An easing of restrictions on the amount of cash Chinese tourists can take abroad will provide a boost to Hong Kong's SARS-battered tourism and retail sectors, economists and officials said.
China's State Administration of Foreign Exchange said Friday it will raise the amount Chinese holidaymakers can carry from US$2,000 to US$5,000, starting Sept. 1.
The move was timed to coincide with the start of a policy to allow residents from Shanghai and Beijing -- two of China's wealthiest cities -- to make visits individually to Hong Kong. Previously Chinese tourists had to join tour groups to visit the city.
The latest move by Beijing to help revive the city's economy, particularly the tourism sector -- which was crippled by the SARS outbreak -- was welcomed by officials and economists who forecast it would bring significant economic benefits to the city.
Henry Tsoi, senior economist for the Bank of East Asia, said the move would help stimulate retail sales in the city, which analysts estimate have plunged some 50 percent since the outbreak of the deadly SARS virus in mid-March.
"The decision to raise the limits will certainly be positive to Hong Kong because it will allow mainland Chinese tourists to bring in more cash and that will certainly boost retail sales here," said Tsoi.
June retail sales slumped 6.4 percent from a year earlier to HK$13.6 billion (US$1.75 billion) after a fall of 11.1 percent to HK$13.8 billion in May at the height of the SARS outbreak when shoppers stayed home and tourists kept away from the city.
The retail sector is Hong Kong's second-largest industry (after import and export trade) in terms of sales turnover and number of employees. Retail sales last year totaled HK$176.9 billion.
Some newspapers estimated that the lifting of the cash restriction would help bring about an extra HK$40 billion in tourism receipts to Hong Kong annually.
However, Tsoi said the figure was "overly optimistic."
"Each visitor spends on average US$6,000. There may not be such a huge change in their expenditure because if they take more US dollars then they will bring less renminbi ... I expect the majority of them will spend a bit more but wealthier visitors from Shanghai could bring a lot more cash," Tsoi noted.
HSBC economist George Leung noted that Beijing's announcement had not relaxed the 6,000 yuan limit that traveler's could take out of the country.
Nonetheless, he said the new changes would still help the city to revive its stagnant economy which official data showed on Friday had contracted 0.5 percent in the second quarter from a year earlier.
"It's been a long-held complaint from mainland tourists that they're not able to bring enough money to spend in Hong Kong. If a whole family comes, the tourists will be able to bring even more cash," Leung told the South China Morning Post.
Visitor arrivals from China reached 6.83 million last year -- or 41.2 percent of the total 16.5 million visitor arrivals who arrived in the territory last year.
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