Budget that braces for tough times


Broad measures spelt out under Budget 2020 will likely sustain the economy, if there is no further escalation in trade fights.

A glimmer of hope emerged after the US outlined the first phase of a deal to settle some issues related to trade, but there is a lingering suspicion that China could be just buying time as it will most likely not concede to any loss of sovereignty.

China is developing its own ecosystem that could be “outside the reach” of the US, and it is possible that the time bought with such rearguard actions may allow China to achieve its aims.

Malaysia, a trade dependent economy, can only hope that it all works out well, if it can integrate into both ecosystems, said Inter-Pacific Securities head of research Pong Teng Siew.

More stimulus measures would be undertaken should the global economy worsen and in the worst case scenario, Malaysia would have room to spend more if it increases the budget deficit, currently at 3.2% of the gross domestic product (GDP).

The worry is that a further deterioration in global trade tensions may push the global economy into recession. If that does not happen, these Budget 2020 measures should be able to sustain the economy, according to RHB Research Institute chief Asean economist Peck Boon Soon.

Given the external headwinds that continue to pose more downside risks, it looks like Budget 2020, which attempts to spread out its positive effects, has been designed to brace for rough times.

Some positive impetus could be derived from measures to support tourism, construction and infrastructure, as well as small and medium scale enterprises (SMEs), said AmBank Research head Anthony Dass.

Tourism-related businesses such as food and beverage, accommodation, travel and transport, shopping and entertainment will likely benefit.

Recognising the importance of SMEs in driving growth, a string of measures to facilitate their financing needs, ease of doing business, faster adoption of high technology and green initiatives, should also bode well.

The bottomline is that resources are limited while the government still aims for fiscal consolidation and repayment of all debts.

Spreading out these scarce resources will probably succeed in paring off any broad-based slowdown, but it will be hard to make a dent when the sense of a loss in economic momentum is gradually settling in, said Pong.

More measures are required to stimulate the economy but in view of the gloomy global outlook and domestic issues, it is still overall, a good budget.

However, the allocation between capital and operating expenditure is still imbalanced; there is too little capital expenditure and there appears to be ‘little effort’ to reduce operating expenditure.

This will have a long term effect, especially in an aging society, according to Areca Capital CEO Danny Wong. In view of concerns over the lack of investments and falling revenue, efforts to boost foreign direct investments and tourism are welcome but more robust steps are required.

A correction in property prices may be a remedy for the overhang and inaffordability issues especially among young people.

The budget tries to forestall a price pullback, which would affect developers stuck with high land prices, by allowing foreigners to fill the demand gap.

But demand has evaporated, partly caused by the migration of mid-level talent and delays in household formation, the driver of long term demand and new home construction. Developers, lulled by the padding of demand through low interest rates for borrowers, high financing margins and easy access to debts, find it hard to lower prices.

They had thought the elevated level of demand was sustainable but it was not. Reduced prices may mean less profits but possibly a lifeline by way of cashflows, and may help restore delays in household formation and loss of talent, said Pong.

A worrying trend is that more and more young Malaysians are moving out of the country in search of jobs.Even mid-level expertise and talent is migrating; previously, it was mostly those who were highly mobile internationally.

A major cause is the lack of growth in real purchasing power.

Is the projected GDP growth of 4.8% achievable?

With the government continuing its spending and development initiatives, growth should remain robust, supported by services and construction, higher production from agriculture and mining. But manufacturing is expected to moderate.

Malaysia can achieve its 4.8% growth target, said Hong Leong Bank chief operating operating officer, global markets, Hor Kwok Wai.

However, in view of slower world GDP growth of 2.8%, AmBank Research expects growth of 4.0% with an upside of 4.3% for Malaysia.

Coming up with a further set of stimulus, should things worsen, may be a challenge.

Columnist Yap Leng Kuen is watchful of the tech war. The views expressed are the writer’s own.

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Viewing trade talks progress with rationality, calmness

Ending the trade war benefits whole world

Both China and the US still have resources to sustain a  trade war, but further consumption of those resources is unnecessary  since their goals have proved naive and absurd. The situation is still highly uncertain, but the historical indicators will gradually be corrected. China and the US will not get lost and the world will benefit from the implementation of the consensus reached by the two heads of state, assuming the responsibility to both countries and the world and moving steadily towards the final end of the trade war in stages.

 

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Malaysia’s Tax Budget 2020 highlights


KUALA LUMPUR (Oct 11): The following are the highlights of Budget 2020:

Malaysian economy

Government

  • The Bureau of Public Complaints will be replaced by the Malaysian Ombudsman to enhance govt’s governance and delivery systems
  • Govt to move forward with the formation of the Independent Police Complaints and Misconduct Commission (IPCMC) to increase public confidence and trust in police.
  • Japan Bank for International Cooperation (JBIC) offers to guarantee additional tranche of Samurai bonds with lower interest rate of less than 0.5% compared with 0.63% previously. The federal government plans to issue the bonds early next year. Issuance size to be determined after further discussion with JBIC.
  • Home Ministry to receive RM16.9 billion boost for 2020.
  • Allocation for Islamic affairs under PM’s Dept increased to RM1.3 billion from 1.2 billion in 2019
  • Govt has set up National Committee on Investments (NCI), chaired by Minister of Finance and Minister of International Trade and Industry
  • Allocation for Defence Ministry raised from RM13.9 billion in 2019 to RM15.6 billion in 2020

