What to do about Hong Kong

Great Debates
21

The key is who is going to decide what exactly is considered “subversive behaviour”. China does not have a very good track record of honouring the decisions made by the Hong Kong Court of Final Appeal. I also have doubts about how independent the Court really is. That is what is truly disturbing.

As someone who grew up in Hong Kong, I totally agree that Britain has done some not-so-nice things in the past. However, compared to what was going on in China in the past 150 years, I will take the Brits anytime, thank you. The chaos of the Chinese civil war doesn’t sound very appealing to me, and the stories that my parents told me about what they went through during the Cultural Revolution don’t sound any better either. If Britain did such a horrible job, please explain to me where did the ancestors of most Hong Kong people come from and why did they come.

It is true that China has opened up a lot in the recent past. It is a big country, it has a lot of resources and good people, and I have no doubt that it is going to surpass Hong Kong in every way in the future. However, let’s not forget that today in China people still get arrested for what they believe in everyday. The Internet is censored, and you don’t get to watch CNN. It is not that difficult to imagine why do people get a little bit uneasy when dealing with the Chinese government.

Some people may be cheering when the Britannia left, but I seriously doubt many locals were looking forward to the take over by the Chinese government. Personally, I think independence is the best thing, but this is never going to happen under the current Chinese regime.

22

What HK needs, and will have (2010-2015 is my estimate) is democracy. Independence, etc is absurd.

There is a danger that HK will become less relevant as other Chinese cities develop, though it will be HK’s own fault if this happens. My impression is that the current HK govt is seriously backward-looking and dimwitted here and can’t envisage the ways HK could maintain the gap between itself and the rest, eg by freeing up immigration of qualified people, freeing up the cartelized economy, getting its underclass re-settled in the Mainland and so on - letting HK turn into Manhatten East.

An interesting post-colonial economic culture clash is evident. Nearly all the people arguing for free-market solutions to HK’s problems are gwailos (there are some exceptions). Virtually all the clamor for subsidies, picking winners, state intervention, etc are HK Chinese (including most of the govt).

**China Guy: ** Extract from the UK-PRC Joint Declaration…
www.hkbu.edu.hk/~pchksar/JD/jd-full8.htm…

"58. The amount of new land which may be granted by the Hong Kong Government will be limited to 50 hectares a year. The limit does not include land granted to the Housing Authority for the construction of public rental housing. "

Sounds harmless, but it turned out to be deadly, when combined with negative real interest rates (a by-product of the US$ peg at a time of US economic weakness). It was put there at the insistence of Beijing, for reasons never totally made clear (unless you buy their explanation that they thought the UK would sell the land and run away). The bubble transferred massive wealth to pro-PRC tycoons (property developers enjoyed 60% profit margins at one stage) and the post-97 govt, and it made everyone feel good in the run-up to the handover.

Beijing’s culpability is not mentioned in polite society here these days. Then-Financial Secretary Donald Tsang mentioned it in early 97 and got a major slap on the wrist from his future big bosses.

23

They tested the sirens a few days ago, but everybody ignored them. People are no longer required to get off the streets, traffic no longer stops, etc.

24

Abe,

You gotta be kidding. Patten was widely regarded as the worst governer Hong Kong ever had among the locals. He was absent more than half of the time, and he did jack with the economy, including the property bubble and the dollar peg.
Hemlock,

The real interest rate is not negative, if it is, it would do wonders since everybody would take money out from the banks and invest. OTOH, the real interst rate is very high due to deflation. That combined with a worse than nothing financial policy has been messing things up real well.

25

Just in case some of you didn’t notice, Beijing has not at all interfered in Hong Kong. The last time the Standing Committee of the People’s Congress did anything was at the behest of the SAR government.

Minor but important detail.

26

Not contesting your quote, but within that parameter the HK government further limited supply. Also please note that does not include public housing land, where the majority of Hong Kongese live. I watched this pretty closely from the sales desk of several different investment house from 1994-1998. (Okay, maybe I’m getting senile, but it was something we all watched extremely closely and you know the property stocks all went roaring up whenever the supply got choked off by the HK gvt.)

Don’t know about the real interest rate being negative. It is fair to say that property appreciation through much of the 90’s outpaced the interest rate, thus fueling a speculative bubble. Of course, now the problem is with deflation.

