Big Lychee, Various Sectors

Chart of the day: monthly remuneration of ‘politically appointed officials’ in the Hong Kong government…

Rank and file civil servants’ pay – look at the ads in the SCMP on Saturdays – is similarly generous. People who work in the public sector like to claim that their jobs are so different in nature from private-sector ones that accurate comparisons are not possible. Or that the senior positions are equivalent to high-flying business executives (who must create value in a competitive environment and answer to shareholders). 

There are ways to benchmark civil service pay. One would be to take Hong Kong’s total government salaries bill as a percentage of total GDP, and then compare it with the equivalent stat from, say, Japan, South Korea,  Singapore, Oz, Canada, the UK, the US, France, Germany, etc. Or maybe compare average civil servants’ pay and average private-sector pay as percentages of GDP per capita across different countries. That would be interesting.

When I was a kid, I would avidly read Every Big Boy’s Book of Manly Things Savages Do (or something), which included descriptions of trial by ordeal. Supposedly, some African tribes would require suspects of wrongdoing to plunge a hand into boiling water. In practice, the water wasn’t really dangerously hot, but guilty people would reveal themselves by freaking out beforehand. So another approach would be to announce a rigorous comparative survey of any sort, and see how the civil servants react. Extreme wailing and panty-wetting would suggest that they are indeed overpaid and know it.

The HK Police tell Transit Jam he must remove the little Hong Kong flag on the header of his website, following a complaint. 

Maybe we could all find hundreds of other social media accounts and other sites using the flag and ‘complain’ about them. 

The amazing things that happen when you don’t get tried by a National Security court: Grandpa Chan cleared of unauthorized display of banners in a park…

Siding with 78-year old Chan Ki-kau at the Kowloon City Magistrates’ Courts on Tuesday, Magistrate Kestrel Lam rejected the prosecution’s argument that simply holding up banners without a permit constituted a criminal offence.

Lam’s decision surrounded whether “displaying” a banner should be interpreted broadly. “There is no logical reason why a much wider, all-embracing construction should be adopted,” Lam ruled.

…Defence counsel Tam earlier argued that a banner displayed at a country park, as stated in the offence, must have “a degree of permanence and habitual regularity,” citing an interpretation of the Public Health and Municipal Services Ordinance in a 2021 Court of Final Appeal ruling.

The court also accepted the defence’s argument that a broad, all-encompassing interpretation of what constitutes a banner display would infringe upon the constitutional right to freedom of expression, citing the apex court’s decision to overturn journalist Bao Choy’s conviction last June.

Why was this prosecution mounted in the first case? The state’s logic for prosecuting the Hong Kong 47 and Jimmy Lai, even though they didn’t do anything most people would see as illegal, is pretty clear: they are high-profile individuals and/or involved in high-profile activities that the authorities might views as threats. Chan was active in the protest movement, but barely more so than a couple of million other people. 

Will the government appeal, when there is plainly no serious public interest like safety, health, the environment or community peace and convenience at stake? Or will someone have the sense to leave the old guy alone?

Too Simple, Sometimes Naive (possibly paywalled) sees an easing in China’s Wolf Warrior diplomacy…

Wolf Warriorism’ became the accepted term for [a] nationalistic, aggressive form of discourse. No more demure Asian state. China had summoned a new-found arrogance, belligerence.

In 2021, I summed up the general tone as: “I’m China, f— you.”

But the movement failed spectacularly. And today, the state is in full-on damage-reparation mode (more on this at the end).

…In many ways, Wolf Warriorism was no more than Trumpism with Chinese Characteristics.

“Make America Great Again” became “New Era”.

…Despite idolising strongmen and absolute power, they had surprisingly brittle temperaments. “Traditional values” were under attack, a litany of transgressors including Dulce & Gabana, H&M, and Canada Goose all “hurt national feelings”.

From this milieu, Chinese media began picking up the fringes of western politics. Politicians like MP George Galloway, or MEP Clare Daley. Alternative voices, like Code Pink or Ben Norton. When businessmen stopped answering the phone, bookers grabbed Youtubers, happy for the exposure.

