I spent the weekend in sunny Shenzhen, delighting in such delights as Szechuan and Muslim cuisine. If only in Hong Kong we could get 25 dumplings for 15 bucks…
And then there was this…
(OK – the two above were separate places.)
However, there is a price to pay. Even for fairly frequent visitors, it is a nuisance to be just a few miles from Hong Kong and yet unable to check Twitter, to Google anything or to peruse YouTube. Also, you can’t get the online South China Morning Post. Which is why I missed the story about Hong Kong Financial Secretary John Tsang’s anger at Moody’s cutting the city’s debt outlook from stable to negative. (Bloomberg report here, and Standard editorial here.)
Since the Hong Kong government has vast reserves and consistent surpluses, it does not need to issue debt except as PR stunts (like trying to stimulate a market in ‘Islamic’ bonds for no obvious reason) or to by-pass the Legislative branch on financing white-elephant projects (the third runway). Moody’s warning is on one level just academic.
Pro-Beijing and other detractors hurry to remind us that Moody’s gave overly generous ratings to mortgage derivatives and key players involved in the 2008 meltdown. This is true. Are they saying that the ratings agencies have not since mended their ways? In which case, we should conclude that Moody’s is understating the extent to which Hong Kong is screwed.
John Tsang and fellow officials are upset by what Moody’s is saying in its deep-down, between-the-lines sort of way. The agency suggests that Hong Kong’s high exposure to the Mainland economy is a Bad Thing – the exact opposite of the official line about Belt-and-Road/integration/blah-blah, but pretty similar to what young localist radicals say. Even more scarily, Moody’s says that ‘political linkages with China are weighing on Hong Kong’s institutional strength’.
Here it is alluding to a whole range of trends over the last few years that few members of polite society dare mention in public, let alone connect as dots:
- the Hong Kong government’s selective/biased handling of broadcasting licences, university appointments, policing of protests, public-prosecution decisions, electoral rules;
- a marked tendency for senior officials to parrot Beijing-speak (Belt-Road-babble, motherland/integration/cooperation-blather), growing use of government ‘public interest’ information resources for obviously political campaigns;
- the growing influence of Chinese state-linked companies and businessmen in local media, finance, trading and other sectors, and the listing of whacko-governance Mainland firms on our exchange;
- Beijing-backed intimidation/smearing of critics, and recently, a damning precedent for Mainland security agents to kidnap people off the streets of Hong Kong and transfer them over the border for forced confessions, with no reference to local laws or authorities.
We could add (though it is also a way to feed co-opted business interests) the vast expenditure of public funds on needless infrastructure projects to symbolize Hong Kong ‘integration’ (HK-Zhuhai Bridge, HK-Shenzhen High-Speed Rail). And more.
Moody’s mentions none of these items by name. But in the Hong Kong and international business establishment, it is not done to talk even about the possibility of any such things. You sweep these elephants-in-the-room under the carpet and don’t rock the boat. The bureaucratic elite play along. How else can John Tsang and Chief Secretary Carrie Lam stay sane? Otherwise, they have to face the fact that they have lost their moral bearings, serving an administration that is entangling Hong Kong into Beijing’s Leninist system of control. The pressure will be on the other ratings agencies not to follow Moody’s in finding that the Emperor is not wearing any clothes.