1MDB

Corporate, finance and fintech

  • Govt will continue to ensure at least 30% of tenders of each ministry are reserved for only Bumiputera contractors
  • 50% matching grant of up to RM5,000 to increase the digitalisation of operations for Malaysian small and medium enterprises (SME)
  • RM50m allocation proposed to encourage SMEs to engage in more export promotion activities
  • Govt to provide extra RM50m for SC’s My Co-Investment Fund (MyCIF) to assist SMEs that have difficulties in getting financing
  • Govt to merge Bank Pembangunan Malaysia, Danajamin Nasional, SME Bank and EXIM Bank Malaysia to restructure development financial institutions (DFI)
  • Govt allocates RM1 billion in investment incentives to attract Fortune Fortune 500 companies and global unicorns
  • Govt to offer special investment incentive package worth RM1b per year for five years to local companies capable of penetrating overseas market
  • Additional RM10m allocation to be set aside for MITI to increase monitoring to ensure approved investments are realised
  • Government evaluating Carey Island development feasibility for next growth phase
  • Govt intends to develop a 100-acre logistics hub at Special Border Economic Zone at Kota Perdana in Bukit Kayu Hitam to strengthen trade relations with Thailand
  • National Fiberisation & Connectivity Plan will adopt public-private partnership approach involving total investment of RM21.6b
  • RM20m allocation for Cradle Fund to train and offer grants to high-impact technology entrepreneurs
  • Licensing for digital banks to be opened for public consultation by year end. A framework is expected to be released in 1H2020
  • Digital bank licensing framework will be finalised by Bank Negara and open for application in the first half of 2020
  • Govt to allocate additional RM50 million to Malaysia Co-Investment Fund (MyCIF) to benefit equity crowdfunding platforms and peer-to-peer (P2P) financing platforms.
  • Ceiling on Market Development Grant (MDG) by Malaysia External Trade Development Corporation (Matrade) raised to RM300,000. Cap on entry to export exhibitions also raised to RM25,000. RM50 million allocated to encourage SMEs to join promotional activities.

Entrepreneur

  • RM445m Bumiputera entrepreneur development grant for access to financing, provision of business premises, entrepreneurship training
  • Govt to provide loans worth RM100m under Small Industries Entrepreneurs Financing Scheme for Chinese community
  • Govt to provide RM20m in loans under entrepreneur development scheme for Indian community
    Govt to allocate RM500m as guaranteed facility for women entrepreneurs via Syarikat Jaminan Pembiayaan Perniagaan Bhd (SJPP)
  • Skim Jaminan Pinjaman Perniagaan will be enhanced, with the government guarantee raised to 80% of the loan amount while the guarantee fee is reduced to 0.75%. A RM500 million guarantee facility has been set aside especially for women entrepreneurs.
  • SME Bank will introduce two new funds: a RM200m fund specially for women entrepreneurs, and a RM300m fund to support SMEs with potential to become regional champs
  • Ministry of Entrepreneur Development to give RM10 million for advisory services and awareness for the halal industry
  • Tax incentives for venture capital and angel investors will be extended until 2023
  • Govt jobs worth RM1.3b dedicated for Bumiputera contractors

Internet and tech

  • Mandatory Standard on Access Pricing (MSAP) has successfully reduced broadband prices by 49% and increased speeds by three times
  • RM250m will be set aside by MCMC to prepare broadband access via satellite technology to increase connectivity in rural Malaysia, especially Sabah and Sarawak
  • Matching grant fund of RM25m will be set aside to encourage more pioneer digital projects that benefit fibre optic infrastructure and 5G
  • RM20m allocated to MDEC to groom local champions in producing digital content
  • RM50 million grant to develop 5G ecosystem to prepare for  5G transformation worldwide
  • Smart automation matching grant (up to RM2m) for 1,000 local manufacturers and 1,000 services companies to automate business processes
  • To boost use of e-wallets, govt to offer one-time RM30 digital stimulus to qualified Malaysians aged 18 and above with annual income less than RM100,000
  • 14 one-stop digital improvement centres to be set up in every state to faciltiate access to financing, development of business capacity
  • RM10m to be set aside for MDEC to train micro-digital entrepreneurs and technology experts to leverage e-market places, social media platforms
  • Digital Social Responsibility (DSR) is commitment from business sector to enhance workforce with digital skills needed by society. Contributions from the private sector to the DSR will be given tax
  • R&D in public sector to be intensified with RM524 million allocation to ministries, public agencies exemptions.
  • Government to up e-sports allocation to RM20m due to high potential
  • Green Investment Tax Allowance (GITA) and Green Investment Tax Exemptions (GITE) extended to 2023 in line with sustainable development

Palm oil

  • Govt has launched palm oil replanting loan fund worth RM550m for smallholders
  • Govt to implement B20 biodiesel for the transport sector by end-2020. This is expected to increase palm oil demand by 500,000 tonnes per annum.

Rubber

  • RM200m set aside for ‘Bantuan Musim Tengkujuh’ to eligible rubber smallholders under RISDA, Lembaga Industri Getah Sabah
  • RM100 million allocated for Rubber Production Incentive in 2020 to enhance income of smallholders faced with low rubber prices

Agriculture

  • Allocation for Agriculture and Agro-based Industry Ministry increased to RM4.9 billion, including RM150 million to support plant integration programmes such as for chilli, pineapple, coconut, watermelon and bamboo.
  • RM855 million allocation under Federal Government Padi Fertilizer Scheme to boost padi yield

Civil servants

  • Civil servants’ emoluments to exceed RM82 billion
  • Civil servant pension will cost RM27.1 billion
  • Civil servants’ cost of living allowance or COLA to be raised by RM50 a month starting 2020 for support group, with an additional RM350 million a year
  • Civil servants will be allowed early redemption of accumulated leaves (gantian cuti rehat) for up to 75 days as replacement pay for those who have served at least 15 years
  • Govt announces RM500 special payment for civil servants Grade 56 and below. Govt retirees to get special payment of RM250, also extended to non-pensionable veterans
  • Govt to allocate RM330 million to the Property and Land Management Division under the Prime Ministers Department to repair and maintain the public service quarters. Meanwhile, RM150 million and RM250 million is set aside to repair and refurbish Malaysian Armed Forces family housing units (RKAT) and PDRM quarters.
  • Fire fighters to get a special allowance of RM200 a month, which will benefit 14,400 personnel under the Fire and Rescue Dept, amounting to RM35 mil.

Highway and tolls

  • The Cabinet has approved the proposed offer to acquire four highways in the Klang Valleyy – Shah Alam Expressway (KESAS), Damansara-Puchong Expressway (LDP), Sprint Expressway (SPRINT) and SMART Tunnel (SMART) to be funded via Government-guaranteed borrowings.
  • Citizens to enjoy average 18% discount on all PLUS highways
  • Effective Jan 1, 2020, toll rates for cars at the Second Penang Bridge will be reduced from RM8.50 to RM7.00.

Public transport

  • RM450 million proposed to acquire up to 500 electric buses for public transport in selected cities nationwide
  • Govt intends to proceed with the Rapid Transit System (RTS) between Johor Bahru and Singapore.
  • It will also invest RM85 million beginning 2020 to ease congestion at the Causeway and 2nd Link by enhancing vehicle and traffic flow through the Customs, Immigration and Quarantine Complex.