Internally, patriotism was the new currency. Rather than talent.

Chinese staff willing to say what others baulked at were promoted and pushed. One high-profile CGTN host admitted to me they felt pressured into ‘spicing up’ their content, in worry of being left behind by the new ethos, and overtaken by other colleagues.

It was a collective bubble of manufactured hate. An echo of the Cultural Revolution.

And it was an unmitigated disaster.

…Ambassadors have calmed their words. Sometime, around a year ago, there was an internal recognition that something wasn’t working.

Hong Kong. Xinjiang. Covid. Taiwan. Ukraine. South China Sea. Wave, after wave of negative stories has hit China this past decade, putting it on the wrong side of public opinion with much of the world. There’s only so much fighting the tide one can do, before you start drowning.

International public opinion of China is at now at historic lows, and falling. Not just with the western world but also with one-time friendly nations, like Philippines, Turkey and Hungary — or protests in nations the CPC have pumped full of Belt & Road cash.

…China’s economic squeeze, its over-reliance on exports, and its slow rebound in international visitors following the pandemic has only exacerbated the internal panic.

There’s now an active effort to soften China’s international image; cage the wolf.

…One of the earliest signs came at the very top in January 2023, when MoFA spokesman Zhao Lijian — probably the most bombastic of the CPC’s spokespeople — was reshuffled to an obscure department, at the division of borders and maritime affairs.

Most assert the ‘promotion’ was more to do with Lijian’s wife, and her problematic weibo posts — however it’s noticeable just how much his colleagues have toned down their statements since.

Will Hong Kong’s ‘despicable’ outraged official press releases calm down? I would miss them.

A Taipei Times feature on how Taiwanese businessmen are reducing the risks of doing business in China, and what everyone else can learn from them…

Though it appears that some processes and intellectual property rights are still maintained by Tesla in-house, they have handed over quite a bit of know-how to domestic suppliers, which combined with subsidies and support from the government has contributed to a booming Chinese electric vehicle industry. The CCP and the Shanghai municipal government knew what they were doing when they bent over backward to get Elon Musk to invest in a factory there.

Musk made a big mistake and there are already signs that the CCP and local officials are starting to make life difficult for Tesla. For example, there is an ever-widening list of places where Teslas are banned due to “security concerns,” starting logically with key government buildings and military bases, but expanding to highway operators, local authority agencies, convention centers and cultural centers.

The Hong Kong government launches a competition to find new names for a pair of pandas hitherto called An An and Ke Ke, and then scraps it… 

…the judges … selected the suggestion to keep the original names of the five-year-old pandas, as the Chinese pronunciation of “An” and “Ke” together resembles the word “encore,” symbolising ongoing good fortune for Hong Kong.

Doesn’t sound much like ‘encore’ at all, but we’ll believe you. RTHK finds supportive public feedback…

“I think it is so meaningful. There is more of a sense of belonging by keeping their original names,” said a woman surnamed To.

Another woman surnamed Li said she fears people might confuse the new An An with the previous panda of the same name, who passed away in 2022.

“I think it’s fine, but some people might think of the old An An. That An An lived in Hong Kong for a very long time, so we were really sad when he passed away. It should be fine to reuse the name because the new panda is used to this name anyway. It should help him adjust a lot easier,” she said.

CE John Lee adds…

“The government will continue to seize the opportunities presented by the giant pandas, actively collaborating with various sectors to organise more related activities and launch locally themed panda products, providing visitors with a unique panda experience and boosting Hong Kong’s tourism and retail industries.”

Reports say the competition attracted 22,600 responses. There are widespread suspicions that many citizens submitted ideas like Jimmy, Long Hair, Joshua, Gwyneth, etc.  

An HKFP op-ed asks why protests are more tolerated in the mainland than in Hong Kong these days…

In October this year former Hong Kong minister Anthony Cheung advised the government to relax its de facto ban on public protest. ‘If I were government, I would encourage certain groups to assemble. [To win back international support] you have to prove that assembly is still possible.” That is, authorities should indicate their willingness to consider applications for demonstrations on a wider range of issues than is currently the case.

