Big Lychee, Various Sectors

The UN climate summit begins in Copenhagen.

Science has long known that more greenhouse gasses in the atmosphere equal a warmer planet; it also confirms that man-generated emissions of billions of tons of carbon over 150 years have contributed to the effect.  People who refuse to accept these basic propositions are on a par with creationists for willful, ideologically-driven ignorance.

What is less certain is the extent to which climate and emissions output trends during a brief moment in geological time can be extrapolated into reliable forecasts.  Feed the data into some computer models and you get shocking scenarios of what might happen if we have another century of coal-fired power stations, 747s, SUVs, deforestation and livestock flatulence: a 6C rise in temperature, widespread famine and floods by 2100.  But this rests on a lot of assumptions.

Apart from some mouth-frothing militants demanding that we all go back to living in caves, most of us – even though we understand the basic science – are, if we are to be honest, pretty much unconcerned.  We assume the alarmist predictions are simply too pessimistic. We expect some better technology will come along before it gets that bad.  We reassure ourselves that there are also natural causes of warming and some self-correcting planetary mechanism might step in and shift water vapour levels or ocean currents and fix everything, otherwise (fingers crossed) how could life have survived for three billion years?

Part of the reason we are laid-back is that environmentalists have produced scare stories before.  We heard dire warnings about mass starvation in the 1970s owing to overpopulation, or at least forecasts that all the tin and/or copper would run out by 2000.  And then there was the great global cooling scare.

And these people are ineffable bores.  British writer George Monbiot is no doubt highly knowledgeable, but who, apart from devoted followers, can stomach the hand-wringing, self-righteous, “I’ve broken my self-imposed ban on flying” crusading?  Multiply that by the array of worldwide all-purpose irritants whining about saving the world – Al Gore, Desmond Tutu and Mary Robinson (in today’s newspapers), Bob Geldorf, the European Union, ex-United Nations officials, Jimmy Carter, not to mention Greenpeace and the rest – and it’s enough to make you join the deniers.  If your brain won’t let you do that, at least your heart can tell you it’s alright to sit back and enjoy the sight of dimwitted ultra-skeptics driving the humourless worrier-warriors up the wall in exasperation.

And then last but possibly not least, could it be that – whatever the fighters against global warming like to think – we don’t really care that much about our children and their children?  Not so much that they come before ourselves.

If a giant comet were on course to slam into our planet in five years, every nation on Earth would be writing out cheques to NASA and sending rocket experts over to the US to help put something together to ward it off.  But this is much longer term.  For many of us, especially those not living under Himalayan glaciers, a warmer world might be a nicer place in which to carry on developing our bit-more-greenish-but-not-really-sustainable economy for a couple of decades before the next generation comes of age.

People are spending a lot of money on their kids’ education, and they never fail to remind everyone they know how extremely clever and gifted and above-average the little brats are.  I have no reason to doubt them.  In the last half-century we’ve come from piston-engine airliners and black and white TV to the Internet and gene therapy.  I’m sure someone’s precious genius offspring will work out how to grow meat in laboratories and design cost-effective solar cells and batteries.

Indeed, the threat of inheriting a world on the brink of desertification or deluge – whichever gives our talented, spoilt, highly-strung descendents worse nightmares – might spur them on.  I’m doing my bit: I tell every teenager I meet that I’m going to have ‘Warm enough for you?’ engraved on my tombstone.

It’s as worked up as I can get.

Hundreds of British Mid-Levels residents’ dreams of a traditional Sunday lunch of roast beef, boiled cabbage and Heinz baked beans with lashings of gravy were cruelly dashed this morning when a major conflagration broke out at the Yorkshire Pudding restaurant in Staunton Street, Soho.

Greasy, black, malodorous fumes suddenly spewed into the still-sleepy neighbourhood from the alleyway adjoining Shelley Street shortly after 9.00am.  Staff rushed to alert their colleagues at Staunton Café, owned by the same chain of eateries, leading to a serious delay to an order of a double espresso, as a result of which the customer concerned was tempted to steal the establishment’s copy of the Sunday Post but thought better of it as he had already read it.

Within minutes, a fetching young female constable was on the scene, accompanied by two slightly dull looking male comrades valiantly talking into their radios.  Soon after, a fire engine arrived.  Then another.  Then another.

As firemen crowded into the smoky ruins, an ambulance attempted to squeeze into the narrow street and a Cable News camera crew appeared among the dozens of curious and excited onlookers crowded outside Duke’s Burgers, the famed wagyu sandwich purveyors opposite.  At this point, the espresso was finally delivered, and thus one emergency, at least, was over.

Saturday’s South China Morning Post invited readers to believe that Hong Kong is begging and pleading to be given the inestimable honour of being allowed to play some sort of part in China’s next Five Year Plan.

