Hong Kong leader John Lee urged residents to take advantage of new measures announced by Beijing to facilitate cross-border exchanges as he vowed to further integrate the self-administered city into the country’s development plans.

China’s gift of a pair of giant pandas will help attract tourists and a new five-year travel card offered to non-Chinese permanent residents in the former British colony will bolster the Asia finance hub’s advantage, the chief executive said in a regular press briefing on Tuesday.

Lee called the travel measure, announced on Monday on the anniversary of Hong Kong’s return to Chinese rule, a “policy breakthrough” that demonstrates the strength of the “one country, two systems” framework governing the city. He said the government will promote the arrangement to foreign business chambers.

Hong Kong has struggled to regain its growth momentum after its pandemic isolation and crackdown on dissent dented its reputation. A slowdown in the Chinese economy has also hurt the city’s key retail and services sector, while a decrease in deals has dragged on its financial industry, another pillar of its economy.

The yet-to-be-named pandas are expected to arrive in months and add to an existing pair that serve as an attraction. Another policy announced by Chinese authorities will give Hong Kong companies more preferential treatments in tapping the mainland market under the Closer Economic Partnership Arrangement, he said, with details to be announced later.

The measures will better integrate Hong Kong into China’s Greater Bay Area economic cluster, comprising also Macau and nine mainland cities, he said. 

Growing transport links have helped a record number of Hong Kong residents to travel to neighbouring cities over holidays, leaving local shops empty on holidays and weekends. Retail sales fell for a third month in May, dropping 11.5%, in the worst streak since January 2021, according to official data released on Tuesday.

In a step expected to boost spending of Chinese tourists in Hong Kong, central authorities raised the duty-free allowance for mainland residents shopping in the semi-autonomous territory starting on Monday.

Lee urged residents to innovate to capitalise on the recent measures, but warned of challenges ahead citing unspecified changes in the economic circumstances.

“Hong Kong is now at a stage of transition because the different sectors of our economy will have to face new challenges because of the fast-changing economic situation around us,” he said. “There will be special areas where we can make use of the scientific advances to help us to produce more, but there are also changes we need to accept as we have gone through previously many times.”

  - Bloomberg