When asked to comment on Cheung’s advice, Chief Executive John Lee said such a view was narrow-minded. “There are many ways to express an opinion such as through seminars – there is no single avenue.” Some protests had been hijacked in the past, he said. “The most important thing is to ensure that others are not affected.”

The police caution that protest must not violate “the rights and freedoms of others.” What does this mean? Not creating a traffic disturbance? Not occupying public space that others could use? Not calling attention to an issue or cause with which others (including the authorities) may disagree, find obnoxious, or distasteful?

If being supportive of some, rather than virtually zero, freedom of assembly is ‘narrow-minded’, what does a ‘broad-minded’ person think?

The Financial Secretary says it is ‘too early’ to consider pay cuts for civil servants to fix the government’s budget deficit. Good phrase! It could mean that things aren’t that bad yet, so it might not be necessary. Or it could mean that yes, we are in a mess – but are still too terrified to admit it. Either way, Paul Chan’s comments seem to imply that current public-sector salary levels are in some way related to high land valuations/revenues.

The Hong Kong government replaces two senior officials. One of them – the tourism, pandas and mega-events minister Kevin Yeung – recently complained bitterly when an RTHK reporter asked him a pointed question, prompting the station to remind its reporters to adopt more positive angles in future. He is replaced by civil servant Rosanna Law. The other is transport minister Lam Sai-hung. (More on their failings here.) CE John Lee damns the outgoing pair with some faint praise…

“I really think that they have contributed their best [and have given] their best efforts for Hong Kong. So I thank them sincerely and I hope that they will have a good life, happy life after their departure,” Lee said.

“But I want to do more in these two and a half years. I want to get the people who will fit my criteria in building more results and ensuring the community understand and appreciate government policies. And I think I’ve got the best choices,” the CE added.

And to think Lee was lauding Kev for his noble work on monkey deaths just a few weeks ago.

Given the pay scale for these jobs (some HK$360,000 a month), you might expect Ms Law to show some initiative and argue against getting obsessed over panda bears and tourist numbers. But no…

…Law said top of her agenda would be to prepare for the introduction of the pandas to the public at Ocean Park, ensuring the smooth implementation of the multi-entry visa scheme for Shenzhen residents and preparing for next year’s National Games.

Joel Chan points out…

As of today, Hong Kong will need to average at least 189,000 daily visitors to reach the Tourism Board’s goal of 46 million visitors for 2024

Why do they set a target? (What do you call 200 tourists suspended in the air on the Wheel of Death? A start. Maybe not.)

Cathay Pacific removes an episode of cartoon Family Guy because of a visual reference to Tank Man… 

A complaint was raised against the flagship carrier on social media, in light of the city’s national security laws: “We emphasise that the content of the programme does not represent Cathay Pacific’s standpoint,” a spokesperson told HKFP on Thursday, “and have immediately arranged to have the programme removed as soon as possible.”

…“We have promptly informed the service provider of the seriousness of the incident, and have instructed them to thoroughly investigate the cause and strengthen oversight to ensure that similar incidents do not occur in the future.”

The absurdity is the point: any company that can’t afford to displease the powers that be must publicly humiliate itself as an act of contrition. (Republican congressmen kowtowing to Trump to survive the next primary election will know the feeling.) In Cathay’s case, there’s a lot riding on it. The company has a major brand name, aircraft, skilled staff, slots and route licences, which Mainland carriers would be happy to get their hands on.

Chart of the day, via David Webb: an all-time high of 40% of prisoners in Hong Kong are on remand – 3,790 people presumed guilty before trial.

Some weekend reading…

A review of The Troublemaker: How Jimmy Lai Became a Billionaire, Hong Kong’s Greatest Dissident, and China’s Most Feared Critic by Mark L. Clifford…

Lai is a man who thoroughly confounds the CCP with its reductionist and distorted view of a corruptible human nature. He sticks to transcendent principles and cannot be bought off or intimidated. For Beijing, nothing evokes more terror than the embodiment of its lies exposed by such men. Lai may remain imprisoned but his moral courage is forever a part of Hong Kong’s history.