Fuel subsidy

  • Individuals owning not more than two cars and two motorcycles can get fuel subsidy for one vehicle. The qualifying criteria are:
    • A passenger car with 1,600cc engine capacity and below, or
    • Any car above 1,600cc must be more than 10 years old, or
    • A qualified motorcycle must be 150cc and below, or
    • Any motorcycles above 150cc must be more than 7 years old.

 

  • From January 2020, the targeted fuel subsidy or PSP will be launched in Peninsular Malaysia with two eligible categories as follows:
    • For eligible recipients of the BSH, the petrol subsidy receivable will be RM30 per month for car owners and RM12 per month for motorcycle owners. This subsidy will be in the form of cash transfer, deposited into the recipient’s bank account every 4 months. The first payment will be made in April 2020 for the period January to April 2020; and
    • For all other motorists who are not BSH recipients, they will receive a special Kad95 which allows them to enjoy the fuel subsidy at a discount of 30 sen per litre limited to 100 litres per month for cars or 40 litres per month for motorcycles when purchasing RON95 at the petrol station. The Kad95 will be implemented progressively during the first quarter of 2020.

Taxes

  • Govt will merge Special Commissioner of Income Tax and Customs Appeal Tribunal into the Tax Appeal Tribunal, to be operational in 2021. Through this, taxpayers unhappy with the decision of IRB director-general or the Customs D-G can appeal
  • Govt proposes that a new band for taxable income in excess of RM2 million be introduced and taxed at 30%, up 2 percentage point from the current 28%. This will affect approximately 2,000 top income earners in the country.
  • Govt has repaid GST refunds amounting to RM15.9b to more than 78,000 companies, and income tax refunds of RM13.6b to 448,000 companies and 184,000 taxpayers

Medical and Healthcare

  • To support local medical device industry, government will introduce an initiative to encourage local producers to upgrade equipment and tools used in public clinics and hospitals, based on a minimum allocation of 30%.
  • RM227m to be set aside to upgrade medical equipment, and RM95m to renovate infrastructure and medical facilities, like in Hospital Pontian
  • RM1.6 billion to build new hospitals and upgrade existing ones. The hospital includes Tengku Ampuan Rahimah Klang, Hospital Kampar, Hospital Labuan and the Queen Elizabeth II Hospital, Sabah Heart Centre.
  • Govt to allocate RM60m for pneumococcal vaccination for all children
  • RM319m to build and upgrade health and dental clinics and quarters facilities; new clinics will be built in Setiu, Sg Petani, and Cameron Highlands, as well as Kudat and Tawau in Sabah, and Lon San and Sg Simunjan in Sarawak
  • Health Ministry to get RM30.6 billion allocation, compared to RM28.7 billion under Budget 2019

MySalam

  • MySalam to be expanded so that those with critical illnesses will get RM8,000 cash; those being treated in govt hospitals can also claim RM50 wage replacement a day for up to 14 days

Islamic finance

  • Islamic Economic Blueprint to be formulated to position Malaysia as centre of excellence for Islamic finance
  • Special Islamic Finance Committee to be set up to develop the Islamic finance ecosystem

FELDA

Property and housing

  • RPGT base year for asset purchase revised to Jan 1, 2013 for asset acquired before that date
  • To reduce supply overhang of condominiums and apartments amounting to RM8.3 billion in the second quarter of 2019, govt will lower the threshold on high rise property prices in urban areas for foreign ownership from RM1 million to RM600,000 in 2020.
  • Govt to extend Youth Housing Scheme administered by Bank Simpanan Nasional from Jan 1, 2020 until Dec 31, 2021. The scheme also offers a 10% loan guarantee via Cagamas to enable borrowers to get full financing and RM200 monthly instalment assistance for the first two years, limited to 10,000 home units.
  • Public Sector Home Financing Board to offer free personal accident insurance for up to two years to new government housing loan borrowers
  • To help those who can’t come up with 10% deposit or get financing to buy homes, govt will collaborate with financial institutions to introduce the rent-to-own (RTO) financing scheme, where up to RM10 billion will be provided by the financial institutions, with the governnment supporting via a 30% or RM3 billion guarantee.
    • This RTO scheme is for purchase of first home up to RM500,000 property price.
    • Under this scheme, the applicant will rent the property for up to 5 years and after the first year, and the tenant will have the option to purchase the house based on the price fixed at the time the tenancy agreement is signed.

Gaming Industry

  • To curb illegal gambling, govt proposes a higher minimum mandatory penalty of RM100,000 for illegal gamblers, along with a minimum mandatory jail sentence of six months.
    • For illegal operators, a higher minimum mandatory penalty of RM1 million and a 12 month minimum mandatory jail sentence will be imposed.
  • To curb illegal gambling, govt proposes a higher minimum mandatory penalty of RM100,000 for illegal gamblers, along with a minimum mandatory jail sentence of six months.
  • Starting 2020, total number of special draws for Numbers Forecast Operator (NFO) will be reduced from 11 to 8 times a year..

 

Employment

  • Hiring fresh graduates: Two-year pay incentives of RM500 a month. Hiring incentive of RM300 a month.
  • Incentives to get women into the workforce:
    • Two-year pay incentive of RM500 a month
    • Hiring incentive of RM300
    • Tax exemption for women returning to work will be extended until 2023.
  • Govt revises Employment Act, including increasing maternity leave from 60 days to 90 days from 2021
  • Govt proposes to raise minimum wage in urban areas to RM1,200 a month in 2020
  • Govt to launch Malaysians @ Work initiative aimed at creating better employment opportunities for youth and women, reducing over-dependence on low-skilled foreign workers
  • Malaysians who replace foreign workers will get a monthly wage incentive of RM350/RM500 for two years, depending on the sector. Employers will get a monthly incentive of RM250 a month throughout the same period.