Cenemora, two factual points. CNN is widely available in china, I get it on my TV. I just checked and the CNN main webpage just poped up. Not even sure if CNN goes off the air around June 4 any more. I last remember it being blocked for a few days around the anniversary in 1999 but not since then. Second, is that the Chinese government tries to censor part of the internet. But by it’s nature, the internet is very difficult to censor.

27

Same in Kaohsiung. I remember even 4 years ago, soldiers would force you off the street if you were moving while the siren was on.

Do you have a cite for this. It seem to me the opposite is true.
Hong Kong determined to boost English, education standards

Now, this is not to say that I think China, or the Chinese government, is great. I live in Taiwan, and pretty much agree with A-Bien when he says that there are two countries on either side of the strait. However complaints like

are, as China Guy already pointed out, irrelevant. Hong Kong has been like this for a long time

Chris

28

Since Hong Kong is a machine that runs on property, it’s not surprising that property tycoons should have large influence in its affairs. I never said otherwise. The main difference between today and yesterday, or influence from Beijing versus London, is–well, who would you feel safer running your pseudo-democratic area? Of course property tycoons have always had huge influence in Hong Kong, I am not disputing that. But throw Beijing into the picture, and keep in mind that most successful Hong Kong businessmen (and all the major property tycoons) have to be (or have to pretend to be) pro-Beijing, and you have a bigger problem than before.

Standards of English in Hong Kong have dropped quite a bit in the last decade–that’s why the government is now addressing the problem, which has been the subject of many (public) complaints (especially since its dithering on the subject of education post-Handover). I’ll find a cite later if I can, but in the meanwhile, try and get some service in English from utilities, the police (!), even government offices. Hong Kong English, it’s true, has always been the subject of many jokes, but it’s been getting worse for years.

Please spare me the stuff about the oppressed Chinese and so forth. That’s documented history, but hasn’t applied for years and years. Gone are the days when gweilos (foreigners) were discouraged from riding in the subway so as not to mix with the dirty locals. Today’s Hong Kong is much different from that picture from the distant past.

Yes, I hear the same complaining about ex-pats all the time, pretty much in most parts of the world. They come for a few years, they make ridiculous amounts of money, they act like they own the place, no respect for the locals, blah blah, it’s the same story in a lot pf places. Yes, quite a lot of people are assholes, especially when their plan is two or three years of intense earning on a package in Hong Kong and then back home with a chunk of cash. But–surprise–there are foreigners in Hong Kong who actually live here, and who don’t thrive on huge ex-pat corporate packages, and who don’t think the locals are hopelessly stupid and need Western guidance to get anywhere. In fact, the days of the ex-pat package are probably gone for good in Hong Kong, mainly because of the very different economy since the last two or three recessions. It’s true that Western foreigners in Hong Kong often get better pay, but that’s because they import certain talents (such as good English! Or management expertise, or financial experience, or any other special skills) that the city-state needs.

Today the racism in Hong Kong is, if anything, against Westerners. Not that it’s a serious problem by any means–Hong Kong is a very safe city, and instances of racism are unlikely to be more serious than deliberately poor service or jokes behind your back. It’s a bit pointless though, since most of the “troublemaker” foreigners moved away years ago.

So, China Guy, what is your point about Hong Kong? Your quick paragraph on perceived injustices doesn’t address anything. Colonies have seldom been examples of equality, agreed. We may criticize the U.K.'s rule of Hong Kong for many wrongs, certainly. In the meanwhile, the average Hong Kong Chinese pretty much throughout the history of Hong Kong have had a much better time (and pay) than their contemporary mainland Chinese, even under the cruel British boot (and let’s not forget all the distorting noise Beijing has always made and inspired over this subject). Still, by the 1990s if there had been a cruel British boot on Hong Kong it certainly was no longer there, and by most accounts I heard prior to that hadn’t been there for quite some time (barring the friction to be expected when different cultures co-exist)

As for Patten, Hong Kong’s loudest advocate of democracy at the time and one of the very few who dared speak thusly in the growling face of Beijing, I have a real hard time taking seriously the claim that he “was widely regarded as the worst governer Hong Kong ever had among the locals”. Well, the locals have been shedding their apolitical nature for at least a decade now, so it’s no wonder that they should find someone to chew out–particularly with the volumes of Beijing-inspired hatred of the colonialism in HK. I repeat, the prevailing attitude around Handover time in Hong Kong was one of great concern at looming China. And, not surprisingly, the same concern STILL exists today, although it’s been whittled by five years of soothing propaganda and distracted by almost as long of brutal recession.

