An optimistic start to the week

Hong Kong’s biggest post-1997 buzzword has been ‘integration’. Other than the fact that it is with the Mainland, no-one agrees exactly what it entails. Most accept that it is primarily to do with the economy – trade and investment. Some also see a social dimension involving personal and household mobility. To encourage correct thinking, the government started to use the term ‘boundary’ for the border. Only cynics with a sense of irony apply the label to political matters, like the creeping influence of Chinese officials in the city’s administration.

The basic message has been that, whatever it is, this ‘integration’ is obviously a good thing, allowing Hong Kong to ride China’s rise to global superstardom. Officially, it would not take place at the expense of the city’s international connections. Until recently, only a few throwbacks to the 1980s like former Chief Secretary Anson Chan have asked whether the city would be better off remaining relatively insulated from Mainland influence (as envisaged in much of the Basic Law). In the last few years, of course, such sentiments have taken root among younger radical ‘nativist’ or ‘localist’ groups.

China’s economy is now approaching some sort of disruptive transformation or upheaval – in the absence of reliable data, no-one knows what. (See comments from Willy Lam and others here on the leadership’s dilemma; and slides 2-6 here for a big-picture summary.) But whatever happens, Hong Kong’s Integration-is-Wonderful economy can only suffer. We are already seeing this in the luxury-retail/Mainland tourism sector…

Bl-LuxBran

All right-minded Hongkongers rejoice in reading about the closures of stores selling overpriced garbage (in which landlords feel pain, and Bloomberg amusingly describes Burberry as a ‘trenchcoat maker’). Some observers, peeved at the city’s ingratitude, feel or hope that everyone will be hurt…

Tw-ShRe

William Pesek puts this in the context of Hong Kong’s dismal governance…

Bl-Rather

Even he, like so many others, makes the mistake of believing Hong Kong ‘has become Bl-HKCantreliant on … the tens of millions of shoppers’ from the Mainland. It looks like that. But what we are really seeing is – surely – a tourism industry reliant on Hong Kong, not vice-versa. It’s just massive, distorting, unsustainable arbitrage. The city was a happier, more comfortable and certainly no less prosperous place 10 years ago before the unmanageable deluge of Mainland shopper-tourists struck.

The government is off on its hallucinatory fantasy in which we must cram yet more tourists in, and simultaneously pick winners in tech and creative sectors (so long as they don’t, like Uber, compete with established anti-innovative Beijing-favoured tycoon interests). Hence the deal with New World to expand Avenue of Stars. There’s almost a parallel here: China’s leaders can’t think beyond more debt-fueled investment in infrastructure; Hong Kong’s can’t think beyond cramming more tourists in.

There is no reason for Hong Kong people to pay any attention. ‘Integration’ is very much incomplete, of debatable value and meeting popular resistance. The impact of China’s economic slowdown (and factors like a stronger US Dollar) could or should include: fewer crowds, lower rents, lower living costs, more space for smaller companies, and more opportunities for innovators and entrepreneurs. To our bureaucrats and tycoons, these are Bad Things. To the rest of us, China’s dreaded downturn might offer an alternative – not a moment too soon – to an increasingly gloomy ‘Mainland’ future.

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14 Responses to An optimistic start to the week

  1. Qian Jin says:

    In your photo banner above, why have you blotted out the Chinese character “英” (Ying) on C.Y. Leung’s name card?

    Is it a case that he is no longer so ‘brave’ or has he given up permanently his right to reclaim British Nationality?

  2. Scotty Dotty says:

    Excellent post today.

    “The city was a happier, more comfortable and certainly no less prosperous place 10 years ago before the unmanageable deluge of Mainland shopper-tourists struck.”

    Amen.

  3. Stephen says:

    Whilst David Webb expresses confidence that “China will be an open and democratic society by 2047” about the only thing I can confidently predict about 2047 is I’ll either be dead or a dribbling wreck.

    I think it’s the road to China takes to get to 2047 that’s troubling. To be clear it’s for the people China to decide when the CCP has served its ”mandate” and can no longer deliver prosperity. That the state is so inherently corrupt, that it cannot enforce any laws, will, coupled with a prolonged severe downturn and a ludicrously pompous President determine that it is past saving and perhaps we are now seeing the beginning of the end of the CCP ?