We may be in for a long wait, because it is unlikely that China will ever again, strictly speaking, have a Five Year Plan.  The 10th, covering 2001-05, seems to have been the last.  The 11th blueprint for development, covering 2006-10, called itself a Five Year Guideline.

Here’s a sample of Mao’s original 1953-57 Stalinist-style industrialization diktat:

And here’s some of the 2006-10, ‘Socialism with Chinese Characteristics’ model*:

The first is a classic example of the dream that central planners could out-perform market forces.  The last looks scarily like the well-intentioned lies political parties in the West put in their election platforms.  And that is, in some ways, what it is: a manifesto for a lapsed-Marxist, one-party state.  The whole thing is a ritual to mollify old Leftists, remind everyone who’s in charge and showcase new policies that could easily be announced separately.

What does it have to do with us in the Big Lychee?  Nothing.  We don’t pay taxes towards the spending programmes; the infrastructure work is not for our benefit; the social and economic reforms are not the ones that we need.  Some measures may represent theoretical competitive threats or commercial opportunities to Hong Kong – or to foreign countries – but so what?

It’s yet another opportunity for local officials to send the people of Hong Kong a familiar subliminal message: after doing fine on its own up to 1997, our city is now mysteriously incapable of surviving without the care and protection of Beijing.  In other words, shut up and stop complaining about bad governance and asking for democracy in case you upset the national leaders and they pull the plug on us.

The job of inviting the press round to scribble it down this time seems to have fallen to Lau Siu-kai, head of the Central Policy Unit – a think-tank in colonial times, now an in-house PR agency concocting evidence of the importance of partnership/integration/cooperation/etc (plus some mild bizarreness about the theatre).  The SCMP dutifully gave it page-one treatment.

Professor Lau … said there was a “growing and pervasive anxiety” among Hongkongers about the city’s role in China’s economic development being usurped by mainland cities or it being sidelined by the nation’s rapid development.

“The pace of change in the mindset of Hong Kong people is faster than we expected,” Lau said. More than 70 per cent of people polled by the think tank in September said Hong Kong needed greater participation in drafting the next five-year plan. [The same proportion that’s in favour of universal suffrage.]

…Twenty academics from Hong Kong were invited to join a closed-door seminar in Beijing in October on Hong Kong’s role in the 12th five-year plan. Co-organised by the Hong Kong Development Forum, a political group founded by business leaders, and the central government’s liaison office in Hong Kong, it was also attended by top officials from the NDRC and the Hong Kong and Macau Affairs Office.

Lau said Hong Kong should study where it needed the support of the central government in the next five years and “how Hong Kong can use its strengths to contribute to the nation’s economic development”.

…The Hong Kong government is also hoping to inject into the blueprint the thrust of a landmark agreement now being thrashed out with Guangdong for development of the Pearl River Delta in the next decade.

The Plan for the Reform and Development of the Pearl River Delta (2008-2020) released by the NDRC last December spells out the central government’s determination to turn Hong Kong, Macau and Guangdong into an international metropolis.

A framework agreement on the proposals is expected this month.

Can’t wait.

In the SCMP’s defence, it was a Saturday.

* Sharp eyes will notice that the five-year cycle shifted at some point so it now ends in year XX10 rather than XXX7 (and XXX5 rather than XXX2).  There was a three-year gap (1963-65) between the second and third plans; the starvation to death of some 30 million people in the early 1960s after officials falsified food production data in order to meet or exceed targets probably slowed things up a bit.

An interesting little bar chart from JP Morgan Private (as in “don’t cut and paste our stuff”) Banking:

The gleaming office blocks going up in Dubai in 2006-2011 contain enough floor area to provide each man, woman and child in the city with an adult-size bed space.  Shanghai’s boom a decade earlier added a tenth of that per inhabitant – enough new room to put a pillow in.

Two years ago property firm Colliers were warning about Dubai’s 1-3% vacancy rate and “substantial pent-up demand … yet to find a home.”  Rentals in the emirate’s centre were 10th highest in the world, almost on a par with mid-town Manhattan.  Now, they are looking at a 50% vacancy rate next year.  Prices for residential and commercial real estate have broadly halved.

Where’s all the Schadenfreude?  Obviously, right-thinking bystanders can’t help rubbing their hands with glee at the sight of the British carpetbaggers, fat Indian slave-brokers and Ukrainian whores fleeing the Gulf.  But the mood is bordering on sympathy for the Al-Maktoum family who created modern Dubai (admittedly, a special sort of sympathy reserved for multi-billionaire feudal despots in trouble – the Germans must have a word for it.)

