Hong Kong (dpa) - Hong Kong's government has pledged billions of dollars in financial aid to residents of the Chinese Special Administrative Region because of the ongoing economic downturn.
Adults with a permanent residence in Hong Kong should receive 10,000 Hong Kong dollars (about 1180 euros), the government informed the metropolis. Hong Kong's economy has been suffering from the effects of political protests and the coronavirus outbreak for months.
Treasury Secretary Paul Chan said in a speech that "crucial measures" need to be taken to address the city's economic problems. The financial aid from the city's multi-billion dollar budget is intended to relieve citizens while boosting consumption in Hong Kong.
In total, 71 billion Hong Kong dollars are to be made available to around seven million people from the budget of 120 billion Hong Kong dollars (about 14.16 billion euros). Chan expects the measure to lead to a higher deficit. "Although there is a record-breaking deficit in the budget for next year, I believe that only with such a budget can we help our community and local businesses survive their difficulties," said Chan.
When citizens receive money directly from the state without anything in return, economists speak of “helicopter money”. In the classic form it means that a central bank gives every citizen an equal amount of money. The economist Milton Friedman is said to have used the image of such a rain of money from a helicopter for the first time.
The idea behind this is that the residents spend the gift money immediately and thus spur the economy. Critics fear that such financial injections will only arouse new desires and fuel the notion that central banks simply have to print more money to solve the problem. There is also the risk that citizens will not spend the money, but mostly save it.
The demonstrations in the Chinese Special Administrative Region have been going on for more than half a year. The protests are directed against their own government and the Chinese leadership in Beijing, which is expanding their influence on the former British crown colony.
Since its return to China in 1997, Hong Kong has been autonomously administered under the sovereignty of Beijing under the "one country, two systems" principle.
In the meantime, the spread of the coronavirus epidemic has also affected residents in Hong Kong. According to the World Health Organization, 81 people have already been infected with the novel corona virus, and two people have died.