Hong Kong’s Economic Development Strategy

Posted: November 7th, 2023

Hong Kong’s Economic Development Strategy

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April 14, 2022

Hong Kong’s Economic Development Strategy

Rising seawater levels might be the most significant economic challenge for Hong Kong for the next few decades. The effects of climate change on coastal cities worldwide are worsening each year. Discussions on climate change and its potential implications are becoming more relevant with the realisation that climate change does not impact human activities and biological life only. Coastal cities have more to lose in terms of their way of life, economies, and identity as a people. Since the turn of the 21st century, Hong Kong’s major economic sectors, real estate and fishing, have been threatened by rising sea levels. Hong Kong’s problems of high population density and rapid urban growth have been compounded in recent years by increased flooding and encroaching seawater caused by climate change. It is estimated that 28 square kilometres of Hong Kong’s coastal land will be under seawater by 2050. Hong Kong lawmakers and other relevant stakeholders face the daunting task of developing solutions to combat rising sea levels through law, policy, research and innovation. Rising seawater will disrupt Hong Kong’s economic development without timely and effective public planning, affecting its real estate, fishing, port, and air industries.

Hong Kong’s Development Strategies towards Climate Change

Hong Kong’s government has been heavily investing in research and development on green energy to meet some of its growing needs in transport and shipping. In 1997, the government committed $70 billion to innovation on technological infrastructure innovation (Lam & Roy, 2020). The amount has nearly tripled since then. The government relies on private-public partnerships to enhance its speed and funding for innovation. For instance, universities are known to spend over $3 billion annually. The government established Hong Kong Industrial Technology Center to offer support services to the industry at 250 million (Lam & Roy, 2020). The centre’s purpose is to transform Hong Kong into a leader in the development and implementation of information technology. Innovation technology sits at the core of Hong Kong’s climate action plan, with energy renewal prioritising infrastructural repurposing. Such an approach is evident in the city’s new approach to housing.

Climate Change and Real Estate

Rising sea waters are significantly contributing to Hong Kong’s housing crisis. According to Zhang et al. (2011), Hong Kong has ranked among the top 10 most expensive real estate markets in Asia for the last one and a half-decade. Despite the city’s real estate market boom, about one-third of the properties are in areas prone to frequent flooding. Kwan (2021) reports that tycoons, such as Li Ka-Shing, are considering the final frontier as new real estate territories. Hong Kong has 18 key areas the government considers to be at high risk of flooding (Green Peace Asia, 2020; Kim et al. 2020). The designated locations are home to over 90,000 people. Despite publicised warnings, developers believe that land reclamation is a promising solution to the land problem. Lower basin households will experience increased flooding while hillside residences record frequent landslides.

 The weather pattern will affect housing prices, making homes more inaccessible. The Economic Theory claims that man is selfish, opting to live in a place where he or she can maximise their net benefits, including comfort and savings. A study on the impact of rainfall and humidity on housing prices shows that an increase of one millimetre of rainfall per year reduces average home pricing (Man, 2010). Hong Kong’s high grounds will become extremely expensive in the coming years, pushing people to migrate to offshore islands and new territories. The trend increases the pressure on developers and policymakers to design solid solutions for flooding. The new territories receive more average rainfall, pushing property prices down. Snow and tornados are rare in the city, making rainfall a more influential weather condition than temperature. Hong Kong’s economic strategy has to consider the growing effect of precipitation over temperature when addressing the housing crisis.

In response to global climate change and Hong Kong’s housing crisis, the city is adopting principles of green construction to minimise space and energy consumption. According to Hong Kong’s climate action plan, real estate focuses on green architecture only (Kwan, 2021). Construction works and buildings account for nearly 90% of all electricity consumption in Hong Kong, which equates to 60% of total carbon emissions (Kwan, 2021). New buildings adopt natural ventilation by planting plants on rooftops and balconies to improve airflow while reducing the city’s atmospheric carbon. Ives (2017) discusses the use of hemp and plastics in constructing public blocks, such as the airport’s seawall. Even though the government repurposed the main runway, infrastructural upgrades follow the principles of green architecture. For instance, large windows are used to improve natural lighting, reducing the need for electricity. The government’s commitment to green architecture is evident in the West Kowloon government offices in Yua Mai Tei.