Unlike many other tribal rulers in the Arabian peninsula, the Al-Maktoums were not peasant goat herders who got rich on oil.  They were merchants who saw opportunities for their hometown to make an honest and socially useful living out of international trade.  One particular brainwave was transshipment, by which reasonably high-value cargo would zip from the Far East to Dubai across the Indian Ocean by ship and then be transferred to freighter aircraft for swift delivery on to Western Europe.  Goods would arrive and depart the same day, which is impressive in a part of the world where arriving three hours late for a meeting is normal.

And, by the standards of many Arab potentates, Dubai’s rulers are a laid-back, cosmopolitan, tolerant and progressive bunch of people.  This is, of course, relative; but if you are crazy enough to try to kick-start a trendy, Western-friendly metropolis in any Arab state, this would be the place.

What no-one wants to talk about much here in the Big Lychee is whether we are perched on the doorstep of a ‘Dubai with Chinese characteristics’.  Mainland cities like Shanghai have not stopped building since the period shown in the bar chart.  To quote consultants Gerson Lehrman:

Commercial property vacancy rates in China approach 50% in major cities. Asking rents have declined by as much as 60% from 2007 with free rent concessions.  However, Chinese property values have not declined at all.  Moody’s cited values may be down 45-55% from 2007 peak around the world, but not in China. How can Chinese banks with nearly 40% loan exposure to real estate not be impacted by the massive oversupply of virtually all property types?

…No one questions how Chinese bank nonperforming loans have declined to only 1.6% of total lending when they’ve doubled and tripled loan growth since listing in 2003-2004. The issue is not a future asset bubble based on the massive $1.27 trillion lent thru September 2009 but the huge unreported NPL which manifests itself throughout China in empty office buildings, luxury malls without customers, luxury hotels operating at 30% occupancy and thousands of closed factories in the Pearl River Delta.

…The China miracle is fundamentally flawed with over-investment and massive liquidity with an implicit government guarantee which may or may not be honored when the music stops.

Yikes.  It is true that you see a lot of empty-looking residential and commercial developments in the mainland.  It is also true that plain middle-class folks up there have very few ways to invest wealth; bank accounts pay no interest, capital controls keep funds in-country, and the stock market is a casino – they have almost no choice but to buy a villa and watch the paint peel.

One big difference between Dubai and China is that in the latter the lenders are mainly state-owned, so writing off a ton of bad mortgage debt boils down to another government outlay.  And, unlike with Expos or manned space shots, the country at least ends up with a stock of mouldy urban villas, which will come in handy as another few hundred million people move from the countryside to the cities in the coming decade or two.

But if/when a Chinese bubble does burst, will the world’s pent-up Schadenfreude burst forth?  For all the debtors’ prisons and trafficking in child camel jockeys, the Al-Maktoums at least meant well, more or less.  The Chinese Communist Party’s unlovable combination of vanity, paranoia, inhumanity and menace puts the glorious motherland in a different sympathy-attraction league.

Hong Kong’s chief secretary, Henry Tang Ying-yen, did a good job in Shenzhen yesterday.  It was the two cities’ regular love-in, hosted by the acting mayor, Wang Rong (non-acting predecessor Xu Zongheng being under arrest for graft).  The painstakingly agreed joint statement indulges in mutual backslapping about the gathering being a resounding success and the usual vague plans to cooperate about cooperating.  But is there any danger of something of real substance?

The main achievement of the meeting was to agree that the two cities would continue working together on a special zone of some sort in Qianhai (above Mawan Port in the area north of Shenzhen’s pleasant southwestern district of Shekou).  It will be a bonded port, service park or The Manhattan of South China!!, according to taste.

Why should Hong Kong – and presumably its hard-working, clean-living, disfranchised taxpayers – help an adjoining city start up what appears to be an attempt to bite into the market share of the Big Lychee, free port to the gentry since 1841?  That question was asked last June when Shenzhen’s official mouthpiece excitedly announced that Hong Kong would essentially co-build the project (just days before Xu’s detention).  Our officials awkwardly mumbled that it would provide opportunities for Hong Kong firms.

Yesterday’s joint statement spells out the arrangement more clearly:

…both sides have reviewed the work progress in the past few months, and have reached consensus on the respective role in taking forward the co-operation initiative.

And those respective roles are:

Shenzhen Municipal Government will take up the leading role, and be responsible for the development and management of the Qianhai area, while the HKSAR Government would provide comments on the study and formulation of issues like development planning and policies.

Phew!  They pay for, construct and run the thing, and we provide… comments.  Free, presumably, but I think we can live with that.

So well done, Henry, for shielding us from molestation by Shenzhen-ites’ grubby, acquisitive little official fingers straying across the border.  He also agreed – as Shenzhen had already – that the Big Lychee should accept a fresh supply of visitors: ragged and impoverished migrant workers from outside Guangdong province who live on RMB1,000 a month if they are lucky.  Excellent news for anyone in Hong Kong needing cheaper illegal labourers and hookers.