Tourism

  • RM25 million allocated to Malaysia Healthcare Tourism Council to strengthen Malaysia’s position as the preferred destination for medical tourism in Asean for oncology, cardiology and fertility treatments.
  • Govt to contribute RM100 million towards construction of new cable car system to Penang Hill
  • RM1.1 billion allocated to Ministry of Tourism and Culture, of which RM90 million is specifically for VMY2020 promotion and programmes

Sabah and Sarawak

  • Govt plans to double special alowance for Sabah to RM53.4m and Sarawak to RM32m; this to be doubled further to 106.8m for Sabah and RM64m for Sarawak in five years
  • RM587 million allocation for rural water projects, of which RM470 million will be for Sabah and Sarawak
  • RM500 million for rural electrification benefiting more than 30,000 rural households, majority in Sabah and Sarawak

Aid and subsidies

  1. Govt to spend RM24.2 billion on subsidies and social assistance
  2. RM100 million grant proposed for Malaysian Indian Transformation Unit (MITRA) of which 80% will be programme-based
  3. RM57 million provided to Orang Asli Development Department (JAKOA), in addition to RM83 million allocation for the community’s economic development, education and infrastructure.
  4. RM575 million proposed for socio-economic assistance to senior citizens benefiting 137,000 seniors whose household income is below poverty level
  5. RM25 million allocated to manage, administer and expand food bank programme
  6. Allocation for subsidies and social assistance increased to RM24.2 billion, including welfare aid such as Bantuan Sara Hidup (BSH). BSH scheme expanded to cover 1.1 million single individuals aged above 40 earning less than RM2,000 per month.

Rural development

  • RM10.9 billion allocated for rural development projects in 2020, from RM9.7 billion in 2019
  • RM738 million provided for Risda and Felcra to implement income generating programme
  • RM1 billion set aside for rural roads throughout Malaysia, primarily targeted at Sabah and Sarawak

Education and training

  • Allowance for KAFA teachers increased by RM100 a month, to benefit 33,200 existing teachers
  • RM735 million proposed for school maintenance and upgrading works
  • Government allocates RM210m to expedite digital infrastructure establishment in public buildings like schools
  • Education Ministry to receive largest allocation of  of RM64.1 billion in 2020 from RM60.2 billion in 2019
  • Allocation for TVET programmes raised from RM5.7 billion in 2019 to RM5.9 billion in 2020
  • RM1.3 billion proposed for education institutions under MARA, a further RM2 billion for student loans benefitting 50,000 students

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China’s new digital currency


https://youtu.be/QlBp9fz6eVE

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Made in China” used to be a synonym for cheap products, but all that has changed. China has made huge progress in innovation and technology. From the Sunway TaihuLight supercomputer, the fastest in the world, and the 500-meter-wide radio telescope in southwest China’s Guizhou Province, to the development of lithium battery and 3D-printed blood vessels made from stem cells and renewable energy technologies, Chinese innovations are making a name for themselves.
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China’s central bank speeds up digital currency drive

 Private-sector players likely to participate in project

Photo: VCG

With internet technologies advancing and cryptocurrencies flourishing amid a broad digital transformation, individual countries are starting to issue legal tender in digital form, and the People’s Bank of China (PBC), the country’s central bank, is also accelerating its pace in this area.

As of Sunday, the PBC had applied for 74 patents involved with digital currencies to the National Intellectual Property Administration, according to a report by the Economic Information Daily on Monday.

The PBC said it will speed up the development of legal digital currency on Friday.

Wang Xin, director of the PBC Research Bureau, said in July that the authority is organizing market-oriented institutions to jointly research and develop a central bank digital currency and the program has been approved by the State Council, China’s Cabinet.

“China is beefing up efforts in digital currency innovation, a trend driven by emerging technologies that is spreading worldwide,” said Huang Zhen, a professor at the Central University of Finance and Economics.

Rather than letting cryptocurrencies challenge the position of sovereign currencies, it is wiser for countries to roll out their own digital currencies, Huang told the Global Times on Monday.

Chinese authorities ordered a ban on initial coin offerings in 2017 and stopped direct bitcoin-yuan trading as the rapidly expanding market spawned concerns over financial risks.

The PBC, one of the earliest central banks in the world to start the process of digital currency innovation, launched its program in 2014 during the tenure of former governor Zhou Xiaochuan. In 2017, the PBC established a research institution for the digital currency.

“China is among the leading countries in terms of its research into a government-backed currency,” said Huang.

Favorable conditions

The basic conditions favorable for China’s implementation of a digital currency include comprehensive and fast networks, broad digitalization in the financial sector, and advanced financial technologies – particularly blockchain, a digital, public ledger that records online transactions, according to Huang.

In recent years, Chinese internet companies have made huge achievements in the mobile payment and e-commerce sectors, helping create a digital economy of more than 30 trillion yuan ($4.36 trillion), according to media reports.

In June, US social media giant Facebook released an official white paper for its cryptocurrency project Libra, a blockchain-powered stablecoin expected to arrive in 2020.

The move stepped up the global race for digital currencies, with China’s central bank paying close attention.

The central bank is closely working with market participants on creating a central bank digital currency, PBC official Wang said.

“China’s private market players have accumulated some experience in the digital currency sector. Their participation in the government’s work will effectively help promote the project,” Cao Yin, an expert in the blockchain sector, told the Global Times on Monday.

It is likely that the sovereign digital currency will be issued within two or three years at the soonest, although the authority tends to take a prudent attitude, Cao said.

Once it is broadly implemented, the new currency will have a big impact on Alibaba’s Alipay and Tencent’s WeChat Pay, the two dominant mobile digital payment tools in China, as the PBC’s digital currency is featured by decentralization, unlike the former two.

Challenges ahead

There are still some bumps on the road to promoting the digital currency.

“For this new kind of currency, its nature actually poses challenges to existing policies in such aspects as foreign exchange control, so it takes time to balance benefits with potential risks,” said Cao.

A flexible and open mechanism is needed by the PBC to attract more talent, he added.

Digital currencies can help strengthen regulation as transaction data can be tracked and analyzed, including illegal money laundering, according to Huang. But laws and rules should be formulated in a timely fashion to protect individual information. “Safety is the biggest issue,” he added.

“Use of the digital currency to better serve the real economy also requires policy guidance,” said Huang.
Newspaper headline: PBC accelerates digital currency drive.

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Huawei launches ‘fastest’ AI cluster, challenging Google in computing; unveils flagship Mate 30 series, along with Watch GT 2 smartwatch and Vision TV snap on like a pro!


