The Hong Kong government should earn HK$35 billion ($4.52 billion) in revenue in the current financial year. It is from the 0.1% ‘stamp duty’ on behalf of stock transactions resulting from high trading volumes.
Hong Kong earned $33.23 billion from the levy in the 2019-2020 financial year ended March 31, 2020. That accounted for about 5% of government revenue. This is what Christopher Hui, Hong Kong’s secretary for financial services and the treasury, said in a written response.
Average daily turnover for securities traded in Hong Kong was 49% higher in the 2020 calendar year than a year earlier. This was based on stock exchange data, aided by pandemic-driven sharp market volatility. Last month, the local benchmark hit a 20-month high.
Buyers and sellers of securities in Hong Kong should both pay 0.1% of the value of transactions. Certain products, though, such as exchange-traded funds, are excluded.
Other major global trading centres, including the U.S. and Japan, do not charge such a fee.
Hui said the government would continue to examine the rate of stamp duty. Government revenue and the competitiveness of Hong Kong’s stock market have to be balanced.
Trade to be Part of Biden’s China Strategy
Part of President Joe Biden’s overall negotiation policy with China will be a trade. However, it won’t be the driving force in Sino-U.S. relations. That’s because it was under former President Donald Trump, a former official at the Office of the U.S. Trade Representative.
In the Asia-Pacific region, the Biden administration would receive a push to engage in trade by pacts. These include the Regional Cooperation Economic Partnership (RCEP) in Asia and China’s Comprehensive Agreement on Investment (CAI) with Europe. This is what Wendy Cutler, former USTR assistant trade representative and currently vice president of the Asia Society Policy Institute said about it.
Taking the U.S. back into the Comprehensive and Progressive (NYSE:PGR) Agreement for Trans-Pacific Partnership (CPTPP), was not the only way. There are other ways to build ties in the Asia-Pacific region which have excluded China.
Moreover, the CPTPP had been the centrepiece of former President Barack Obama’s strategic pivot to Asia. It covers 11 countries across the Pacific. However, Trump withdrew the U.S. from the pact in 2017 before it received a signature.
Cutler said narrower and sectoral deals could instead provide a more viable alternative. The RCEP needs to be taken seriously. It was signed between 15 Asia-Pacific countries, including China, in November 2020.