Azernews.Az

by Alimat Aliyeva

Hong Kong has announced plans to reduce 10,000 civil service positions as part of efforts to address its growing budget deficit of $12.9 billion, Azernews reports. The move comes alongside a push for large-scale artificial intelligence implementation to tackle economic challenges, geopolitical tensions, and a sluggish real estate market.

Financial Secretary Paul Chan stated that the job cuts will take effect by April 2027, marking a 2% reduction in the civil service workforce over the next two years. Additionally, public sector salaries will be frozen this year. As part of broader fiscal consolidation measures, government spending is set to decrease by 7% by the end of the 2027-2028 fiscal year, according to Reuters.

Hong Kong is also increasing investment in AI and high-tech industries to boost economic diversification. The government has allocated $130 million to support the Institute of AI Research and Development, aligning with China's broader push for technological self-sufficiency.

The city’s economy remains vulnerable to external pressures, including slowing growth in China and ongoing U.S.-China tensions. Earlier this year, the U.S. imposed an additional 10% duty on goods from China and Hong Kong.

Meanwhile, Hong Kong’s finances have been strained by a sharp decline in land sales revenue, traditionally a major source of government income. Housing prices have dropped by nearly 30% over the past three years, with land contributions now accounting for only 5% of the treasury, down from over 20%.

As Hong Kong shifts focus toward AI and innovation, these measures are expected to help mitigate financial pressures and strengthen its position as a global financial and technological hub.