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Huawei Launches ‘World’s Fastest AI Training  Cluster

Huawei launches “world’s fastest AI training cluster” – Verdict

Huawei launches Atlas 900, world’s fastest AI training cluster

Focus on computing could challenge industry leaders like Google: analysts

Visitors check out devices at the Huawei Connect 2019 in Shanghai on Wednesday. Photo: Shen Weiduo/GT

Chinese telecom giant Huawei Technologies on Wednesday unveiled its ambition in the computing sector by laying out its strategy for the $2 trillion sector and releasing what it claims to be the world’s fastest artificial intelligence (AI) training cluster, the Atlas 900, a move that industry analysts said could challenge industry giants like Google.

Huawei’s foray into the computing area also comes after steady progress it made in 5G businesses and the proprietary operating system HarmonyOS, showing the industry giant’s defiance and resilience amid the US intensified crackdown over the past year. it also marks another milestone for the company, said analysts.

“When most people think Huawei, they think connections…But our work doesn’t stop at connectivity. Both connections and computing are key,” Ken Hu (Houkun), deputy chairman of Huawei, spoke of Huawei’s ambitions in the industry at the Huawei Connect 2019, an annual conference held by the industry giant in Shanghai, which runs from Wednesday to Friday.

“In terms of Huawei’s investment, they’re equally important. In the past, we mostly talked about connections. Today I’d like to focus on computing,” Hu said. The future of computing is a massive market worth more than $2 trillion by 2023, where Huawei wants to carve out a space.

Huawei also introduced sectors it will focus on in the industry, including architectural innovation, investment in its all-scenario processors and the construction of an open ecosystem, which will involve an investment of another $1.5 billion in its developer program.

From the launch of its chip series and proprietary operating system to servers, to the computing layout, it is stepping up efforts to build up a comprehensive ability amid the US’ intensified crackdown, Xiang Ligang, a Beijing-based veteran industry analyst, told the Global Times on Wednesday.

Xiang said these moves indicate the US crackdown will not contain the company’s growth.

Apart from the official debut of its computing strategy, Huawei on Wednesday also unveiled the Atlas 900, which it claimed is the fastest AI training cluster that combines the power of thousands of its proprietary Ascend processors.

Building on the technical strength it has developed over the past decade, Huawei said that Atlas 900 takes only 59.8 seconds to train ResNet-50, a type of artificial neural network that is the gold standard for measuring AI training performance. This is 10 seconds faster than the previous world record.

“The layout in the computing sector and launch of training clusters mainly aim to serve as rivals to industry giants like Google, which now has the strongest computing power in the world. The world’s major breakthroughs in the AI sector also come from Google,” Jiang Junmu, chief writer at the telecom industry news website c114.com.cn, who covers Huawei closely, told the Global Times on Wednesday.

The biggest barrier to AI development is the lack of computing ability, but this is also where Huawei sees opportunity, Jiang said.


US ban effect

Being on a US blacklist since May 16, which restricts many US companies from selling products to Huawei, has cast a shadow on its businesses. While playing down the US effect, Hu said on Wednesday during the opening remarks that “Huawei has been doing just fine, like the good weather in Shanghai today.”

He told reporters that Huawei has secured more than 50 contracts even amid the baseless security accusations from the US, and the number is still increasing. He estimated that 5G businesses will start contributing to revenue by the end of next year with the full roll-out of 5G services in China.

Still, insiders pointed out uncertainties for the giant. For instance, the company, which is also the world’s second-largest smartphone maker, is scheduled to launch a high-end smartphone Mate 30 series on Thursday. Whether the new handset will be able to run Google’s Android operating system and apps may affect its sales.

Huawei rotating chairman Eric Xu (Zhijun) said last month that while the impact of the US curbs was weaker than previously expected, there would still be at least $10 billion in losses in its smartphone unit’s revenue this year.

An insider told the Global Times on the sidelines of the conference that it’s unclear whether Huawei’s own computing architecture and proprietary HarmonyOS could support its devices and meet consumer expectations.

“The company is doing OK, but it still has holes to be fixed in the face of unclear prospects,” the insider said.
Newspaper headline: Huawei launches ‘fastest’ AI cluster

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Huawei unveils flagship Mate 30 series, along with Watch GT 2 smartwatch and Vision TV


Design-wise, the Mate 30 Pro comes with anarrow notch, slim bezels and an edge-to-edge Horizon Display, whichcurves at an 88° angle, to maximise the screen real estate. — Photos:KHOR SOW YEE/The Star

Huawei has unveiled its latest flagship smartphones, the Mate 30 and Mate 30 Pro – along with a Mate 30 Pro Porsche variant and a Mate 30 Pro 5G model – at a launch event in Munich, Germany.

The Mate 30 range is powered by the new Kirin 990 SoC chipset. The 5G models, however, are powered by the Kirin 990 5G chipset – the first to integrate both processing units and a 5G modem on the same chip – making these devices the “world’s first second-generation 5G smartphones that support 4K video calls”, claims Huawei.

“The era of 5G is an opportunity to rethink the smartphone technology and the Huawei Mate 30 series is the ultimate expression of what’s possible,” said Huawei business group CEO Richard Yu.

Design-wise, the Mate 30 Pro comes with a narrow notch, slim bezels and an edge-to-edge Horizon Display, which curves at an 88° angle, to maximise the screen real estate.

It has also eliminated the side volume buttons and replaced them with virtual keys, allowing users to position them on either side of the phone – a handy feature for both left- and right-handed users.

The Mate 30 series sports a triple/quad camera system, with a ring design surrounded by a metallic “halo”.

Mate 30 Pro has a 40-megapixel SuperSensing camera with wide-angle lens, a 40-megapixel camera with ultra-wide angle lens, an 8-megapixel camera with telephoto lens, and a 3D depth sensing camera.

Mate 30 Pro has a 40-megapixel SuperSensing camera with wide-angle lens, a 40-megapixel camera with ultra-wide angle lens, an 8-megapixel camera with telephoto lens, and a 3D depth sensing camera.

For the Mate 30, this comprises a 40-megapixel SuperSensing camera, a 16-megapixel camera with ultra wide-angle lens and an 8-megapixel camera with telephoto lens.

The smartphone also boasts optical image stabilisation (OIS), along with laser focus, which together are capable of 2.5cm macro photography and max ISO of 204800.

