By Donny Kwok and James Pomfret

HONG KONG (Reuters) -Hong Kong's leader pledged on Wednesday to reform and revive the economy and financial markets including slashing liquor duties, while seeking to improve dire living conditions for the city's poorest.

John Lee, in his third annual policy address, highlighted the need to "deepen our reforms and explore new growth areas," in line with China's national priorities and recent calls from Beijing for all sectors to unite to promote development and economic growth.

Hong Kong's small and open economy has felt the ripple effects of a slowdown in the Chinese economy and political tensions including a years-long national security crackdown.

It grew by 3.3% in the second quarter from a year earlier, and is forecast to grow 2.5%-3.5% for the year.

Although tourism has rebounded since COVID, with 46 million visitors expected this year, consumption and retail spending remain sluggish, while stock listings have dried up and capital flight remains a challenge.

Lee told Hong Kong's legislature that duties on liquor would be slashed to 10% from 100% for drinks with more than 30% alcohol content, in a bid to stimulate the trade in spirits. The lower duties apply only to spirits priced over HK$200 ($26), and for the portion above that amount.

The move would "promote liquor trade and boost development of high value added industries including logistics and storage, tourism as well as high end food and beverage consumption," Lee said.

He hoped the move would benefit Hong Kong in the way that it became an Asian wine trading hub after wine duties were abolished in 2008.