    But what comes next in the glorious march to 2047 ? Federalism, complete with powerful Mayors or Military rule ? Whether Hong Kong is sufficiently ‘separate’ enough, as it once was, to ride out what happens next in China over the next 20 years I am not so sure. What I am sure is that CCP card carrying CY Leung cannot be allowed another 5 years as if he does I think it will be time for me to get the fuck out of Dodge.

  4. Qian Jin says:

    @Scotty Dotty : “The city was …… certainly no less prosperous place 10 years ago before the unmanageable deluge of Mainland shopper-tourists struck.”

    But you are forgetting the rich landlords…………… it has become far more prosperous for them this past decade.. …. but at the majority’s expense and misery.

    The core problem is the tycoons and landlords…….. not the shoppers. The OC thugs would be better kicking tycoons’ cars rather than Mainlanders’ suitcases.

  5. Monkey Uncensored says:

    1) Fuck Shaun Rein … spineless vile little CCP-red-princess-marrying-communist-party-boosting-piece-of-shit shill … lacking even the entrepreneurial nous to leverage his wife’s connections into a real economy business that isn’t based on public, international fellatio of the organisation that has directly or indirectly murdered more han Chinese than any other regime in China’s history (and more of its own citizens than any other country in the world – ever).

    a sad time when those educated in a place in which they can read and study authentic, impartial scholarship of modern Chinese history doth forswear their integrity in pursuit of the gilded trinkets…

    what a fucking waste of space that wanker. oh my i look forward to the day when him and his ilk are accurately perceived for what they are and have always been (here is looking at you @Qian Jin) – fucking hanjian (p.s. some background on mr. rein for anyone interested: http://www.pekingduck.org/2014/10/shaun-rein-wants-your-help-marketing-the-end-of-copycat-china/).

    2) thank you for the link to David Webb’s presentation Hemmers, spot on analysis, couldn’t agree more with his strategic analysis.

    3) My opinion … crisis of confidence in the political economy of china is underway … it is all, really, ultimately about politics … basing the entire legitimacy of your system of state authority upon a cyclical, resource-constrained process (economic growth) is of course a weak and unsustainable position.

    i predict that – whether a visionary leader emerges from the process of inward collapse (and transformation) of the chinese political system – Hong Kong’s general populace is going to become a major source of international legitimacy of an ailing chinese party-state within a context of widespread social discontent and unrest. simple trade “leave us the fuck alone and we will tell the world, including our mainland brethren that you aren’t that bad after all … you are serious about liberalising your economy, reforming your political system” …. it happened (Hong Kong supporting China’s economic liberalisation) in the 80s and 90s … and regardless of willingness, party leadership is going to be forced to further liberalise the economy, and initiate some process of political reform in the next 5 years (e.g. liberalising media – i.e. eliminating some of the censorship protection that the state gets from popular-led discontent, getting rid of hukou, opening up the capital account etc). and i suspect at that time Hong Kongers are going to become “old compatriots and comrades again”… when it is becoming clear that everyone hates you and is screaming for your blood, you look for those who are indifferent, or who are willing to be your friends in exchange for some benefits you can grant … such processes of calculation are hard-wired into the han political brain…

    one of the great strengths of the han ethnocultural identity is political and ideological flexibility … when the wind changes (as anyone who has done business with mainland SOE’s can attest), all positive or negative previous experiences are redacted from memory, and everyone is all smiles (or frowns, depending on the new wind) based on a forward-looking, usually astute, always pragmatic, political analysis. i see no reason why the current tension would restrict the party-state elite cosying up to Hongkers when it starts to become evident to the international community quite how deep a pile of shit the party-elite is in.

    And on the day that that happens, when the CCP softens to Hong Konger’s demands for political autonomy (and consequently Hong Konger’s get accountable economic policymaking by HK Gov) the smart tycoons will sell their holdings and get the fuck out of dodge … and no doubt move back to old family digs in Shanghai and Canton. or develop the capability to create genuine, sustainable economic value through technological and other forms of entrepreneurial innovation (as opposed to rent-seeking economic parasitism)… one of those two, whichever is more likely lol…

    and … before anyone says i hate China … i believe the opening of China, and the deepening of political, economic, and legal systems that are founded on the independent rule of law, constitutionalism and the universal, inalienable rights of humankind (whether the transition occurs under a visionary Gorbachev style leader, or is a transformation germinated in the midst of a chaotic systemic collapse process) … is a necessary condition for the development of true prosperity, peace and freedom for the population of China (one of the most fucked over populaces in the world in the last 100 years), as well as a shift to a more equitable, sustainable, and moral global system of political economy … if you want world peace, or the end of human starvation, then we need China to be a peaceful, stable, free and enlightened actor in the world.

