Big Lychee, Various Sectors

From AFP via HKFP, a look at Hong Kong’s  ‘mammoth’ budget deficit…

The Chinese finance hub last saw a string of deficits after the Asian financial crisis in the late 1990s — but their scale was a fraction of the HK$252 billion (US$32.4 billion) shortfall in the 2020-21 fiscal year.

Hong Kong has recorded annual deficits exceeding US$20 billion in three of the past four years, according to official figures.

…While Chan earlier predicted a return to surplus in “three or so years”, a former government minister told AFP that the situation is “not just due to economic cycles” spurred by the coronavirus pandemic.

“If you look at Hong Kong versus other economies in the region, for example Singapore, those other economies have done much better,” said Anthony Cheung, who oversaw transport and housing policies.

Adding to the headache is the exodus of companies and high-paid workers as the city’s international reputation took a hit after Beijing quelled pro-democracy protests and imposed a sweeping national security law in 2020.

…The city’s economic fortunes are ultimately tied to how investors view the city as a regional and global hub, said Cheung, the former minister.

“We have to continue to showcase Hong Kong as a city that welcomes all kinds of views, all kinds of people, so long as they stay within the parameters of the national security legislation,” Cheung said.

The government does not appreciate suggestions that the post-2019 ‘second handover’ NatSec order might play a role in Hong Kong’s economic predicament. It’s impossible to disentangle the ‘NatSec’ effect from other factors. For example, Covid would have hit the economy under any circumstances; but the new ‘all-patriot’ leadership made things x% worse by insisting on emulating Beijing’s zero-Covid approach well after the rest of the world started opening up. If it were possible to measure different underlying causes, China’s post-bubble economic slowdown would account for the bulk of the problem. Looking forward, global backlashes against China’s over-production will increasingly weigh in.

As for what to do about it, we’ve been over this before. As the article says, the Northern Metropolis project looks likely to go ahead. If used wisely (if), the land freed up by rezoning and other measures could deliver decent affordable housing on such a scale as to offer economic stimulus in its own right. Imagine what households could do if they spent less on housing. The Lantau reclamation looks, literally, dead in the water, though officials don’t want to admit it. 

Anyone can think up relatively small measures like trimming elderly transport subsidies or jacking up parking fines, which might make sense but don’t impact the numbers much. Few want to consider major shifts in revenue and expenditure, as the Budget will no doubt show.

On the tax side, the main serious options are higher salaries/profits tax rates, or a (more regressive) sales tax. All of which might harm economic activity anyway. There’s a danger that officials will try to resurrect the old high-land-price housing-scam fiscal model, which has done so much to distort the economy (and create public discontent) in the past. Land revenues, the article says, were US$21 billion in 2018 and US$ 2.5 billion last year. That way, they might calculate, they can protect their own over-inflated pay packages. Because, probably, the only responsible way out is a long (five-10 years?) civil-service pay freeze.

If we are looking to trim a little here and a little there – how about having fewer people who are ‘innocent until proven guilty’ in jail? David Webb’s latest update. As of end-2024, 38.8% of incarcerated people in Hong Kong were on remand – ie awaiting trial. Add in those detained under immigration laws, and that’s 40.2%, or 3,889, of people in custody who have not been convicted. Both the percentage and the total number are records.

The government plans to make sure independent Hong Kong unions do not pose a NatSec or foreign-influence risk…

The Hong Kong government has proposed legislative amendments to permanently bar those convicted of national security offences from serving in labour unions and to require all foreign funding to be vetted by the authorities.

…To bar funding from an “external force” that would endanger national security, the government proposed that unions must make an application to the registrar declaring the source and usage of the funds provided, according to a document submitted to the Legislative Council. “Trade unions shall not receive such funds unless approved by the Registrar,” it said.

According to the document, the amendments to the ordinance would adopt the same definition of “external force” under the city’s homegrown national security legislation, to cover foreign governments, political parties, and external organisations “that pursue political ends,” as well as their related personnel.

…As national security offences are “more serious” than existing crimes that would bar one from serving in a union, including fraud, dishonesty, extortion, and triad activities, “we consider that stricter restrictions should be imposed,” the government said in its proposal.

Are there any reasons to suspect that any unions pose some sort of threat to national security?

And a student union cancels the showing of a Burmese film about human rights after officials warn that it might be breaking the law.

Some Taiwanese-themed light relief from YouTube…

Everyday life of an expat family (presumably American) in Taiwan in 1960. They had a maid, great cars, and flew on Civil Air Transport flights (of CIA-front fame).

