Invasion of the Tiny Brokers

Hong Kong’s small stockbrokers are technologically backward, lack economies of scale and account for a declining share (now just 10%) of trading. It is hardly surprising that they oppose modern regulatory reforms that would keep the city’s market world-class – the amazing thing is that they succeed.

Bloomberg asks why, and concludes that it comes down to the city’s ‘unique political system’. Its report suggests that the political system failed to evolve with the stock market, and this accidental quirk has left the small brokers a disproportionate number of votes in the 1,200-strong Election Committee that picks the Chief Executive.

However, if Bloomberg looked around, it would find Hong Kong full of these accidental quirks – groups able to convince government to protect outdated models and practices when change would benefit the wider community and economy. A well-known example is the holders of taxi-licences who got Uber banned. You could include property and other cartels, the rural Heung Yee Kuk lobby, and various professions.

These are interests that were co-opted by the Chinese government as a local support base back in the 1980s and 90s. They subsequently received privileged positions in the election body and legislature. A superficial reading of the dynamics is that this gives them clout to push government around (hence the brokers bullying Carrie Lam in the Bloomberg story).

But this presumes that they have actual votes to wield in an actual competitive electoral process. The reality is that Beijing chooses the Chief Executive first, and the ‘election’ that the brokers and others go through is a rubber-stamp charade. As shoe-shiners who will grovel to the Communist Party in an instant, the brokers (taxi-owners, developers, HYK, etc) will obey instructions anyway. (And in Carrie’s case, she didn’t even want the damn job.) So what’s with the wheeling-and-dealing-for-votes thing, as if this were a genuine Western-style lobby-corrupted democracy?

The best explanation lies with Beijing’s obsession with control – or its insecurity.

Anyone connected with a business ‘functional constituency’ will know that Beijing’s pre-ordained winner in a Chief Executive ‘election’ does indeed beg for support (for nominations and then votes). Beijing’s local Liaison Office seems to be fairly hands-off in letting its co-opted sectors extract favours from the ‘candidate’.

This might seem like a reward for loyalty. But why value the 1980s-era vested interests’ loyalty so highly in this day and age? These same sectors hold Hong Kong back economically, damage it socially and sap the hapless Chief Executive of credibility. They are more trouble than they are worth. Beijing would surely be better off ditching the geriatric parasites and dinosaur-dynasties and winning the support of the entrepreneurial, innovative, techie sectors that would at last have room to grow.

But Beijing is paranoid, and it does not see alternative or replacement ‘friends’ in a city it increasingly alienates. So it clings to these sorry and shabby old vested-interest relics. They, unsurprisingly, milk the situation for all it’s worth. (This may be above their heads, but they even have an interest in perpetuating the HK alienation-CCP paranoia cycle.)

The Bloomberg analysis is that the ‘political structure’ causes the problem. It might be better to say the reverse – the problem causes the political structure.


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Still room for at least 40 million more

Hong Kong’s officials forecast tourist numbers will rise to over 60 million this year. Yet they whine that visitors are staying for ever-shorter periods. And publicly-subsidized Disneyland makes a loss yet again (HK$345 million – peanuts compared with the billions in land value and opportunity costs the white-elephant Mouse has swallowed).

It seems the more tourists we cram into Hong Kong, the more trouble the industry is in. And that makes perfect sense: tourism is undermining itself.

The obsession with tourist numbers arose from an obsession with Mainlanders-as-buyers-of-luxury-crap hoovering up Euro-trash brands and enriching the city’s landlords. As Mainlanders move on to more sophisticated vacationing, visitors are on average staying for less time and spending less – but all the tourism sector can think up is increasing throughput or adding increasingly desperate ‘attractions’.

Meanwhile, Hongkongers with sense, taste and a few days to spare head off to Taiwan or Japan. They are mostly not going for phony, culturally alien theme parks or tourist magnets (though some exist). They are not going to buy overpriced junk. Many are not even drawn specifically by scenic countryside or historic sites (though both countries have them). They go because they are nice places.

The transport is great. The food is great. The environment is clean, quiet, safe and pleasant – genuine communities with relaxed people enjoying a high quality of life in accordance with their own standards and customs. They are nice to live in, and as a result they are nice to visit.