Have a look at the “self-censorship” issue in the HK media (English but also especially Chinese media), I think it’s a taste of the regard Hong Kong people have for Beijing’s integrity and competence, and for their freedom to operate. Of course things could be a lot worse, but there is no way Hong Kong today is a better place for Beijing’s tender loving care–quite the opposite. That was the point. Talk of oppressed Chinese of decades ago, or of the higher pay afforded to imported talent doesn’t really seem pertinent to the argument.

29

Urban Ranger The interest rates that were negative were those in the early-mid 1990s, during the property bubble. Inflation was around 10% a year, interest rates were identical to those of the US, due to the peg, ergo negative in real terms.

What this meant was, you lost money by saving it in the bank, but made it by borrowing. Combined with the limited land supply, it was a recipe for a disaster. Apartments became speculative investments, even changing hands several times before construction was complete, and genuine home buyers were priced out of the market.

China Guy - the HK govt found the restriction a convenient excuse to limit land supply, which helped raise huge revenues apparently out of thin air. The fact that it didn’t apply to land for public housing is largely irellevant, as those flats couldn’t be traded. Private flats became a latter-day version of Dutch tulips.

30

Patten would not have stirred up trouble without approval from London. He even lost his seat at Bath, and he got this job precisely because he was a politician, thus John Major knew what he could do.

I do not see there was or is any major concern of a looming China. The last stage of “right of abode” in UK allotments was only half used up. This is as objective an indication of how the locals felt wrt to the PRC.

What “self-censorship?”

Oh, one more thing. Do you know the Brits publish an annual review of Hong Kong ever since the handover?

31

Hemlock - so does this mean that you agree the colonial government limited the land supply (substantially below the cap demanded by Beijing)? If yes, then the entire blame of the current horrendous property problem can be laid at the feet of the colonial caretakers that were active participants in the entire bubble. Just curious, did any of those land auction revenues go to London?

Abe my point is that perhaps the British Colonial Government looked good relative to Mainland China, but that doesn’t mean they actually were good on an absolute basis. Most people including myself would say they did at least a minimally decent job, but there are plenty of issues that they could have done a whole lot better. You’ve said the exact same thing, and then justified it by saying it would have been worse if China had been in charge all along.

I have kept myself focused on the OP and not on the relative merits of China versus British rule, which would be a pretty one sided debate. However, back to the OP, Britan had 99 years in which to foster a thriving democracy, a competitive economy, free press, equal rights, ad nauseum. The fact of the matter is the colonial government fell far short on all of these and many other things.

Ex-pat packages are not as prevalent as they once were, but just go out to the Mid-Levels or the American Club and you’ll see that they are far from extinct. Another reason that there are less expat packages is because a lot of government positions are no longer filled by British civil servants, and therefore do not qualify for expatriate benefits. We’re just going to have to agree to disagree about whether the local Chinese were discriminated against. I don’t mean ancient history, I’m talking up until 1997.

32

China Guy - my memory’s a bit hazy, but IIRC there were occasions when the colonial govt announced a tightening of land sales in response to downward lurches in property prices (which happened 92-3 or so). Remember, no-one thought the bubble was a bubble (ie a bad thing) at the time, it was seen as evidence of HK’s wonderful future. As I say, Donald Tsang pointed the finger at Beijing in early 97 when he hinted the rises were unsustainable (he actually advised people to wait rather than buy), and got a major blast from Beijing that suggested he’d touched a sensitive point. Only since 97 has the bubble been seen as a bad thing. If it were possible to blame the Brits, someone would have done it by now. Oddly, they haven’t.

And no, no local govt revenues ever went to the UK govt from any colony (or vice-versa) except for defense costs or as donations during war. The policy was that colonies paid for themselves, unless they were of strategic value, but anything they made, they kept. (Of course, British businesses made and repatriated profits from colonies in no small way, and periods of protectionism would have required colonies to buy British at times).

