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Hong Kong targets rising inflation and property prices

Hong Kong government has announced plans for a $20bn package to relieve the effects of inflation.

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Announcing Hong Kong’s Budget for 2011, financial secretary John Tsang Chun-wah said, while he was very pleased with the pace of growth achieved over the previous year – the economy grew by 6.8% in 2010, he is concerned about the risks of inflation and increasing property prices.

In order to tackle this, Chun-wah is proposing to introduce “relief measures” to “ease the burden on residents brought about by inflation”. 

Chung-wah said while deciding on the measures he had considered three principles. “First, the measures must be in line with our economic cycle. The objective is to ease the burden on residents brought about by inflation.  Therefore, measures that will further aggravate inflation will not be considered,” he said.

“Second, the measures must be targeted so that they will benefit those most in need. Third, the measures must be pragmatic and sustainable and must be within our means.”

In addition, Chun-wah announced the government is aiming to stabilize the booming property market by releasing acres of government-owned land for redevelopment. The government therefore plans to increase the amount of available land for private residential housing to between 30,000 and 40,000, much higher than the annual average of 20,000.

Chung-whu said: “We must not lose sight of the risk to our social and economic stability with the formation of a property bubble.  I am prepared to administer additional measures when required to ensure that the property market remains stable and healthy.”

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