All Hong Kong’s greedy, parasitical tourism industry and frenzied bureaucrats know is pushing up landlords’ rents and developers’ profits. And that means eradicating street markets and street food, and local stores, and replacing them with malls, malls and more sterile malls.

Having swamped Central and Sheung Wan with Koreans promised a fake ‘Old Town’ experience, officials are now set on wrecking poor Shamshuipo. After replacing the old hardware stores and groceries with international ice-cream, cake, perfumed-candle and other chains, the slash-and-burn tourism industry will move on to pulverize and ethnically cleanse another neighbourhood into a concept-theme-zone-hub.

Obviously, the ‘tourism’ lobby couldn’t care less that they are wrecking Hong Kong as a place for the city’s own (irrelevant) people to live in. But they’re so dumb, they’re wrecking it as a place worth visiting, and ultimately being a landlord in. The only silver lining: the selfie-snapping guidebook-obeying North Asian zombies will probably finally go away.

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Did some ironing over the holidays….

Hey, they’re only for the security guards. Note inspired use of 1990s-era Cathay Pacific first-class table napkin, for extra-auspicious festive good-fortune and prosperity vibes.

A few links to unleash Dog Year…

The UK’s Guardian applies its juvenile clueless trendy hip anti-orthodoxy to a subject Hong Kong can relate to, getting suckered into publishing a Mainlander’s dismissal of British-Chinese culture as outdated and false. By which she means Cantonese-based. Forget ‘southern’ lion dances, she says, and get authentic – selling Burberry products to shoppers from the glorious motherland. Apart from confusing community traditions with tawdry tourist attractions, she claims to think that ‘kung hei fat choy’ is Canto for the Mandarin ‘xin nian kuai le’ when it is fairly recognizably ‘gong xi fa cai’ (‘sun lin fai lok’ to anyone who wonders if she is feigning this obtuseness).

She incurs the wrath of right-thinking people everywhere (here, here, here, etc) for this United Front-aligned neo-Han-nationalist piffle. (Or could it be some sort of parody-satire-humour thing that didn’t quite work? Always hard to tell with the Guardian.)

On the subject of ‘tawdry’, the Communist Party culture-warping and historical revisionist fun continues over at CCTV’s Spring Gala (whaddya mean you missed it?)  The superlative-defying garishness-as-propaganda extravaganza introduced viewers to a recovered national treasure – a scroll called ‘Landscape Map of the Silk Road’ supposedly from the early Ming Dynasty. It is in fact a Qing-era work called ‘Mongolian Landscape Map’; it still pre-dates the German-devised phrase ‘Silk Road’.

More truth-merging-with-fantasy… For hardcore Alibaba watchers only, the latest instalment from Deep-Throat IPO, following the announcement that Jack Ma’s company would buy one third of (his as well) Ant ‘recent setbacks’ Financial – in which the Dick Fuld Banker-Speak Translator spews out such horrors as ‘…Transfer Fake Subsidiaries and Bad Assets in Exchange for a Boatload of Promises-to-Pay and a 33% Equity Stake … to be held in yet another Fake Kick-back Subsidiary…. Paving The Way For Huge Future Fake Asset Write-Ups’.

As an antidote to all this, Quote of the Day is Jake Van Der Kamp’s definition of Belt and Road: ‘…a storm of hot air that sycophants emit as evidence of their eagerness to obey commands from Beijing’.


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HK government continues spring-cleaning

Just time for Hong Kong to squeeze in a little more Mainlandization before the New Year festivities.

A court rules that civil servants can bar a candidate from the ballot provided their telepathic induction is augmented with ‘cogent, clear and compelling’ evidence that the individual would not uphold the Basic Law. The judge also says the would-be candidates should have a reasonable opportunity to respond. This leaves a little wiggle-room for future cases, but misses the fundamental question of whether to disagree with a law is the same as planning not to uphold it.

Another court rejects an attempt by Occupy leaders to throw out ‘incitement to incite public nuisance’ charges against them. This is probably no bad thing. The prosecutions are clearly political and aimed at high-profile individuals, and the action has been dragged out for years; the more ludicrous the charges, the more despotic the government looks. If Beijing was smart, its officials would nudge the local administration into dropping this no-win mess. Depending on final verdicts/sentences, either the government or the judiciary must come out of this with (further) tarnished reputations.