ASPI Strategist on China’s replacement of Mongolian with ‘Northern frontier’ culture…

Chinese authorities have launched a campaign to change the term that people use to refer to Mongolian culture and to the cultural and historical heritage of the Inner Mongolia Autonomous Region (IMAR) in a move aimed at eroding Mongolian identity and sense of homeland.

The Chinese Communist Party’s new official term, bei jiang wenhua, meaning ‘northern frontier culture’, eliminates reference to Mongolians, one of China’s 56 officially recognised ethnic groups. Since July 2023, Inner Mongolia state media articles, official websites, party statements, party-organised children’s activities, and official social media posts have widely promoted the phrase. The party’s regional propaganda office has also founded an academic journal dedicated to ‘northern frontier culture’, and Inner Mongolia’s premier state-run academic institute has opened a ‘northern frontier’ research centre.

The adoption of the term appears to be part of the CCP’s growing campaign to weaken Mongolian ethnic identity and instead push a Han-centric national identity through the elimination of Mongolian language education and other measures.

…In October 2023, Zheng Chengyan, vice director of the Inner Mongolia Museum, wrote in an essay posted to the Inner Mongolia culture and tourism department website that ‘northern frontier culture as a regional culture has been jointly created by all ethnic groups in the northern frontier region since ancient times and is an important part of Chinese culture’.

One small problem: an actual independent Republic of Mongolia, with cultural identity intact, exists right next door

Chinese academic Wang Wen of the Chongyang Institute for Financial Studies at Renmin University recommends lowering barriers to foreign information and contacts as a way to boost China’s confidence…

However, after spending a few more days attending such forums or engaging in these exchanges abroad, a different feeling gradually emerges: a growing sense of comfort and enrichment. Cutting-edge information, hot topics, fierce discussions and brainstorming sessions abound, all without excessive formalities, empty phrases or rigid expressions. Reflecting on the relaxed pace of those “laid-back” foreign cities—like Paris, Berlin and Istanbul, which I recently visited—one notices a refreshing feeling of ease and naturalness all around: a cup of coffee, a daily newspaper, a group of friends, a broad smile and an unhurried afternoon. 

…Yet one can’t quite shake the feeling that Chinese scholars still tend to present their analyses as framed within official discourse, displaying not only a lack of basic adaptation of political ideas to academia, but also underscoring the intellectual poverty of Chinese academic theory in recent years. In contrast, international academia is continually introducing fresh concepts and insights. It’s hard to imagine how American scholars would maintain their dominant position in global discourse if they simply regurgitated White House policy or repeated their president’s remarks at international forums.

…Even more concerning is the increasingly severe blockage of information flows between China and the rest of the world. In the 2023 statistics on the global internet language share, Chinese ranked only 13th, below English, Spanish, German, Japanese, French, Russian, Portuguese, Italian, Dutch, Turkish, Polish and Persian. Moreover, historical data shows a decline in the global share of Chinese-language webpages in recent years, dropping from 4.3% in 2013 to just 1.2% currently. In fact, between 2021 and 2022, the Chinese language lagged behind even Vietnamese in this regard.

…After drinking deeply from the waters of foreign discourse, a majority of Chinese citizens has developed basic immunity against the infiltration of Western ideologies. They are now able to confront the storms of international public opinion with “cultural confidence” [文化自信]. They are now more and more capable of filtering out those absurd, tedious and occasionally malicious talking points, and are far more willing to retaliate of their own accord against propaganda attacks by foreign anti-China forces. 

This is an ad-free place, but I want to push an excellent service provider. If you want your knives sharpened: Blade N Beans, 1003 Harvest Building, 29-35 Wing Kut Street, Central… 

Now I have to get back to watching Olivia Squizzle. She will also name your children.