Meanwhile, its larger sibling the Mate 30 Pro comes with a 40-megapixel SuperSensing camera with wide-angle lens, a 40-megapixel camera with ultra-wide angle lens, an 8-megapixel camera with telephoto lens, and a 3D depth sensing camera.

The SuperSensing camera features a dual main-camera system with a max video ISO rating of 51200 to capture videos at super slow-motion at up to 7,680fps (frames per second), as well as 4K ultra-wide angle low-light time-lapse video and real-time Bokeh.

The second of the dual-camera system promises brilliant results in low-light conditions with ISO 409600 light sensitivity.

Huawei says that the 8-megapixel camera on the phones offer 3x optical zoom, 5x hybrid zoom and up to 30x digital zoom.

The front-facing camera on the Mate 30 also comes with 3D depth sensing that is purportedly able to deliver pro-Bokeh effects with accurate depth-of-field info for selfies and portraits.

The front-facing camera on the Mate 30 also comes with 3D depth sensing that is purportedly able to deliver pro-Bokeh effects with accurate depth-of-field info for selfies and portraits.

The front-facing camera also comes with 3D depth sensing that is purportedly able to deliver pro-Bokeh effects with accurate depth-of-field info for selfies and portraits.

Other features include an always-on display with a lock screen that changes colour throughout the day, AI gesture control for contactless interaction, HiCar smart travel for seamless connectivity with a car’s on-board communication and entertainment systems, 3D face unlock and in-screen fingerprint sensor (Mate 30 Pro only).

Huawei has eliminated the side volume buttons and replaced them with virtual ones on the Mate 30 Pro (pic) and Mate 30.

Huawei has eliminated the side volume buttons and replaced them with virtual ones on the Mate 30 Pro (pic) and Mate 30.

The 6.62in Mate 30 has a 4,200mAh battery, while the 6.53in Mate 30 Pro has with a 4,500mAh battery. Both support fast wired and wireless charging, while the Mate 30 Pro provides upgraded reverse wireless charging for other compatible devices.

The Huawei Mate 30 with 8GB RAM and 128GB storage will retail at €799 (RM3.700), while the Mate 30 Pro with 8GB RAM and 256GB storage will go for €1,099 (RM5,100) for the non-5G version and €1,199 (RM5,550) for the 5G model.

The phones will be available in Emerald Green, Space Silver, Cosmic Purple, and Black, while the Forest Green and Orange will be available in vegan leather.

The Porsche Design Huawei Mate 30 RS, a variant of the Pro, has 12GB RAM and 512GB storage, and will be available in red or black with leather finishing on the back and will retail at €2,095 (RM9,700).

Local prices and availability have yet to be announced.

Besides the Mate series, Huawei also announced the Watch GT 2, which is powered by the Kirin A1 chip and boasts a claimed battery life of 14 days per charge.

It will also come with new functions such as 15 smart workout modes with 10 training modes just for running, an enhanced music player, and the ability to answer voice calls on the watch via Bluetooth.

The Huawei Watch GT 2 smartwatch will come in two sizes; a 42mm version with a 1.2in Amoled display and a 46mm version with a 1.39in Amoled display, and will be available in October for €229 (RM1,050) and €249 (RM1,150), respectively.

Huawei also announced the availability of its FreeBuds 3 wireless Bluetooth earphones which feature active noise cancellation and ultra-low audio latency.

The black and white versions of FreeBuds 3 will be available in China, Europe, Middle East, Russia, Asia Pacific and Latin America from November at €179 (RM850).

One more device that was revealed was a TV dubbed Huawei Vision, with a 4K quantum dot screen (55in, 65in, 75in) and refresh rate of up to 120Hz, as well as “perceptive AI-eye” function with AI video call, face recognition and tracking features, and control centre for smart home devices. However, no pricing or availability was announced.

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Recession fears can by itself be a self-fulfilling prophecy


 

AS talk of a recession picks up, a veteran fund manager, Ang Kok Heng of Phillip Capital Management Sdn Bhd, correctly points out that the Malaysian stock market has been in “recession” in five of the six years since 2014.

Hence, he does not envisage how it can get worse for the Malaysian stock market if the global economy does go into a recession next year. Fears of a global recession have picked up pace based on the behaviour of the US yield curve.

The yield curve, which charts the spreads of US debt papers of various tenures, has inverted several times in the past few weeks. Most people would not understand what an inverted yield curve means.

Simply put, it means long-dated debt papers of 10 years giving lower returns compared to shorter-term debt papers such as two-year US Treasuries. It causes what is called an inverted yield curve.

It goes against the normal behaviour of US Treasury yields because long-term debt papers should give a higher return than short-term papers.

The consequence of an inverted yield curve is that it will lead to banks reducing their lending activities because their margins are narrow. Eventually, it results in companies reducing their activities and the country going into a slowdown or recession.

An inverted yield curve has been the precursor to all past recessions (see diagram).

However, there are some who are disputing the fears of an impending global recession based on the behaviour of the bond yield curve. Their reason is that the bond yields are not behaving as what they should due to the governments all around the world printing money to keep interest rates artificially low since 2009.

Interest rates have become so low to the extent that European banks are offering no returns on deposits. This means depositors do not get any money for keeping their money in the banks. Borrowers instead get discounts on their installments.

It’s happening in Europe because government bond yields there have turned negative.

For instance, the yield on 10-year Switzerland bonds is negative 0.74%, while German bonds of a similar tenure yield negative 0.52%. From France to Denmark, government debt papers have negative yields.

Only some countries such as Portugal and Spain still have positive yields on their debt papers.

Analysts believe that this has resulted in investors resorting to buying US debt papers that still offer positive yields. Hence, the price of bonds across all tenures in the US has gone up, causing their yields to come down.

The search for yields has also resulted in the narrowing of the difference between what the two-year and 10-year debt papers offer. And there have been several occasions in the last one month when the yield on the 10-year paper was lower than the two-year debt papers.

Apart from the behaviour of the yield curve, the other indicator that is seen as a precursor to a recession is the declining manufacturing sector all around the world caused by the trade war between the US and China. The Purchasing Managers’ Index (PMI), which is a leading indicator to assess the state of the economy, has been declining for all major economies.

For Malaysia, the PMI has been less than the 50-point benchmark for almost a year now. The same trend is seen in China, while the indicator has started to decline in the US in the last few months, which some see as a result of the trade war.