Meanwhile, prosecutors seek to add more incitement charges in the cases against another group of activists.

The never-ending stream of legal cases aimed at punishing opposition or rigging elections is numbing – this is what the whole thing looks like.

The deterioration of rule of law is one-way, and local officials and judges with a conscience are ultimately powerless to resist it – Beijing is now prepared to override any administrative or legal obstacles through Basic Law ‘interpretation’ or other devices.

One big line to cross will be the criminalization of opinion, whether through Article 23 national security laws or some sort of Beijing edict. It would start with a ban on calls for Hong Kong independence, then extend to calls for the overthrow of the Communist Party. Such restriction of freedom of expression (currently limited to flag-desecration and imminent national anthem laws) would imply formal censorship of some sort.

Also inevitable: measures to curb the influence of foreign judges in Hong Kong courts, which is already coming in Macau. It’s probably only a matter of time before lawyers who defend opposition figures start coming under greater pressure.

The suppression has already started. The authorities are penalizing stock analysts for disrespectful opinions of Mainland companies, and short-sellers say they are avoiding Hong Kong because of fears for their safety (as are, I hear, some corporate investigators). First they came for the scumbags, and I did not speak out…

To prepare for a gloomy Dog Year, I foresee tomorrow probably being a goof-off, so declare the four-day weekend a five-day one – and open.

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Today’s dumb idea…

Let’s push housing prices up even further by subsidizing buyers currently unable to afford homes. The proposer seems to think that earmarking proceeds from land/housing-based revenues for this purpose makes the idea elegant. But public money raised from any source would have the same result – more cash being bid for the same number of units, resulting in… Ah! Higher margins for developers. Maybe that’s the point. Carry on.


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Fake interview

Posing as an applicant for the new post of Pilates Instructor, I sneaked into the South China Morning Post’s new headquarters over the weekend. As you would expect of a high-tech trendy company, the place offers a fitness zone (ping-pong table, yoga mats, a surprising number of punch-bags), an in-house acupuncturist, massages, pet-grooming facilities, a Mandarin-medium crèche with goose-stepping for toddlers, and a luxury café. Also, a very convincing-looking British-style pub – with its own brand of beer (a quite decent IPA).

On a darker note – there’s the Punishment Chair, in which disobedient staff members are disciplined…

As staff unpack their boxes, the mood is somewhat subdued. Not everyone is impressed by the paper’s latest scoop – a forced confession ‘interview’ with kidnapped and re-kidnapped publisher Gui Minhai, hosted by Beijing’s security forces. For objections, see here (with links to other background) and here; some might say hmmm or think bad-karma-for-not-fact-checking; reporters’ responses here and here.

The main complaint is that the media accepting the invitation legitimized the grotesque display, enabled the Communist Party’s propaganda machine to achieve its purpose, and arguably abetted a human-rights abuse (assuming Gui’s performance followed some form of torture).

The press could justify going on the grounds that the event was indisputably a news story and it would have been unthinkable not to attend. But are they chasing the truth or helping to spread lies? The SCMP report blandly conveys Gui’s statements without a hint of skepticism (his tale suggests serious concocted weirdness), but at least quotes an Amnesty International guy suggesting it was rehearsed.

Of course, under their Beijing-friendly ownership, the SCMP and Oriental Daily exist to serve the Chinese party-state’s interests in cases like this. They wouldn’t have been invited to this stunt otherwise. It wouldn’t have happened otherwise. Dragging journalistic ethics into this is beside the point.

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Vatican joins CCP-worship cult

With Western companies like Mercedes, Marriott and Zara engaging in the most humiliating and unseemly Panda-groveling, perhaps we should not be too surprised to see a senior Catholic official effusively praising China. We might, however, raise an eyebrow at the academician-bishop concerned for specifically commending the Communist regime for adhering to the Church’s ‘social doctrine’ (here and here).

This follows a recent visit to the country on a diplomatic mission, which left him hugely impressed by the absence of shantytowns and drug-taking youths, and the tons of human dignity, national conscience and focus on the common good. He somehow neglects forced abortions, persecution of religions and suppression of human rights – which one Catholic commentator points out are ‘not optional extras’.