You say
Britan had 99 years in which to foster a thriving democracy, a competitive economy, free press, equal rights, ad nauseum. The fact of the matter is the colonial government fell far short on all of these and many other things

Fell far short compared with where? Certainly not compared with most other parts of Asia in the 5 decades to 97. For a bunch of semi-competent buffoons, they did pretty well. Look at GDP growth, human rights records, life expectancy, etc.

Expat packages. These were becoming unfashionable in HR circles during the 90s in favor of “equal pay for equal work” - Only a minority of white faces you see these days are enjoying such perks, and that’s simply because they’ve been relocated. Companies do the same when posting a HK employee overseas. There are definitely some holdouts, with owners of old Hongs perversely determined to force their staff to live in overly lavish apartments (the staff would prefer the cash). But I think in most places (eg, the Mainland), localization is the big thing these days - nothing to do with the handover.

33

Excuse me, but there were plenty of dire warnings about the property bubble in 93, 94, and later in the run up to the 97 handover. It was pretty much all we ever talked about on the trading desk, and it was pretty much all that the institutional fund managers wanted to know about. It was big in the western and chinese press. I can’t cite you off hand, but there were many times that I can remember when the government halted land sales to “stimulate the property market for the good of Hong Kong.”

Pax Britannica did decently. No one is arguing that. But, just focus on democracy. Britan had HK for 99 years, and they never did jack to produce meaningful democracy. Most of what they instituted, they tried to do in the final 2-3 years before the handover. Did they do better than Pol Pot and Mao and Chiang Kai-shek and Mahathir and Lee Kwan Yu? I wouldn’t exactly call that major league competition. :slight_smile:

I’ve been hearing the “localization”/expats ain’t what they used to be refrain for 20 years now. Like to see some hard numbers, but this has been the trend for the 20 years since I first came to Asia, and I suspect has always been the trend.

34

I claimed that London did a good job with HK, without necessarily going into comparisons. I even raised the point about the tendency of colonies to be less than perfect. But, all things considered, Hong Kong (leaving aside historical racial problems prevalent under almost all such conditions) was and is a marvel of a city.

Free press: check. Competitive economy: a bit vague but check, until the woes of recent years anyway. Equal rights: check. Thriving democracy: just about impossible to consider, unless you suggest that China would be all right allowing a bastion of full-feldged democracy right in its side. However, once the territory reverted to China, HK was left with (supposedly anyway) autonomy except in defense and foreign affairs–negotiated by the UK if I remember correctly. It has been for several years–decades–a free society with legally protected rights. The Basic Law was passed in 1990, but even before 1990 there are few reports I have heard of the injustices you allude to, unless you go back years.

How could you tell just by looking in these places? True, there are some ex-pat packages today, but they are few and far between. The ex-pat package is no longer prevalent. It is, if not extinct, endangered. And not all the Western people you see in the mid-levels and the American club are ex-pat package material, not by a long shot. There are a lot of Westerners who live in Hong Kong, and who couldn’t possibly be on an ex-pat package. My wife and her family for example–her parents came to HK almost 40 years ago. They’re successful entrepreneurs, like many of their friends. They hang out in the American Club and a bunch of other clubs like them–and aren’t on any sort of ex-pat package. Their friends, all of them old China hands, also hang out in the same clubs. I live in the Mid-Levels, and I’m not on an ex-pat package–nor are practically any of my friends near here. Just looking for Westerners in an area or place could give you the wrong impression as far as ex-pat packages go.

I still don’t follow what kind of discrimination you are talking about. Put two ethnic groups together and there is always friction, especially in colonies. But some example of what you are talking about up to 1997 might help–my memory is a bit hazy on that stuff (I certainly remember being discriminated when I arrived in HK, and that was before 1997–and I’m not British or even a native English speaker with a British-sounding name).

35

Model capitalistic economy – bwahahahahahahahahahahahaha

The Hong Kong government was quite skilled at selling the story that Hong Kong was the most capitalistic place on earth. And when talking about restaurants, retail shops, factories, exporters, it was to a real degree true. However, if you look at the main drivers of the underlying Hong Kong economy, it was hardly a model of capitalism. Actually, it was quite the model of a colonialist economy.