A 19-minute rom-com called Mentalese Express (turn on subtitles). Set in an office elevator in Taiwan day by day, a young Japanese male expat and a local girl want to get to know each other but don’t dare actually talk. Not a great title, but full of hilarious awkwardness. (Not sure what she sees in the guy.)

Apparently, Australian-born actress Joanne Missingham is one of Taiwan’s top Go players. And if you liked the short film, check out the little BTS documentary about how they shot it. (That’s ‘behind the scenes’, duh.)

The Democratic Party considers disbanding. Along with other pan-dem groups, they are barred from participation in what was once a semi-representative electoral process for the legislature and district councils. In a system that does not recognize the independent voices of civil society, they have no standing in public life. 

So why have they carried on? Perhaps in the hope that the authorities might one day calm down and give a little symbolic space back to opposition bodies. Or more likely out of a calculation that it’s simply not worth the hassle – and maybe the government will simply look weaker for driving another harmless/inert pressure group out of existence…

Martin Lee, a veteran democrat who was the founding chairperson of the Democratic Party in 1994, told the paper that he had no communication with the current executive committee, but he was “not surprised” about the talk of disbandment.

Lo, who was re-elected chair in December following a change of term for the party’s executive committee, said at that time that the party still represents “a slice of residents” but acknowledged that the party carries less influence than before.

…Multiple members of the party have been jailed or detained, including Helena Wong and Lam Cheuk-ting, as well as former chairs Wu Chi-wai and Albert Ho.

Members of Democratic Party, as well as their families and employers, have received harassing messages and letters in the run-up to its internal election, Lo said last November.

A couple of videos, via Twitter…

‘Absconder’ Chloe Cheung on the BBC.

And an interview with Mark Clifford, author of The Troublemaker, on Jimmy Lai.

An NYT op-ed looks at the other huge threat to global trade…

China now dominates global manufacturing, and its trade surplus dwarfs the biggest run by Germany and Japan during their eras of postwar export supremacy. Countries around the world get cheap Chinese products, but they can’t sell nearly as many of their own to China. Their export sectors are hurting — see Germany — and not hiring.

Why is Mr. Xi doing this? To make up for the Chinese government’s mismanagement of its domestic economy.

The author recounts China’s longstanding over-investment and under-consumption, and its recent property bust…

Mr. Xi’s response to the Covid pandemic also played a role. To cushion the pandemic’s economic shock, advanced economies around the world opened up their government checkbooks to support consumer spending. The one major economy that didn’t take significant steps to stimulate its economy and support households was the country where the virus first took hold: China. He is ideologically opposed to cutting government checks or anything else that smacks of welfarism, believing that consumer stimulus — unlike investment — generates no lasting value. So while consumers in the United States and elsewhere began spending again, including on Chinese imports, China was able to recover on the back of other countries’ stimulus checks while throwing everything into building out its manufacturing sector to replace the growth that property wasn’t providing.

In other words, Mr. Xi is making China’s trade partners and competitors pay for the government’s misplaced bet on real estate and its longer-term failure to strengthen the spending of Chinese households.

…Mr. Xi has a one-way vision of trade. Mr. Trump often sounds as if he doesn’t believe in any trade. Between the two of them, the global economy is in for a rough ride.

The four stats to remember (give or take a percentage point): China has 20% of the world’s population, and accounts for 20% of the global economy; and it produces 37% of global manufactures, and accounts for just 13% of global consumption.

NatSec police bring in another relative of former District Council member Carmen Lau for questioning. A week ago, they brought in her uncle and aunt. She says the latest to be interviewed is a ‘distant’ relative (apparently her sister-in-law).

As an ‘absconder’, Lau is wanted for ‘inciting secession and colluding with a foreign country or with external elements to endanger national security’, with police offering a HK$1 million reward for her. (See Brian Kern’s list from three weeks ago.)

So what exactly do the NatSec cops ask when they sit an absconder’s parent, sibling, cousin or ex-colleague down in an interrogation room? ‘When did you last email your niece?’ ‘Did they send you a Christmas card?’ ‘Did you give them laisee?’ The people brought in typically seem to spend several hours in the police station. Are they being questioned the whole time, or are they sipping government tea while hanging around waiting for someone with a clipboard to see them for five minutes? (And are the authorities already tapping relevant persons’ phones and thus know the answers anyway?)