The SCMP reports experts’ suggestions for fixing the government’s budget deficit…

The Hong Kong government could reduce land sale prices, improve the efficiency of 167,000 civil servants and temporarily freeze their pay as possible solutions to ease the HK$100 billion (US$12.85 billion) deficit, experts have said, while admitting there are no simple fixes.

…city leader John Lee Ka-chiu said on Tuesday that “the government will start by cutting expenditure and increasing revenues”.

…[Economist] Simon Lee said Hong Kong has been too reliant on land sales and stamp duty for its income and needed to diversify its income sources in the long run by including levies such as sales tax.

Officials would be horrified at the idea of lowering land prices to stimulate sales and thus at least some revenues. Their assumption is: cling on to the land for long enough, and apartments must eventually come back to HK$20,000-plus per square foot, as God Himself ordained and carved in stone –  and the premiums will come flooding in.

Even more unacceptable would be the idea of cutting expenditure via a ‘temporary’ pay freeze for civil servants (assuming that ‘improved efficiency’ in practice means layoffs, which is a non-starter). If public-sector remuneration is 50% above that of the real world (and that’s a modest guess), it would take at least a decade for private-sector pay to catch up. Just admitting that such a gap exists would be unthinkable. Plus there’s the morale/loyalty angle.

Other potential spending cuts (assuming wasteful infrastructure projects are shelved, and big items like health, welfare and education remain intact) would only nibble at the deficit. 

That leaves a consumption tax – say 5% on all sales at shops, restaurants, utilities, etc. On the one hand, only the low-paid and poor, who have to spend most of their income on essentials, would really feel any pain. People on civil service salaries will barely notice a difference. The bad news is that sales taxes might in theory put off tourists, who as we all know are the most important and precious beings in existence.

Higher profits and salaries taxes would be more equitable, but now we’re getting blasphemous.

Ultimately, some sort of smaller government/higher taxes combination seems unavoidable – unless a miracle brings back the 1990s-2010s boom era.

In the background: gloomy prospects for the workshop of the world…

In a censored speech, economist Gao Shanwen says Beijing’s GDP and unemployment figures are (basically) false…

He said that if models from other country’s with burst property bubbles were applied to China, the country’s economy should have contracted by at least 2%, more likely by 3-4% in each of the last three years, though official figures have only reported a slowdown of 0.2 percentage points.

“The GDP growth rate has been overestimated by 3 percentage points each year, and by 10 percentage points cumulatively, which corresponds to the loss of 47 million employed people in urban areas,” Gao told the conference in the speech, a copy of which was posted by the U.S.-based China Digital Times website.

The WSJ looks at how developing countries – many supposedly friends of Beijing – are putting up barriers against Chinese manufactured goods…

A deluge of cheap Chinese goods washing over the developing world is jacking up tensions between China and the Global South, complicating Beijing’s plans to build alliances as it confronts escalating trade tensions with the U.S.  

With President-elect Donald Trump saying he plans to significantly increase tariffs on China, Beijing is hoping to unload more of its excess factory production to developing-world countries, from Indonesia to Pakistan to Brazil. 

But many of those countries are pushing back, as cut-price Chinese imports put pressure on their factories, killing jobs and blocking efforts to grow manufacturing at home. Many poorer countries have been counting on expanding manufacturing as the best way to propel their rise up the development ladder.

The article lists measures taken by Brazil, Indonesia, Bangladesh, South Africa and others to prevent Chinese imports from hollowing out their manufacturing sectors.

Michael Pettis comments….

This WSJ article lays out what is in effect an intractable problem of simple arithmetic. China represents 17% of global GDP and 30% of global manufacturing. Its current growth model requires that it increases its share further.

The US represents 23% of global GDP and only 17% of global manufacturing. 

if the two economies, who collectively comprise nearly half of global manufacturing, both try to increase their manufacturing shares, this requires that all other countries reduce their own manufacturing shares to accommodate them.

Not surprisingly, neither the EU nor most developing economies are interested in playing that role. So something must break – we cannot all raise or maintain our shares of global manufacturing. This is just arithmetic.

