarters of Asia’s largest banks; stunning skyscrapers; the Temple Street market; wide shopping boulevards and crowded sidewalks. It is home to 7.5 million people, and it is growing before our very eyes. In five years, it will be home to 300,000 more people. The political clashes in recent months have altered the daily lives of thousands of people, but the city has not stopped growing. Yet a changing scenario is forcing the government to cope with an unstable economic situation, betting on a consumer spending stimulus plan and infrastructure works to relaunch growth.

The international crisis and economic stimulus

The city is facing twin threats. On one hand, the street protests of the past few months; on the other, the coronavirus crisis. These two phenomena have hurt the city’s economy. That’s why the government has launched an unprecedented package of measures.

Financial Secretary Paul Chan announced a HK$120 billion ($15.4 billion) stimulus plan at the end of February. The plan includes a direct payment of HK$10,000 ($1,280) for anyone over the age of 18, for a total of about 7 million people.

Four major infrastructure works will modernise mobility in Hong Kong in the coming years. The goal the new projects is to integrate the city more closely with the Pearl River Delta

The stimulus is one of the most significant in the city’s history, which the authorities say is necessary to give new life to an economy that entered a recession in the third quarter of 2019.

“Hong Kong’s economy is facing enormous challenges this year,” Chan told CNN. “The outlook is far from promising in the near term.”

According to economic forecasts, in March 2021 the deficit will reach 4.8% of GDP, after posting the worst deficit in 15 years last year. However, this will not stop the Hong Kong government, which is determined to take these exceptional measures to stimulate consumption. The consumer stimulus spending comes on top of tax breaks for companies. The government also intends to spend around $25 billion for four new infrastructure projects considered as strategic to modernise the city, as well as to stimulate economic growth at such a difficult time.

Infrastructure to fight traffice

The first and most expensive of the recently-launched sustainable mobility projects began service on 14 February: the Sha Tin-Central railway line, which runs between Tai Wai and Kai Tak, passing through the neighborhoods of Hin Keng and Diamond Hill.

The project cost HK$99.1 billion ($12.7 billion) and involves the construction of 10 city railway stations. The first section opened recently, while the second has been postponed and — according to official announcements – will not be completed before 2022.

Along with the investment in rail transport, the Hong Kong government is supporting the modernization of the city’s mobility with the Tseung Kwan O-Lam Tim (TKO) tunnel, a 3.8-kilometre (2.3-mile) two-lane tunnel that will connect the Cross Bay Link in the east of the city with the Lam Tin Interchange in the west. The new tunnel, which will cost HK$15 billion ($1.9 billion), will not be completed before 2021. It offers an alternative to the TKO, which is one of the most crowded arteries of the city.

The last of the major projects is a new highway, the Central Kowloon Route, which will be completed only in 2025 and for which HK$42.4 billion has been allocated to date ($5.4 billion). The artery will cross the city for a total length of 4.7 kilometres (2.9 miles) connecting West Kowloon with East Kowloon.

One of the works recently completed was a high-speed rail link between Hong Kong and Guangzhou

A quicker border crossing with Macau

For an trading center as important as Hong Kong, border crossings are strategic. It’s no surprise therefore that the government is investing HK$33.7 billion ($4.3 billion) in the Lianntang/Heung Yuen Way Boundary Control Point, a new checkpoint and connecting highway on the border that divides Guangdong, Hong Kong and Macao. The new border crossing will allow 17,850 vehicles and 30,000 passengers to pass through each day, feeding the connections between Hong Kong and the Greater Bay Area, one of the most important areas for China’s economy.

According to the Government of the Hong Kong Special Administrative Region’s website, the new connection required a series of works including changing the course of the Shenzhen River, the construction of a connecting road artery, and repositioning the village of Chuk Yuen.

The impact of major works on the construction industry

The construction industry is benefitting from this building plan. The sector is expected to grow by 3.2% in 2020, according to a report from Fitch, mostly due to these four projects but also to many smaller works.
All of this comes as the Hong Kong Special Administrative Region confirms plans to invest HK$1 trillion ($127 billion) in infrastructure over the next decade to support the city’s growth and competitiveness.

Fitch Ratings sees the construction sector growing by 3.2% in 2020

This choice confirms Hong Kong’s has historic tendency to make infrastructure one of its strengths, as demonstrated by a subway network that transported an average of 4.9 million passengers per day in 2018, and the Hong Kong-Zhuhai-Macao Bridge, one of the longest bridges in the world which connect some of the strategic cities of the Pearl River Delta; and the Express Rail Link, the high-speed rail line that takes passengers from the city to Guangzhou via Shenzhen in just 50 minutes.
These massive projects will all provide yet another stimulus to the city as it continues to meet the challenges of the future by continuing on its path of development and modernization.