The future of Hong Kong is very worrying for many Hongkongers. The opposition camp's plan to launch the "Occupy Central" campaign could ruin Hong Kong's reputation as a leading international financial and commercial center. Meanwhile, the government is alarming the public by admitting that, sooner or later, Hong Kong will have structural fiscal deficits.

Following the 2014-15 Budget, recently handed down by Financial Secretary John Tsang, the Working Group on Long-Term Fiscal Planning (the Working Group) delivered a report on the current state of Hong Kong's public finances. It also offered projections on the government's long-term fiscal position up to 2041-42.

Although the Working Group said Hong Kong's overall fiscal position in the short to medium terms remained healthy, it warned that in the long-term the government's fiscal position would deteriorate. Even if the successive administrations adopt measures suggested by the Working Group, Hong Kong can only defer projected structural fiscal deficits for seven to 15 years. And if we take the territory's worsening political situation into consideration - something neglected by the Working Group - it is possible Hong Kong may have a structural fiscal deficit in less than seven years.

The financial secretary stressed that the Working Group's projections were a warning for Hong Kong people: If government expenditure keeps growing at the expense of revenue, a structural deficit will be inevitable. However, so far the government has only advocated a "Future Fund" to contain spending without other measures to encourage Hong Kong to become a knowledge-based economy.

As the financial secretary explained, the "Future Fund" will comprise the Land Fund and a portion of future fiscal surpluses. This means future governments can draw on the fund to finance infrastructure projects. However, the city cannot build a knowledge-based economy simply by relying on infrastructure projects - even ones as large as the Hong Kong-Macao-Zhuhai Bridge.

Professor Francis Lui, a member of the Working Group, said in the Economic Journal on March 28: "The infrastructure projects are conducive to GDP growth rather than sustainable economic development. Only sustainable economic development can produce sustainable revenues."

Another local economist Li Kui-wai, an associate professor of the Department of Economics and Finance at City University of Hong Kong, stressed in this newspaper on March 24 that the "help-the-poor" campaign launched by the government was irrelevant to a knowledge-based economy.

The fact that the government has yet to really tackle these problems is clearly frustrating many people.

Hong Kong's future lies in its economic integration with the mainland as well as its political relationship with the central government. At the moment, it's more important to promote harmony between Hong Kong people and their mainland compatriots. The apparent rising enmity among a minority of Hongkongers towards mainlanders - reflected in so-called "Driving Out Locusts" movement - must stop. In addition, the "Occupy Central" campaign will also severely damage political relations across the Shenzhen River. These things will have a negative effect on Hong Kong's future.

The political tension in Hong Kong is increasing so that the 2014-15 Budget, only announced a month ago, has largely been forgotten. The community is obsessed with politics - particularly the ongoing public consultation on constitutional development. A responsible government should maintain a balance. It should not only work to implement universal suffrage, but also try to stop the "Occupy Central" campaign. At the same time, it has promoted measures to speed-up the city's economic transformation.

Society should shift its focus from political campaigns to economic development. If the opposition and their supporters become addicted to endless political struggle, then Hong Kong's future really is worrying.

The author is a current affairs commentator.

(China Daily 04/02/2014 page9)