    apologies for the rambling and grammar … i blame the humidity…

  6. Cassowary says:

    Funny thing, this nostalgia. Were we that much happier in 2005? The huge protests of 2003/04 weren’t long over, Tung was limping out of office, the NPC had just Decided that we were not to have democracy in 2007, unemployment was still at 5.5% (down from a peak of 8% in 2003), and Bow Tie Tsang looked like the best thing since sliced bread. On the plus side, housing was more affordable and the invading tourist hordes were us going up to Shenzhen. (Remember how the patriots back then were exhorting us to stay and spend our money in Hong Kong?) But I’m pretty sure that in 2005, we thought 2005 mostly sucked.

  7. reductio says:

    And news just in. The Shanghai Stock Index finishes down 8%. And that’s after the National Team tries to keep this lead balloon aloft. Thank goodness for Hong Shanghai Stock connect. Gold Bauhinias all round!

  8. Citizen says:

    You’re right Cassowary.

    There are a lot of fucking blowhards commenting here. As ever.

  9. Chinese Netizen says:

    @Monkey Uncensored’s Shaun Rein attack: well said, sir. Can’t disagree with any of what you wrote. He’s a despicable, arse licking piece of shit of the lowest order.

  10. Yoyo the yodeling yokel from Yonkers says:

    When it all starts to unravel in the Glorious Motherland, and it may happen sooner than you think, Hong Kong and Taiwan will be the havens of stability that many on the mainland will yearn for. Interesting times indeed.

    @Stephen: don’t worry about 689. It will be taken care off.

  11. FOARP says:

    I can’t say I think much of Shaun Rein, not least because, judging by the fact that he has blocked me on Twitter despite my never having actually followed him (or even really engaged with him), he obviously doesn’t think that much of me either.

    He comes in a step above guys like Chris Devonshire-Ellis, since at least he actually has all of the qualifications that he claims to have, but his analysis is so often just “the CCP is awesome, and I have great CCP connections!”. He lacks real insight or impartiality and is not worth engaging with most of the time.

    I have no idea whether his market research firm is any good or not, but some of the stuff he’s published in the past is pretty dubious. The one that stand out for me was a survey of 12 “high net worth individuals” about whether they were put off shopping in HK by perceived anti-Mainland attitudes. Leaving aside that blatantly obvious fact that 12 is too small a sample, and that it’s impossible to believe that these 12 people were randomly selected, the survey returned a result of exactly 60% saying “yes” – an impossible figure since 60% of 12 is 7.2 people.

  12. FOARP says:

    PS – Here’s the offending article. The article bears reading in full just to get the flavour of the piece. Money quotes:

    “I was dining at an ultra-luxury resort in Bangkok talking with a millionaire from Beijing about the rising anti-mainland Chinese sentiment in Hong Kong. “It is not unexpected,” the millionaire told me as she checked her shopping bags. She continued, “Every time I visit there, I feel underlying prejudice, whether during business meetings or when shopping at luxury outlets.”

    . . . .

    In interviews with a dozen wealthy Chinese almost all of them told me whenever they travel to Hong Kong for business or pleasure, they feel “many look down” upon them and treat them “like country bumpkins.”

    I was in Hong Kong last week and asked some local people what they felt about these protests. I was surprised at the level of anger many expressed towards Chinese mothers. One man in his forties told me he did not want them to come anymore. Another 30-year-old woman said, “They should not be allowed here. It is crazy.”

    . . .

    In interviews with a dozen people who said they expected to travel abroad in the next year, none told my firm that the anti-China sentiment would stop them from visiting Hong Kong completely, but 60 percent said they would strongly think about other countries to visit instead of Hong Kong now, because of the discrimination.

    Pretty much everything Rein writes is in the same vein: “I know so many super-rich Chinese people and their opinions all support whatever view-points I’m putting forward”. As if this were some kind of real insight.

  13. Joe Blow says:

    Hang Seng tanking big time. Looks like ‘stock market oracle’ Uncle Four may have to wait a little while for his “30,000” prediction.

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