Some cynics among us might assume that Hong Kong’s first Five-Year Plan is mainly box-ticking symbolism – a big box of economic and patriotic buzzwords wrapped in a Mainland-sounding package. But a (paywalled) Bloomberg op-ed sees it as a decisive shift away from laissez-faire to the sort of industrial policy seen today in many economies (such the US’s push to encourage domestic chip production)…
Northern Metropolis is where Hong Kong aims to attract R&D investments and global talent. By tapping neighboring Shenzhen’s manufacturing powerhouse, Hong Kong can build competence in emerging technologies like quantum computing, allowing the city to diversify its economy toward tech services.
It’s not as if Hong Kong was previously a libertarian paradise. The government owns all the land, and since the mid-80s – when Beijing for some reason demanded tight limits to land auctions – maintaining high land valuations has been a major government priority. This pushed up real-estate prices, and gave the government and developers easy revenues/profits. It seemed like a neat trick while the Mainland economy underwent its massive post-Mao boom and Hong Kong enjoyed a ‘gateway to China’ monopoly. Hong Kong officials didn’t mind that property speculation and landlordism wiped out genuine wealth-creating entrepreneurism so long as land revenues and property prices kept going up.
By the 2010s, this skim-hub game was getting past its sell-by date. Housing prices were a core reason for anger among the population – which boiled over in 2019. And Hong Kong found itself overpriced and uncompetitive for many economic activities. Unable to conceive of any alternative to the property scam, officials attempted to kick-start hubs and zones, most of which relied on granting privileged sectors access to relatively cheap space. It always has to be about real estate.
The Five-Year Plan expands on this approach, aiming – as the Bloomberg piece puts it…
…to make the private sector commit to long-gestation investments that it may otherwise avoid given the enormous uncertainties along the way.
Forty years after most factories relocated over the border, ‘manufacturing and new industrialization’ is supposed to grow by 10% a year and account for over 5% of GDP ‘after’ 2030. But where is Hong Kong’s comparative advantage? Why would you invest in bio-tech, robotics or quantum computing on this side of the border?
A more radical approach would be to admit that the city’s cost base is not a reflection of quality so much as a bad policy choice. Let it rip: replace up-front land premiums with a plain annual property tax, allow the market to build a few hundred thousand decent-sized affordable homes up in the New Territories, and see what enterprising Hong Kong people can do with the landlords off their backs.
US lawmakers introduce a bill to ‘establish a deterrence and accountability framework for Hong Kong political prisoners’…
The legislation would require the State Department to determine within 30 days whether abuse, medical neglect, torture, detention conditions, or other actions contributed to a political prisoner’s death and identify those responsible. It would then mandate sanctions within 60 days against responsible or complicit PRC and Hong Kong officials, requiring international coordination, as well as requiring regular reporting to Congress on the health of, and access to, Jimmy Lai and other political prisoners.
For nostalgic old folks: a UK 1986 news item on the Queen’s visit to Hong Kong. Old places and faces – and a ‘rather motley fly-by’…
“The legislation would require the State Department to determine within 30 days whether abuse, medical neglect, torture, detention conditions, or other actions contributed to a political prisoner’s death and identify those responsible. It would then mandate sanctions within 60 days against responsible or complicit PRC and Hong Kong officials, requiring international coordination, as well as requiring regular reporting to Congress on the health of, and access to, Jimmy Lai and other political prisoners. ”
These sanctions have already been proven to be useless as they do not apply to family members. And now sanctioned persons can even hold funds via self custody in a HK licensed stable coin.
@Mark Bradley
I’ve been lobbying for years that individual sanctions must be extended to all immediate family members to be effective. I’ve gotten nowhere.
One type of response is pure indifference: they practically come right out and say, “Don’t you know we do these things for virtue signalling purposes only?”
The other type of response is equally infuriating: “We don’t do that sort of thing, we’re the good guys, mustn’t hurt innocent bystanders, children shouldn’t pay for the sins of their fathers, etc.”
Really steams my egg.
Thanks for the YouTube item; looked like a more innocent time.
Land premiums should be eliminated and replaced by a “tax” upon completion of the project and/or when each flat is sold. This reduces the risk for developers as their initial land cost plus construction costs are all that they have at risk. So if their cost is $3,000 psf and they sell for $10,000 psf, the $7,000 psf profit is taxed at some given level – say 30%. But developers would be much more aggressive in building as they no longer really have any risk of flat prices declining which would result in a loss if they paid a high land premium 3-5 years before selling the flats. In most cases, the developer would risk profit margin shrinkage rather than an absolute loss. Bankers would love it as well as they will now be pretty much assured that their loan will be good as the risk of developer bankruptcy diminishes.