Is John Tsang defending money-laundering?

There are three items on the front page of today’s Standard: an official warning that a drop in the number of Mainland shoppers would damage the Hong Kong economy; excitement that buyers are apparently rushing to buy new luxury housing projects; and an ad for Subway sandwiches. Apart from the paper’s masthead, which correctly states today’s date, the only information I would accept as believable or trustworthy would be the bit in the top right about the daily choice of five HK$25 sub-drink combos.

The stuff about Financial Secretary John Tsang warning that slowing retail sales will threaten jobs is the latest in a dense barrage of bull on this subject. The report quotes one Caroline Mak of the HK Retail Management Association as saying:

“We can see that the retail industry is not expanding as aggressively as in the past,” she went on, and that came down to the reliance on mainland visitors.

This ‘past aggressive expansion of the industry’ was neatly illustrated in paragraph 5.6 of a Legislative Council report, which said that cosmetics and personal-care stores expanded by 1,500% in the last 10 years, while the number of outlets serving ordinary local people’s needs fell 25-30%. Funny how that report has been widely ignored by officials and the media. Funny, also, about how you hear more and more about a ‘reliance’ on Mainland visitors. Hong Kong is not reliant on Mainland shoppers or the tourism industry; it is the other way round. Just because you are swamped by something does not make you reliant on it.

The officials and lobbyists wetting themselves about jobs are, by the way, the same people who just weeks ago were orchestrating panic-stricken demands to allow the importation of (cheap) labour. Hard to please!

I had the good fortune yesterday to pass by the Brain Power Toddler’s Playland, which recalls last week’s controversy about racial stereotyping in the Big Lychee. The kindergarten’s advertising proudly displays a chubby and alert-looking little baby who is unmistakably of Caucasian extraction, even though the product is clearly aimed at a Chinese-speaking market. Perhaps the subliminal message is that your kid, too, can acquire the mysterious creative and lateral-thinking abilities for which Westerners are (some maintain) renowned. The fact (others maintain) that later in life, the non-Confucian gwailo don’t send money to their parents is something we will overlook for the time being.

‘Endorsement by foreigner’ is also the headline of the other piece of junk news on the Standard’s Page 1 today. Expatriates like the happy smiling Turkish couple and Mainlanders join the local stampede into the primary market for crazily priced residential real estate. The reader is, of course, supposed to infer that piling into new (actually still-not-finished) apartments at HK$8,062-55,889 per sq ft right now makes perfect sense. This is what the developers want you to think. The Standard’s proprietor is a close buddy to these tycoons, who also happen to be the same landlords and distributors behind the Retail Management lobby whose interests, under the guise of ‘jobs’, so concern John Tsang. You do not need the lateral-thinking genius of a white baby to imagine why the tycoons should want to dump their new properties in a hurry at this time.

Subway – with a US$516 million advertising budget in the US alone, 92nd place in Forbes Most Valuable Brands and a global network of 33,800 outlets – comes across as human, warm and cuddly among these sharks.

The South China Morning Post also carries John Tsang’s apocalyptic vision of fewer Mainland Shoppers (this must be the only time in history people are told to fear the departure of a plague of locusts). As well as mentioning the blather about a city’s reputation for hospitality being easy to damage (must try harder), the report alludes to the impact of Beijing’s clampdown on corruption. And tucked away on the back page of the Business section is a full article about Mainlanders’ use of high-end watches and handbags as hard money.

Anyone who has seen the ‘pawnshops’ full of watches around Macau and read about the associated UnionPay Card scam (with state-owned bank acquiescence) will know about this method of getting funds out of China. Anyone who has seen lines of depositors filling banks in Sheung Shui will also know the amount of small-scale money-laundering and dodging of Mainland capital restrictions going on across the border (the big boys can falsify trade invoices). It is impossible to say how much of the glittery tat Mainlanders buy in Hong Kong is for personal use or resale back home, but at least some must be part of this labour-intensive method of exploiting loopholes to transfer Yuan in China via a Mainland credit card to a Hong Kong retailer in exchange for watches/handbags, then to reverse the transaction at a discount, with payment this time in dollars.

To the SCMP columnist, it is a fascinating example of people seeking economic freedom by escaping a rigged currency; he thinks Prada beats Bitcoin any day. To us in Hong Kong – and that should include government officials – it is a reminder of how illusory and transitory this Mainland ‘shopper’ boom is. To the extent that it’s not a phenomenon of gullible nouveaux riches craving overpriced garbage, it’s cross-border smuggling and evasion of taxes; and to the extent it’s neither, it’s the facilitation of money laundering and the undermining of Beijing’s capital controls and therefore monetary policy, a crucial tool that serves to bolster Communist one-party control. A fine thing for John Tsang to promote and protect.

 

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