Chinese tourists are set to enjoy expanded duty-free shopping benefits in Hong Kong, as Beijing plans a substantial increase in the current purchasing limit, according to a report from the Hong Kong media outlet, Ming Pao, cited by Asia Gaming Brief. The new adjustment is expected to elevate the duty-free quota up to six times its current amount.

The announcement was then confirmed by China Morning Post, which reported that the limit was raised from HK$5,400 to HK$16,100 if visitors buy goods at duty-free stores at border crossings, or HK$12,900 for other shopping. Moreover, the new duty-free shopping allowance for mainland Chinese tourists visiting Hong Kong and Macau will begin to be implemented on July 1 at six border crossings.

The Hong Kong government estimated the measure would bring about a significant increase in tourist spending in the city by at least HK$8.8 billion every year. The increased consumption that would be generated by this measure would then add between HK$2.7 billion and HK$5.4 billion to the city’s economy.

A More Appealing Shopping Destination

Even though Hong Kong typically does not levy tariffs on most imports and exports, items bought in the city and taken to mainland China are taxed if their value exceeds the duty-free limit. This expected policy change is set to greatly increase Hong Kong’s attractiveness as a shopping destination for mainland Chinese tourists.

Hong Kong has been striving to regain its status as a premier shopping hub. Historically, mainland visitors have comprised the largest segment of tourists to Hong Kong. However, in recent years, the city has faced increasing competition from nearby destinations like Hainan, a tax-free island, and Macau, known for its casinos. Japan has also seen a boost in duty-free shopping, aided by a weaker yen, which has attracted more visitors from the region.

The adjustment in Hong Kong’s duty-free limit mirrors a similar policy change in neighboring Macau earlier this year. Since March, the new Hengqin Special Tariff Zone policy has increased the duty-free limit for visitors entering Macau through the Hengqin border from RMB5,000 ($688) to RMB8,000 ($1,100).

As Beijing moves forward with this anticipated increase in the duty-free limit for Hong Kong, it is expected to enhance the city’s competitiveness in the regional shopping landscape. Mainland Chinese tourists will likely find renewed incentive to shop in Hong Kong, benefiting from the higher allowance and potentially revitalizing the local retail sector.

Hong Kong’s retail market has historically relied heavily on spending by mainland tourists. This policy shift could stimulate economic activity and offer a boost to various sectors, from luxury goods to everyday consumer products. The potential increase in tourist spending is also likely to provide a much-needed lift to the city’s economy, which has been working to recover from the impacts of the COVID-19 pandemic and ongoing global economic challenges.