There is a long tradition of this one-trip-and-you’re-maximum-bullish sort of thing, going back to Lincoln Steffens and Edgar Snow up to modern-day investors. Among the less gullible, there is also a provocative tradition of Commie-hugging-as-anti-Americanism – say among 1970s-style trendy leftists. The bishop does this when he uses China’s enlightened wonderfulness (‘moral leadership on climate change’) as a counterpoint to evil Yankee individualist capitalism (‘oil multinationals manage Trump’).

The bishop is from Argentina, as is the current Pope. During the 1970s, that country was run by the usual Cold War third-world US-backed right-wing dictatorship/military regime, which sent death squads after opponents. Many social-activist priests and nuns were tortured and killed, though the Catholic hierarchy officially pretty much supported the junta’s fight against godless Communists.

So to some South American Catholics, it is possible to view Communism nostalgically as a social-justice movement. To others, the Church’s past tolerance of fascism as a bulwark against Bolsheviks (in which Pope Francis allegedly played a role) would perhaps provoke some feelings of self-reflection or even guilt.

So it’s complicated. But we can be sure that – as for Marriott and Mercedes – this is ultimately about market share and growth, perhaps at the risk of overall brand image.

(Before any Catholic-bashing or -defending starts, a little disclosure: I attended Catholic schools from convent kindergarten/junior level up to a Jesuit-run university, went through such rituals as First Holy Communion and confessions, and was an altar boy who rang the bell to mark transubstantiation (ie, I personally decided exactly when bread would become human flesh which people would eat – cool, huh?) The teachers encouraged critical thinking to the extent that they almost viewed lapses into atheism as a sign of success. I think all religions are equally good/bad/wondrous/absurd/essentially stupid.)

I declare the weekend open with the inspiring promise that the next one will be of the four-day variety.

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Before Rooster Year ends…

As you start the New Year, so it will continue. That’s why people prepare for the festival by cleaning the house. It is particularly important for debtors to repay outstanding loans – or at least get their credit situation into halfway decent order.

Mega-conglomerate HNA, leveraged to the moon after its wanton asset-acquisition spree, is finding this hard, so it is trying a different tactic – portraying itself as a victim. It faces, its co-chairman says, the same ‘reactionary forces countering China’s rise’ in a ‘conspiracy against the Communist Party Central Committee with Xi Jinping at its core’.

We have no idea who ultimately owns HNA. If it holds wealth on behalf of Beijing’s current ruling insiders, the claim that anxious bankers and dumpers of bonds are hostile to the nation would have some resonance. But if that were the case, it could make some discrete phone calls.

Assuming that HNA is not that well-connected, this looks like a desperate and opportunistic appeal for solidarity and empathy from lesser to greater factions of China’s kleptocrat elite. As a diversion, this is ‘the dog ate my homework’ for grown-ups to the nth degree. And as a display of shoe-shining, it is magnificently putrid – these guys make Hong Kong’s toadying tycoons look like pathetic amateurs. Playing the national leadership’s very own whiny victimhood card shows an audacity bordering on panache.

To end the 12th moon on such a bold, death-defying note might be greatly auspicious. Or maybe HNA (and Dalian Wanda and others) are in for a really crappy Dog Year of panic-selling and unravelling, with implications of horrible bad luck for the whole state-capitalist debt-pyramid mafia regime. I look forward to finding out.


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The latest from Causeway Bay

The South China Morning Post announces its relocation to glamorous, high-tech, space-age new offices. The pictures suggest a James Bond villain’s secret headquarters built deep inside an island off an exotic coast in the Far East. But the description sounds ‘hip trendy Silicon Valley tech’, with lots of open-plan, groovy, laid-back social and recreational areas.

I hear that reporters will not have personal work-stations where they can keep all their files, notepads and contacts’ numbers, but will be expected to ‘hot desk’ in a paperless online way, as befits a cyber-media outfit.

If it helps, they can throw out the contact details of Dui Hua, a US-based NGO that aims to help victims of injustice in China. The campaign group is refusing to talk to the SCMP until it receives an apology for the paper’s ‘ill-tempered, sexist rant and personal attack’ on Angela Gui, who is fighting for the release of her father Gui Minhai, kidnapped and recently re-kidnapped by Beijing’s secret police.