The trade war has caused supply disruptions, impacting the manufacturing sector.

However, there are other indicators that do not indicate a recession is imminent.

Banks are fairly well-capitalised and have pulled the brakes on lending. We do not hear of banks being impacted by major corporate defaults except for some financial institutions in China. Malaysian banks, for instance, have weathered the storm quite well so far, thanks to Bank Negara keeping a tight rein on their lending activities.

There has not been any run-up in asset prices. Property prices in countries such as Malaysia have remained subdued since 2015 after Bank Negara pulled the brakes on lending. Since 2014, Bursa Malaysia has closed lower every year, except for 2017.

The only exception of rising asset prices is Wall Street that has soared to record highs. Stock prices are hitting all-time highs due to improved earnings growth.

Technology companies such as Apple and Amazon are US$1 trillion companies. The other technology companies such as Facebook and Alphabet are enjoying growing valuations because of earnings growth.

No other stock exchange in the world has such a large concentration of technology companies than the exchanges on Wall Street. All technology companies, even from China, want to list on Wall Street.

Even Alibaba is listed on the New York Stock Exchange and not in Hong Kong.

It has been 11 years since the last recession, but the world’s central banks have resumed their printing of cheap money to keep interest rates low. The European Central Bank has resumed quantitative easing, while the US Federal Reserve is reducing interest rates. In essence, central banks are taking these measures to prevent a slowing economy going into recession.

In the meantime, it has caused fear among people and companies. Companies are holding back on spending, and in fact, cutting down on their debt.

A clear indicator is in the US where companies raised the most amount of corporate debt. Apple and Disney raised US$7bil worth of debt papers to reduce their borrowings.

In Malaysia, corporations have been deleveraging for the past few years in anticipation of a slowdown. Companies are not expanding, as indicated by the declining private-sector gross capital formation.

It is only reasonable for companies and people to save for the upcoming rainy days. Even governments are cautious in spending. For instance, in the upcoming Budget 2020, many are expecting the government to start spending. But there is also a view that the government will adopt a cautious stance as it continues to strengthen its balance sheet and reduce debts.

If nobody spends for fear of a recession, it would be a self-fulfilling prophecy.

Most people are expecting a recession, meaning negative growth. Fear of a recession has translated into a slowdown that the world and Malaysia are experiencing. If this fear continues to perpetuate, a recession would be a self-fulling prophecy.

It is good to be fearful, but being too fearful and conservative will also result in lost opportunity.

As Ang of Phillip Capital puts it, in times when fears of a recession seap in, cash must be held to seize opportunities. Holding cash as an investment is not a wise option.

By M. SHANMUGAM , The views expressed here are solely that of the writer. Source link

 

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Jack Ma Ends 20-Year Reign Over Alibaba Wealth Creation Empire


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Behind Hong Kong’s chaos lie deep-seated social ills



Chief Executive of China’s Hong Kong Special Administrative Region (HKSAR) Carrie Lam speaks during a media session in Hong Kong, south China, Sept 5, 2019. [Photo/Xinhua]

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“Seclusion brings no development opportunity for Hong Kong,” said economist Lau Pui-King. “Some youngsters don’t understand that Hong Kong would be even worse if it is secluded from the Chinese mainland.”

“To come out of the current economic difficulty, Hong Kong needs to be linked with the Chinese mainland much closer and more effectively,” she said.

HONG KONG – Kwong loves the pure adrenaline rush he gets when he takes his motorcycle out on the weekends to light up his lackluster life.

The 35-year-old lives with his parents in an old and cramped apartment in the New Territories of Hong Kong. He has a girlfriend but is hesitant to get married and start a family.

“The rent is so high, and there is no way I can afford an apartment,” said Kwong, who earns 15,000 HK dollars ($1,950) a month. Renting a 30-square meter one-bedroom apartment would cost him about two-thirds of his salary.

“Future? I don’t think much about it, just passing each day as it is,” he said.

Kwong’s words reflect the grievances among many people in Hong Kong, particularly the young. Many vented their discontent in prolonged streets protests that have rocked Hong Kong since June.

The demonstrations, which started over two planned amendments to Hong Kong’s ordinances concerning fugitive offenders, widened and turned violent over the past months.

“After more than two months of social unrest, it is obvious to many that discontentment extends far beyond the bill,” said Carrie Lam, chief executive of the Hong Kong Special Administrative Region (HKSAR), referring to the now-withdrawn amendments.

To Lam, the discontent covers political, economic and social issues, including the often-mentioned problems relating to housing and land supply, income distribution, social justice and mobility and opportunities, for the public to be fully engaged in the HKSAR government’s decision-making.

“We can discuss all these issues in our new dialogue platform,” she said.

HKSAR Chief Executive Carrie Lam visits a transitional housing project of the Lok Sin Tong Benevolent Society Kowloon in Hong Kong, south China, Aug 9, 2019. [Photo/Xinhua]


UNAFFORDABLE HOUSES

For nine straight years, housing in Hong Kong has been ranked as the least affordable in the world. Homes in the city got further out of reach for most residents, according to Demographia, an urban planning policy consultancy. The city’s median property price climbed to 7.16 million HK dollars in 2019, or 20.9 times the median household income in 2018, up from 19.4 times from a year earlier.

In the latest case of house transaction, an apartment of 353 square feet (about 33 square meters) at Mong Kok in central Kowloon was sold at 5.2 million HK dollars in September, according to the registered data from Centaline Property Agency Limited.

For those fortunate enough to have bought an apartment, many have to spend a large part of their monthly income on a mortgage. For those who have not bought any property yet, it is common to spend more than 10,000 HK dollars in rent, while saving every penny up for a multi-million HK dollar down payment.

From 2004 to 2018, the property price increased by 4.4 fold, while income stagnated, statistics show. From 2008 to 2017, average real wage growth in Hong Kong was merely 0.1 percent, according to a global wage report by the International Labor Organization. Homeownership dropped from 53 percent to 48.9 percent from 2003 to 2018.

Efforts of the HKSAR government to increase land supply to stem home prices from soaring also went futile amid endless quarrels. Of Hong Kong’s total 1,100 square kilometers of land area, only 24.3 percent has been developed, with land for residential use accounting for a mere 6.9 percent, according to data from the HKSAR government.