In an interesting test of how much has changed in the last five years, Hong Kong and Mainland authorities  are permitting unlimited cross-border visits by Shenzhen residents. Last time this happened, Sheung Shui and other New Territories towns were flooded with smugglers pushing carts laden with Yakult (a yogurt drink that supposedly makes ladies’ boobs bigger) and squatting on the sidewalk to consolidate packs of fresh meat, much to the delight of thousands of flies…

The resumption of multiple-entry Hong Kong visas … is unlikely to give rise to the smuggling practices that once brought overcrowding to northern districts, leader John Lee has said as he cited changes in consumer habits.

…Lee said on Tuesday that the revived scheme would cover a broader swathe of Shenzhen residents compared to before 2015. Non-permanent residents of Shenzhen holding residence permits, such as those who come from rural areas and work in Shenzhen, would also qualify.

If anyone would want to get into cross-border smuggling, it would be migrant workers with no Shenzhen hukou. But in theory the weakening of China’s currency might make smuggling less attractive.

Pros and cons from the authorities’ point of view… An influx of Mainland visitors might push up shop rents, which would please the Boom Days Re-enactment fans among the bureaucracy. On the other hand, it risks provoking resentment and renewed localist sentiment among the Hong Kong population, after all that hard work to nurture national pride. But if you get sufficient numbers of them coming in, no-one can see or hear the local people anyway.

The SCMP’s former editor pens an op-ed that is, by the paper’s standards these days, rather edgy…

On November 19, two major events unfolded simultaneously in Hong Kong which highlighted the paradox of this once-great but now-confused city as it tries to navigate between socialism and capitalism in an era of great uncertainty.

He then compares the gathering of international financiers and Mainland officials and the HK47 sentencing, which grabbed all the attention, adding.

It remains unclear whether the timing of these two major events was coincidental or deliberate. However, subsequent international media reports have shown that the convictions dominated the headlines, not only eclipsing the forum but also making some of the international financiers attending uncomfortable….

…Hong Kong officials and elites have failed in their efforts to counter [negative conceptions] about the city. In fact, some have inadvertently contributed to the perception that Hong Kong is fast becoming “one country, one system” as they are eager to adopt mainland-style language and tone in their public statements, as well as adopting some mainland-style bureaucratic practices….

At which point paywall-avoidance measures are exhausted, but the subhead gives a clue: ‘Efforts to reassure residents, investors and observers have been sidetracked by a lack of clearer parameters on what Hong Kong can or can’t do in the new environment’. 

His reference to Hong Kong being caught between ‘between socialism and capitalism’ is perhaps coy. By ‘socialism’, he means China’s communist system and its absolute need for control; by ‘capitalism’, he means the liberalism and pluralism that allow a free society and enable an international financial hub to thrive.

Let’s pretend it’s not structural, part 2.

According to the Basic Law, the Hong Kong government should balance its budget. Instead, for many years, it reported vast surpluses. And these days, it’s vast deficits. (I suppose you could try arguing it balances out over a 27-year time span. Then again, the Basic Law says lawmakers can reject a budget, while the NatSec court says they can’t – so who knows?) 

The SCMP reports the Hong Kong government’s latest shortfall…

At a meeting of the Legislative Council’s financial affairs panel on Monday, Paul Chan Mo-po revealed the deficit was substantially worse than what he estimated at the beginning of this year as the soft property market had taken a heavy toll on the government’s income generated by land sales, stamp duty and corporate taxes.

“The government’s income was far lower than expected,” the financial secretary said. “Before September, property transactions were very slow, which affected our stamp duty income.”

…The government has also recently downgraded its full-year gross domestic product to 2.5 per cent year-on-year growth based on weaker global demand and local consumption.

RTHK story…

The government has doubled its estimated deficit for the current financial year to around HK$100 billion, citing lower revenue mainly due to poor asset market performances.

When Financial Secretary Paul Chan announced his budget in February, he forecast a shortfall of a little more than HK$48 billion.