Climate Change and Transport

Hong Kong might soon experience reduced economic development due to reduced air traffic associated with a loss of coastal infrastructures. Hong Kong’s major airport is in an extremely low elevation coastal zone (Yesudian & Dawson, 2021). Hong Kong’s airport should anticipate internal and external disruptions to key commercial air routes. The airport was built near the seacoast to avoid human activity because of space restrictions. The height of the runway is 6.7 meters above sea level, while adjacent waters will rise by more than a meter this century (Yesudian & Dawson, 2021). An extreme tropical cyclone might flood the runway at some point in the future. Hong Kong is also experiencing higher air temperatures. The higher temperature might make it harder for aircraft to take off. According to Yesudian and Dawson (2022), high temperature and associated pressure changes alter the loading weight of an aircraft. Therefore, aeroplanes leaving and arriving in Hong Kong will require a longer runway soon. Overall, Hong Kong’s airport might soon experience internal and external disruptions to key commercial air routes.

The traffic debacle makes green transportation a common norm in Hong Kong’s economic development strategy. The government has been upgrading traditional systems while introducing new routes to reduce transport time. The Star Ferry has been a common resident attraction, ferrying people to the central business district for over 120 years (Qiang et al. 2021). As the government introduced plans to improve the seaport walls, it was mentioned that the ferry would also be upgraded. The transformation of Victoria Harbour includes the use of green roofs to reduce heat gain from the sun. As a result, residents will have less need to use electricity to cool off (Qiang et al. 2021). A new cross-border boundary is also to be introduced that joins the eastern corridor in Shenzen. The Yuen Wai Boundary Control point creates an expressway from Shenzen to the eastern sides of Guandong, significantly reducing the transport time and associated carbon emissions. Aside from using renewables to drive transport systems, Hong Kong focuses on reducing transit time to facilitate waste reduction.

Climate Change and Port Activities

Hong Kong’s port is crucial to the island’s economic development. Accordingly, Hong Kong will need significant financial investment to safeguard its port from rising sea levels. Victoria Harbor is becoming increasingly vulnerable to tropical typhoons due to rising seawater levels. The port is crucial to the island’s economic development. In 2018, the Government’s Civil Engineering and Development Department (CEDD) began implementing a new port manual design following the destruction of roads leading out of Victoria Harbor by typhoon Mangkhut (Du & Luh, 2019). The destruction caused by the storm highlighted the ineffectiveness of the city’s drainage system in extreme weather conditions. Research highlights that the port is highly vulnerable to high tides caused by a drop in air pressure and increased wind speed (Qiang et al., 2021). Stronger and bigger waves should be a key concern in infrastructural improvements for the port.

The existing port’s walls will not withstand the power of waves in the coming years. The highest seawater level recorded at Victoria Harbour was 3.96 meters in 1962. Superstorm Wanda created tides four times the normal level just twenty kilometres from Hong Kong’s coastal area (Qiang et al., 2021). Typhoon Mangkhut created tides nearly 3.5 meters high. Despite Victoria Harbor having well-designed wave walls to prevent overtopping, poor drainage accounted for most of the destruction during the typhoon. While Hong Kong airport considers infrastructure upgrades for flooding, Victoria Harbor also needs to be strengthened against extreme storms. Overall, the cost of upgrading the city’s infrastructure to withstand the effects of climate change will directly impact the city’s economic development.

Climate Change and Fisheries

Frequent flooding and increasingly powerful storms gradually destroy Hong Kong’s ancient river villages. The rising tides come with powerful storms that flood and destroy river villages. The Pearl River Delta was one of Hong Kong’s major tourist attractions in the 80s and 90s due to the wooden houses built on stilts (Yi, 2018). In 2017, typhoon Mangkhut delivered waist-deep flooding, destroying most of Tai O, Hong Kong’s last major river village. The small water community is home to nearly 2000 residents. Environmental activists claim the fishing village might not exist as early as 2035 (Yi, 2018). Another cause for the decline in river villages is the depletion of fish in the rivers. Increasing seawater levels and overfishing have driven fish more outwards. Therefore, fishermen must go further and stay out longer to catch fish. The government’s ban on trawling has had little effect on the marine population. Flooding and a lack of food are major concerns associated with climate change causing the loss of river villages in Hong Kong.