It’s interesting that even a charity hardened by years of exposure to China’s vilest human-rights abuses and related propaganda is taken aback by one of the SCMP’s little group of extreme, outré columnists. Three in particular specialize in non-stop cantankerousness and loathing towards Hong Kong’s pro-democrats and other critics of the Communist dictatorship. They are not so much pro-Beijing as anti-anti-Beijing. Worse than being just hate-filled, the repetitive and obsessive attention the fading hacks display towards photogenic younger activists (Joshua Wong, Agnes Chow and indeed Angela Gui) is borderline creepy and disturbing. (One possible excuse: they are under threat of being dropped into a shark-filled tank.)

Zooming out to look at the big picture – a reminder that these shabby columns are a forgotten corner of a giant Mainland corporate empire picked as a commercial winner and policy collaborator by the Chinese party state. SCMP proprietor Jack Ma’s Alibaba has just had its quarterly analysts’ phone-in, leading to an updated regular commentary. The name ‘Enron’ crops up here rather a lot.

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What’s Singlish for ‘schadenfreude’?

Pro-Beijing sex-symbol Lau Siu-kai ponders the ideological tests Hong Kong has introduced out of nowhere in recent years to keep opposition activists off the ballot in elections. Yes, they are vague, he admits. Maybe you’ll be barred from running if you don’t support National Security laws. (So what the hell do you put in your platform if you want to win votes?) But maybe, he adds, it would be OK if you opposed them on grounds of timing. Who knows? Best not to have a position on anything, presumably.

The SCMP quotes the European Union as saying that this sort of thing damages Hong Kong’s reputation. We will be hearing more about this as Beijing continues to chip away at the city’s rule of law.

The background…

So far, we have seen the twisting of process for political reasons. Examples include: the barring of candidates from the ballot for their supposed telepathically-inferred beliefs; the disqualification of lawmakers for incorrect oath-taking; and selective prosecutions of, and appeals for tougher sentences for, protestors.

Then there is the device of ‘interpretation’ of the Basic Law by the (rubber stamp) NPC standing committee, whereby Beijing can summarily change the apparent meaning of Hong Kong’s mini-constitution, with retroactive effect. The local judiciary now seems to accept these quasi-amendments without question, and Beijing can use this method to pre-empt the outcome of a court case (as it did with lawmakers’ disqualifications, and might do with some of the other politically-driven administrative decisions).

An even more draconian approach is a decision by the (‘highest organ of state power’) NPCSC, which is essentially an imperial edict overriding or bypassing even the Basic Law. Beijing recently resorted to this method to justify the transfer of high-speed rail terminus facilities to Mainland jurisdiction, and could use it to impose other decisions on Hong Kong as ‘national policy’ – anything it feels like (subject to implementation by rubber-stamp-to-be local legislature, hence above-mentioned disqualifications, etc).

All of this – especially the persecutions and exclusions of young photogenic opposition activists – has attracted international attention. The New York Times is the latest.

Which leads us to the interesting part…

Some members of Hong Kong’s legal and business community have recently noticed that a growing number of (particularly Western) companies are asking that Singapore rather than Hong Kong be named as the jurisdiction for contract enforcement and arbitration purposes. Especially where deals involve Mainland parties.

It seems that the Lion City’s officials are rubbing their hands with glee at Beijing’s attacks on Hong Kong’s rule of law (or at least surrounding press coverage). The scoundrels are dropping discreet but unsubtle hints that, to be safe, businesses should use the Lion City’s dependable, high-quality, oh-so classy British Common Law system, guaranteed unsullied by the Chinese Communist Party’s dirty fingers.

This is no doubt unfair. The infringements of Hong Kong’s legal principles are so far aimed only at what Beijing sees as threats to the CCP’s monopoly of power. More to the point, the Singaporeans are being massively hypocritical, given that their own legal system starts from a far inferior base in terms of human-rights protections, and Hong Kong business law more closely replicates UK legislation.

But what’s fairness got to do with it? Hong Kong is handing Singapore business promotion officials self-inflicted reputational damage on a plate – of course the city-state scumbags will bad-mouth their now-Communist-run rivals.

As Lau Siu-kai’s blather and the NYT’s reportage suggest, the decline of Hong Kong’s rule-of-law substance and image is just beginning. All Hong Kong’s government will be able to do is bleat more and more desperately and unconvincingly that all is well.

On the subject of decline: when a Hong Kong National Treasure calls it quits, it’s a bad sign…

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