Banking was dominated by HSBC (and it’s majority owned Hang Seng Bank) and Standard Chartered Bank. The telecom operator, Hong Kong Telecom (majority owned by Britians Cable and Wireless) had a complete monopoly on domestic and international calls until 1995. Power was supplied by two companies (HK Electric and China Light and Power) exclusively up through the late 1980’s and price determined by a government board and not the market. The ports were again hardly models of competition since the rights were granted by the government and prices controlled. Only a few “hongs” such as Jardines and Swire were so deeply involved in almost every aspect of the economy they would have been considered monopolists or at least oligopolists anywhere else. Jardines were former opium pirates that got rich smuggling and selling products illegal in Britain to China. Supermarkets and the food supply was limited to two major players (Welcome and Park n Shop, and refer back to the “Hongs” as to who owns those) until about 10 years ago.

The most egregious were the property developers. 4 and perhaps 5 players have dominated property for the last 30 years (Cheung Kong, Sun Hung Kai, Henderson and 1-2 others I can’t remember off hand but can’t be bothered to look up). The government limited supply in an unholy axis of evil that has negatively affected just about everyone in Hong Kong and will do so for probably the coming decade.

Feel free to look up all of the above issues. Please excuse me as I’m going off of memory instead of spending a few hours verifying the above, but since this is a freebie instead of a commissioned piece this is all you’ll get. There may be a minor nit or two you can pick, but the broad strokes are easily checked and will bear out.

On democracy, in the post WW2 world order, the general trend was to off load colonies (eg grant independence) and/or increase democracy and local rule. Look at India for example. But in the case of HK, the colonial government had some right nasty anti-sedition laws on the books and used them on trouble makers, labor organizers, and ironically enough those lobbying for real democracy. So, there was a golden opportunity in the late 40’s to institute democratic reform while China was caught up in a civil war. There was an opportunity during the 1950’s. Look up the Hong Kong riots in the 1960’s, which were very anti colonial in nature and funny enough mirror such movements taking part around the rest of the world. Thus, from 1898 there was no “opportune” time to institute meaningful democratic reforms until Gov Patten set foot in the fragrant harbour in 1994 (or was it 1995). But then the time was perfect because HK was going to be handed over to the Chinese government 3 years later. Uh-huh.

I think HK should have democracy, but Britain should admit to a huge chunk of the blame for why Hong Kong doesn’t.

36

[hijack]Does any one know why when I use quotations or an apostrophe, it comes out with a random Chinese character? I use XP, and it does have Asian language capabilities enabled. Thanks.[/hijack]

37

IIRC, HSBC didn’t buy Hang Seng until the late '70s.

My view on this is the two main chains are trying to squeeze out everybody else. There were more smaller chains and independent stores earlier.

A couple of main ones you forgot is Wharf and Hongkong Land (yet another company controlled by Jardine).

Speaking of which, are Jardine and Swire the only companies with the really scandalous A-B share sheme?

38

IIRC, the scadalous A-B share scheme was actually 4 companies. I think the Pennesula Hotel parent company was one and maybe Lane Crawford. If you have a SCMP, you can look it up in the financial section.

Jardines of course hardly needs to have their Bermuda scam mentioned, where the controlling shareholding family owns about 11% of the stock.

The stock exchange also had dramatic government intervention. First was in the wake of the 1997 Wall Street crash, when the exchange was shut for IIRC 4 days (allowing time for a lot of players to do back door deals).

Second of course was in 1997 when Yambo spent was it USD20 billion to prop up the stock market, all in Hang Seng constituent stocks, and the bulk of those in the developers and banks. Of course, this was a few months after the handover. That pretty much destroyed the free float on the stock exchange, volume has never been the same, and there is a huge overhang on the market. Very good case in point why governments have absolutely no business directly interferring in the stock markets.

Urban Ranger, the two dominant supermarkets got that way via a government sponsored cartel, along with banking, telecoms, ports, power, and property. Don’t forget the old rice cartel as well, which was another government sponsored cartel.

39

Opps,first was in the wake of the 1987 Wall Street crash, then a decade later when the government sucked about 50% of an already small free float out of the market.

40

There are a lot of monopolies and cartels here. Even pigs, cattle and wheat flour are controlled. Pigs and cattle at 100% and flour at more than 50%.

Oh, and don’t forget the cartel of oil companies.