But he told lawmakers on Monday that as well as relatively poor asset market performances, revenue from profits tax is lower because firms aren’t doing too well at present.

…The secretary also reassured lawmakers that they need not worry too much about the government’s dwindling fiscal reserves, saying the key is “taking care of our own business”.

How will that help?

But wait! There’s more! David Webb expands on the FS’s numbers, which count HK$86 billion in proceeds from bonds as revenue rather than liabilities…

The situation is actually worse than the headline, because Mr Chan includes net cash from bond issues. Who will repay those, the tooth fairy? So the real deficit should be over HK$195bn, even worse than 2023-24 ($173bn)…

…Bond proceeds are not revenue or expenditure, they are a form of finance which must be repaid by future taxpayers. If we include them in the calculation, then any deficit could be neutralised just by borrowing the same amount of money!

The Standard op-ed notes the discrepancy and calls for cuts to the bureaucracy – citing Elon Musk – adding…

It is small wonder that some lawmakers have complained that the government is living on debt. Is this why the administration is desperately looking to the private sector for funding to bail out mega development projects, including the Northern Metropolis, to which the government is committed?

Beijing’s officials have urged property tycoons to bid for land, though the developers are clearly reluctant. No-one wants to consider the possibility/reality that the model is broken, and things will not somehow go back to the way they used to be.

The Economist (probably paywalled) suggests that the decline in Hong Kong real-estate prices is not a passing phase…

Home prices have fallen by over a quarter since late 2021. In September they reached their lowest level in eight years; the number of unsold homes had already hit a two-decade high. Commercial property is in trouble, too. Office vacancy rates are at a 25-year high. Rental prices have fallen by 40% from a peak in 2019, according to Savills, a property firm.

…there are signs that this crisis is structural, not cyclical. Hong Kong faces doubt over its future. Draconian national-security laws and a lack of clarity about the city’s role within, rather than alongside, China’s economy have harmed its image overseas. Some of Hong Kong’s pillar industries have been wobbly. Funds raised on its stockmarkets in the first nine months of this year were less than 30% of the amount raised in the same period of 2018. The workforce has shrunk by almost 200,000 in recent years, a big fall in a city of 7.5m. Hong Kong contends with one of the world’s lowest fertility rates, and by 2040 a third of its population will be aged 65 or older.

As with those of pre-2022 administrations, Hong Kong’s top local policymakers seem unable to conceive of radical budgetary or wider economic reforms. Nor do they seem any more inclined to upset property-related interests. The people who could bring fresh ideas are either in jail or otherwise sidelined. The Beijing officials behind the scenes seem more interested in national security and patriotism than in fixing the city’s ‘deep-rooted’ problems.

Hong Kong property became among the most expensive in the world when China was booming and the city offered a unique and highly attractive package of Mainland links, financial and other skills, rule of law and a free press. So much has changed that some serious adjustment to government fiscal policy and the economy’s overall cost structure is inevitable. It’s not about being pro- or anti-high prices, ‘low taxes’, specific interest groups or anything else. It’s simply about accepting reality. (The unsold homes mentioned in the article would sell out tomorrow if the sellers cut prices.)

Yet top officials – who think panda bears and luxury shoppers are bold policy – still seem to think that finding ways to push real-estate prices up will bring the old days back. (There may be personal interests at play here as well: people whose families own several apartments can easily convince themselves that the economy depends on property rather than vice-versa.)

The ‘way forward’, as civil servants used to say, would include a 180-degree shift in official views to recognize the benefits and opportunities arising from lower property prices, and serious action to cut government costs (public-sector pay) and broaden the revenue base. Fat chance, of course.

A HKFP op-ed spells out basic facts about the HK47 trial: there was no law against either holding primary elections or using the legislature’s constitutional powers to reject a budget, nor would such a scenario create ‘chaos’…

Having removed himself to a safe distance, Jonathan Sumption (a very senior retired judge) put it bluntly. The Basic Law, he said, explicitly authorised the Legislative Council (LegCo) to reject the budget and force the city’s leader to resign. It now appeared that “LegCo cannot exercise an express constitutional right for a purpose unwelcome to the government.”