Social worker Jack Wong, 29, lives in an apartment bought by his parents. “I’m lucky. Most of my friends still have to share apartments with their parents. My cousin has been married for seven years, but he is still saving for his down payment, so he has to live at his parents’ house,” he said.

“The older generation changed from having nothing to having something. We, the younger generation, thought we had something, but it turns out we have nothing,” he said.


MIDDLE CLASS’ ANXIETY

While young people complain about having few opportunities for upward mobility, Hong Kong’s middle class, which should have long been stalwarts of the society, are under great economic pressure and in fear of falling behind.

It is not easy to be middle class in Hong Kong, one of the world’s most expensive cities. To join the rank, a household needs to earn at least 55,000 HK dollars, or $7,000, a month, according to Paul Yip Siu-fai, a senior lecturer at the University of Hong Kong. About 10 percent of the households in the city are up to the rank.

Earning that much can be counted as rich in many parts of the world. But in Hong Kong, the money is still tight if you have a child to raise and elderly to support.

Housing is the biggest burden for the average middle-class resident. The cost of having a child is another headache in Hong Kong, where pricey extra-curricular activities and private tutoring are considered necessary to win in the fierce competition.

Fears of descending to the low-income group are real for the middle class. Many think they belong to the middle class only in education and cultural identity, but their living conditions are not much better than the impoverished, said Anthony Cheung Bing-leung, former secretary for transport and housing of the HKSAR government.

Civil servants and teachers, who earn much more than the average income, are traditionally considered middle class. But Cheung found out in a survey that many of them could not afford to have their own apartment, with some even living in the narrow rooms of partitioned apartments.

“We don’t belong to the low-income group, but we could just rent an apartment now,” said Lee, a teacher at a secondary school in Hong Kong.

Lee and her husband earned nearly 1.3 million HK dollars a year, but a 50-square meter apartment is the best they could rent now for a five-member family. She preferred not to give her full name as she feels her situation is embarrassing.

“We want to save more money to buy a house near prestigious elementary schools for our kids,” Lee said. “If our kids can’t go to a good school, it’ll be very tough in the future.”

A woman walks near the Harbour City in Hong Kong, south China, Aug 27, 2019. [Photo/Xinhua]


CHANGING ECONOMIC STRUCTURE

In the 1970s, nearly half of Hong Kong’s labor force were industrial workers when manufacturing thrived in Hong Kong. During the 1980s, Hong Kong’s finance, shipping, trade and logistics and service industries started to boom.

Since then, the economic landscape began to change amid subsequent industrial upgrading.

Due to the hollowing out of the manufacturing industry, the wealth gap in Hong Kong widened and the class division worsened. Despite the prosperity of finance, trade and tourism in recent years, more than 1.37 million people are living below the poverty line in Hong Kong, home to more than 7 million.

Working career options are now limited, leaving little hope for the youngsters to move up the social ranks.

As a result, Hong Kong’s social class has largely been solidified in the 21st century, with the richest people dominated by property developers and their families.

The Gini coefficient, which measures the inequality of income distribution, reached a new high of 0.539 in 2016, far above the warning level of 0.4, according to data by the HKSAR government’s Census and Statistics Department. The greater the number toward one, the more inequal in income distribution.

Though the HKSAR government tried to narrow the wealth gap, many people in Hong Kong said they are not sharing the fruits of economic prosperity, the young and those low-income groups in particular.

STAGNATING POLITICAL BARRIERS

What makes the deep-seated problems in Hong Kong such a hard nut to crack? The reason is complicated, according to observers, partly due to the containment in the current political structure that leads to governance difficulty, partly due to a doctrinaire implementation of the principle of “small government, big market,” or laisser faire, and most importantly due to the opposition’s “say no for none’s sake” that stirs political confrontation and sends Hong Kong into a dilemma of discussions without decisions, or making decisions without execution.

Over the past 22 years, the successive HKSAR governments have tried many times to tackle these problems by rolling out affordable housing programs and narrowing the rich-poor gap.

For example, to make houses more affordable, Tung Chee-hwa, the first HKSAR chief executive, proposed in 1997 to build at least 85,000 flats every year in the public and private sectors, raise the homeownership rate to 70 percent in 10 years and reduce the average waiting time for public rental housing to three years.

Such plans, however, went aborted as home prices plunged in Hong Kong amid the Asian financial crisis in 1998.

“Since Hong Kong’s return, many economic and livelihood issues would not be as politicized as they are now, should the HKSAR government have introduced more policies and better social security arrangements to address those problems,” said Tian Feilong, a law expert of the “one country, two systems” center with the Beijing-based Beihang University.

To carry out major policies or push forward major bills, the HKSAR government needs to garner the support of two-thirds majority at the Legislative Council (LegCo).

The HKSAR government’s previous motions, be it economic policies or fiscal appropriations, were impeded by the opposition time and again at the LegCo, regardless of the interests of the majority of Hong Kong residents and the long-term development of the society.

The HKSAR government sought in 2012 to establish the Innovation and Technology Bureau to ride the global wave of innovative startups, diversify its economic structure and bring more opportunities for young people. Such efforts, however, were obstructed by the opposition at the LegCo in defiance of repeated calls by the public. After three years, the proposal to create the bureau was finally passed by the LegCo.

In another case, a Hong Kong resident, incited by the opposition, appealed in 2010 for a judicial review of the construction plan of the Hong Kong-Zhuhai-Macao Bridge. Though the HKSAR government won the lawsuit after more than a year of court proceedings, 6.5 billion HK dollars of taxpayers’ money had been wasted in the increased construction costs of the bridge’s Hong Kong section due to the delay.

As time passed, problems remained unsolved, so did public discontent.

Repeated political bickering stalled Hong Kong’s social progress amid the sparring, and the opposition created a false target and blamed the Chinese mainland for those deep-seated problems.

Lau Pui-King, an economist in Hong Kong, snubbed the opposition’s resistance of or even antagonism to the Chinese mainland, saying such thinking of secluding Hong Kong from the entire country could end nowhere but push the city down an abyss.

“Seclusion brings no development opportunity for Hong Kong,” Lau said. “Some youngsters don’t understand that Hong Kong would be even worse if it is secluded from the Chinese mainland.”

“To come out of the current economic difficulty, Hong Kong needs to be linked with the Chinese mainland much closer and more effectively,” she said.

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