By Chan King-cheung –
In the past two years, everything has gone wrong in Hong Kong. Economic growth has slowed down. The mainland economy has entered a period of structural adjustment, dealing a blow to sectors such as finance, tourism and retail which thrive on a booming Chinese economy or the opposite. Political storm has erupted one after another. Both the Occupy Central movement and the Mong Kok unrest have exposed the growing violence in civil disobedience campaign. Government-people confrontation and government unpopularity have doubled the difficulty of governance. Hong Kong has suffered from a list of economic, financial and political ills. Worse, there are no effective recipes for the illness.
That said, compared with the losses caused by two financial crises in 1997 and 2003 respectively, the city’s property prices have not plunged. The financial markets have operated normally. The Treasury is still awash with massive surpluses. True, many people feel upset about the present situation. The troubles we are facing are by no means fatal.
A research report compiled by the Trade Development Council has predicted the 2016 Hong Kong economy will grow by one to two per cent, down from 2.4 per cent in 2015. Total exports of goods in 2016 will roughly stay at the same level last year. Labour market will remain tight. The three-month adjusted unemployment rate by the end of January is 3.3 per cent, which is close to the record low in 18 years.
The stable financial market can be attributed to robust supervision by regulatory bodies. Property developers and ordinary families have learned a lesson and kept a low loan-to-lending ratio. As debt level is low, the city will not run into financial troubles even when the economy worsens. Confronted with shrinking purchasing power of mainlanders and a rise of U.S. interest rate, a steady drop of property prices is normal. Thanks to the financial strengths of developers and homeowners, they are not in a rush to “deleverage” by selling their flats. The current fall in property prices represents an orderly adjustment, not a free fall.
Hong Kong has faced no shortage of crises in the past. Thanks to the resilience of Hong Kong people and the flexibility of markets, we have always overcome the difficulties. Our economy often rebounded one to two years after a crisis broke out. Our elites have tackled economic crises easily.
What makes Hong Kong stuck in the past two years, however, is not economic, but political factor. Worse, it is political factor Hong Kong cannot control. Hong Kong people are good at handling business and financial problems because flexibility and versatility are the keywords in seeking profits. But when it comes to tackling political conflicts, principle and stance are the keywords. Some people are prepared to accept no deal whatsoever at all cost. Our traditional elites with power seems to be unable to grapple with the increasing complexities of Hong Kong politics
China’s policy towards Hong Kong had been driven by the imperatives of economy and trade under the principle of mutual benefits and a win-win situation. It has gradually shifted towards a self-oriented policy with the principle of “one country” prevailing. Under the new approach, not only Hong Kong’s economy and trade has been incorporated into the nation’s Five-Year Plan the city’s political development and governance has also had to dance to the key rhyme of the mainland in guarding against “foreign forces.” Hong Kong’s governing team has always been a “basket of sand” with no ruling nucleus. It is no surprise they find no way in tackling the current political crisis to put the city back on the right track.
Chan King-cheung is a veteran journalist. He writes on political and economic issues in Hong Kong and China. This article was translated from his regular column in the Chinese-language Ming Pao.
Photo: VOHK Picture