…the notion that sacking the chief executive would precipitate a “constitutional crisis,” paralyse the government or overthrow the system … is an entirely fictitious prospect drummed up to justify longer sentences. Whatever the organisers of the referendum may have dreamed, the Basic Law provides for a continued orderly and effective government at all stages of a bid to fire the chief executive. If there is no budget the government is authorised to continue with the old one. If there is no chief executive, another official takes over pending the election of a replacement.

Ocean Park is losing money, even though it is attracting large numbers of visitors and now has six panda bears. 

I went to Water World a few times back when it existed. But my first (and only) ever visit to Ocean Park was a couple of years ago. Parts of it have a sort of shabby 1980s feel. It doesn’t help that the place is ultimately part of the government bureaucracy. The aquarium is great, like most aquariums, while the rides are pretty lame. It’s small, being in a crowded city that probably should leave this sort of thing to Shenzhen or somewhere. I went soon after Covid, when there were few crowds, but I’d hate to be there when it’s crowded…

…The park saw around 3,140,000 in total attendance from last July to the end of June this year, up from around 2,360,000 in the previous financial year.

The figure is a five-year high, driven by non-local visitors whose numbers more than tripled. The park said visitors from mainland China almost quadrupled, while those from India and the Philippines increased by more than three and five times, respectively.

To put it in perspective, Ocean Park can’t be as mind-numbing as I imagine DisneyLand to be. And Mainlanders, Indians and Filipinos are, according to leading experts, among the world’s most easily amused nationalities. But Ocean Park has nothing really distinctive. The panda bears are worth about 20 seconds of your time. Snails have more zip. 

The Standard has the ominous headline ‘Return of multi-entry visas looms’ warning that Shenzhen and other Mainland residents will be able to visit Hong Kong more frequently. If that fails, we can round them up at gunpoint and force them to come here.

A few links for the weekend…

From Merics…

…middle income and developing countries are also dealing with China’s surging exports, though their responses have received far less attention

…The wide range of measures taken by countries with their own unique mix of economic and political interests towards China shows the growing international concern caused by China’s economic model, subsidies, overcapacity, and surging exports. It also demonstrates key trends of how China does and doesn’t defend its economic interests with different countries – most notably, that Beijing seems willing to incur economic losses from trade defense measures when it believes it still has considerable potential for political wins, but will fight more intensely against economic losses when convinced a country is politically lost to them.

The Straits Times looks at Malay nationalists’ demands that Kuala Lumpur enforces local laws requiring Bahasa signage to be dominant on shopfronts…

Clashes over the use of Chinese on Kuala Lumpur shop signage are the latest racial flashpoint in Malaysia, with a Cabinet minister warning of economic harm if Prime Minister Anwar Ibrahim’s government continues to ban prominent Chinese characters on retail signboards.

Tourism, Arts and Culture Minister Tiong King Sing lashed out on Nov 24 at a decision by Kuala Lumpur City Hall (DBKL) to enforce a 1982 by-law dictating that any advertisement must have Malay displayed with larger characters than other languages.

“This overboard behaviour not only causes tourists to question the openness and inclusivity of Malaysia, but some international visitors have asked me point-blank whether Malaysia is racist or religiously extreme,” he said, lamenting in a statement that such issues of race and religion can stunt economic growth.

For fans of demographics (more or less) a couple of charts…

Via this thread, bar charts showing that 97% of all talent visa entrants in Hong Kong are from the Mainland. I would be surprised if it was much less. The authorities want to replace the young educated and perhaps somewhat older professional people who have been leaving. Who can they reasonably expect to apply? To the extent policymakers have a choice, what sort of people would they prefer?

And from a business intelligence company via this thread, changes in the number of billionaires in each country in 2023. The number of ultra-rich has grown in most places, but in China and Hong Kong, it has fallen…

(As it has – slightly – in Germany, and in Saudi. Don’t they have any billionaires at all in Japan?)