Hong Kong is one of the world’s largest consumer markets for seafood. As an island, Hong Kong has a high consumption of seafood. Accordingly, Hong Kong, to some extent, relies on its fishing industry for its economic development. Unfortunately, the growing population risks starvation with changing climate conditions. In the recent past, rising seawater levels allowed trawls to fish near coastal waters (Mak et al., 2021). Fishing landings in Hong Kong expanded rapidly throughout the 1990s. However, rising sea waters have disrupted the fishing industry through overfishing (Mak et al., 2021). In response to the declining fish population, The Hong Kong Special Administrative Region (HKSAR) was forced to implement a trawling ban in local waters to protect mangroves from oil and chemical pollution (Mak et al., 2021). Today, only small-sized traditional boats are permitted to fish near Hong Kong’s mainland. Although the ban has led to the recovery of marine life, the fish population is yet to return to its initial numbers.

Climate change is forcing Hong Kong to rethink its conventional fishing practices and overconsumption of seafood. The fishing industry is crucial to Hong Kong’s economy, but the dwindling fish population threatens the country’s economy. Every 4 am at Aberdeen wholesale fish market, 60 to 100 fishing vessels carrying nearly 70 tons of seafood arrive (Knott, 2017). Environmentalists warn that current climate conditions cannot support such excess fishing activity. Government statistics indicate a surge in fish imports and local fish farms (Knott, 2017). Fishermen are investing in community fish farms to counter the declining fish population. As aforementioned, several issues related to climate change are responsible for the dwindling fish population, including increased water salinity and loss of breeding grounds. Local fish farms are attempting to conserve threatened species, such as the squaretail coral grouper and Bluefin tuna (Lotze et al., 2011). Resorting to modern fishing practices highlights the drastic impact climate change has on the wild fish population. 

Hong Kong is investing in initiatives that promote the re-emergence of traditional fishing and fishing villages. Hong Kong is experiencing a gradual loss of the fishing profession with the erosion of fishing villages. In the 1960s, Plover Cove Reservoir had six traditional fishing villages (Tam et al., 2013). The main economic activity in the region was fishing. Three of the fishing villages are no longer habitable due to changes in seawater levels. Tourists and people of Chung Mei, Wang Leng Tau, and Ha Wan have to wait until the water recedes to identify traditional pottery shards, fishing nets and wooden rods (Tao et al., 2018). Remaining villages like Tai O have become impoverished, resulting in massive rural to urban migration. A very small number of the younger generation has been left to learn traditional fishing. The gap also affects large-scale trawl fishing, as the industry faces a declining number of available manual labourers. Climate change has altered the culturally alluring fishing villages into ghost towns for the ageing population. As a result, the metropolis is funding the protection and re-development of fishing villages (Lily et al. 2021). The three remaining villages in Plover Cove are now heritage sites under national and international protection.

The Waste Reduction Blueprint

            Waste reduction is a collective strategy targeting Hong Kong’s major economic sectors. The Hong Kong government set a 2035 target that commits it to transform its disposal practices for waste. According to Knott (2017), the government aims to reduce its per capita waste disposal by 40% while increasing its recovery rate by 55%. As a result, Hong Kong has initiated the development of waste-to-energy facilities to move the metropolis away from its reliance on landfills. Scientific literature documents that landfills release more carbon emissions than the beef industry (Knoot, 2017). However, it remains unclear how industries and companies will align with the waste reduction blueprint. Achieving the waste blueprint will require the government to address six key areas: waste reduction, waste separation, resource circulation, industry support, public education and awareness, and innovation and cooperation.

Conclusion

Climate change is an increasingly pressing concern, with island nations being particularly vulnerable to the implications of climate change. The economic implications of the rising tides and flooding will be severe for Hong Kong in the coming years. Rising seawater levels are causing catastrophic weather events and increasing Hong Kong’s risk of flooding. Increased annual rainfall impacts Hong Kong’s housing market by reducing demand for high-end properties. People pay extremely high prices to access hillside residences, which are less prone to flooding. Increased rainfall is also changing the housing market by destroying traditional fishing villages. The food security concerns caused by climate change affect Hong Kong’s fishing industry, ultimately its economic development. These changes explain the renewed focus on green technology for sustainable future economic development. Renewable energy and green architecture are Hong Kong’s innovative approaches to improving its ecosystem. Hong Kong’s government should remain committed to its long-term plan, focusing on private-public partnerships to foster more green innovation in key economic sectors. As social stability gradually resumes in the metropolis, there will be more opportunities for innovation to address the growing issue of rising seawater levels.

References

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