Foreign Affairs looks at how Donald Trump wants to turn the US into a ‘competitive authoritarian’ country, like Hungary or Turkey (where oppositions and elections exist, but the playing field is rigged)…

The most visible means of weaponizing the state is through targeted prosecution. Virtually all elected autocratic governments deploy justice ministries, public prosecutors’ offices, and tax and intelligence agencies to investigate and prosecute rival politicians, media companies, editors, journalists, business leaders, universities, and other critics. In traditional dictatorships, critics are often charged with crimes such as sedition, treason, or plotting insurrection, but contemporary autocrats tend to prosecute critics for more mundane offenses, such as corruption, tax evasion, defamation, and even minor violations of arcane rules. If investigators look hard enough, they can usually find petty infractions such as unreported income on tax returns or noncompliance with rarely enforced regulations.

Some places, of course, do both.

Just in: Ted Hui’s assets, transferred to his family, are confiscated.

AP looks at Hong Kong’s subdivided apartments…

Jimmy Au’s world shrinks to about the size of a parking space whenever she gets home.

Her cramped Hong Kong home is one of four units carved out of what was once a single apartment. Most of the space is occupied by the bunk bed she shares with her husband and son, and their sleep is often disrupted by neighbors returning late or heading out early. Au’s son often gets bruises bumping into things. Privacy is limited, with only a curtain separating the bathroom from the kitchen.

But what troubles Au most about her home is that she might lose it. 

HKFP on a sociologist’s work on people living in the tiny homes…

[Sociologist Ruby Lai] Lai and her research partners spent two years doing intensive fieldwork in Kwai Chung, Tai Kok Tsui and Kwun Tong. Their research findings were later turned into an art exhibition in one of the districts.

Also in HKFP – the landlords’ side of the subdivided flats story…

Chan told HKFP that he rented a 900-square-foot flat in North Point at the market rate of HK$29,000, turned it into six subdivided units and leased them for a total of HK$40,000 per month.

Charging around HK$6,500 monthly rent for each of over 600 units, Chan’s company rakes in a HK$1 million profit each month after taking maintenance and administrative costs into account.

While he is unwilling to risk the legal repercussions once the new law is in effect, he also said that remodelling each subdivided unit expected to be deemed illegal under the new regulation would not be economically justifiable.

Renovation companies told him it would cost around HK$150,000 to renovate a single subdivided unit in compliance with the proposed standards. Even if he has the funds for the renovations, it may take years to break even on the extra costs, he said.

Yes, landlords face problems too. While it’s easy to demonize them for high rents, they do not cause the underlying problem – a shortage of housing resulting from government policy.

TransitJam introduces ‘probably the first tourist destination in the world to have its own website showing you how to leave it’…

…police launch the Kai Tak Easy Leave website which apparently harnesses the “power of AI” to show people the best way to get away from Kai Tak Stadium.

From Bloomberg an interview with Mark Clifford, author of The Troublemaker…

You can’t separate the legal campaign being waged against Jimmy from what’s happening in Hong Kong more broadly. We had a listed company. The majority shareholders’ voting rights were taken away without a court order. Then our bank accounts were frozen. We had almost a thousand staff. We couldn’t pay them because the bank accounts were frozen. But then the government’s labor tribunal took us to court because we didn’t pay people. We had four separate investigations against us. When you’re on the other end of the state coming after you, it’s really freaky. I had to hire my own lawyers and it’s scary, even though I’m sitting in the States and I’ve done nothing wrong…

…What we’re saying is, you’re not going to normalize this until you start letting people out. And of course, Jimmy’s not the only one. We think there are close to a thousand people in prison. A lot of those people are going to get out in the next year or two. Their lives are going to be forever scarred. But you’ve got to start easing up on Hong Kong, and then maybe the US can start thinking about easing up on sanctions.

…He’s the most prominent or influential independent Chinese language media in the world. I mean, the guy’s just sizzling with ideas. Why do you want to lock up a job and wealth creator like that?

The Guardian on the intimidation of lawyers acting for Lai in the UK…

UK-based lawyers have spoken out about being targeted by the Chinese state and its supporters in a campaign of intimidation including surveillance, hacking of bank accounts and rape threats.

The barristers, from Doughty Street Chambers in London, say there has been a coordinated and concerted campaign against them since they began acting for the jailed Hong Kong pro-democracy activist and media mogul, Jimmy Lai, three years ago.

Caoilfhionn Gallagher KC said she had received threats via email and social media of dismemberment, rape and death, which have extended to her family in recent months.

“I had a threat to rape one of my children because of my work,” she said.

The BBC profiles another ‘enemy of the Chinese state’ in the UK…

Just over a year ago, Chloe Cheung was sitting her A-levels. Now she’s on a Chinese government list of wanted dissidents.

The choir girl-turned-democracy activist woke up to news in December that police in Hong Kong had issued a $HK1 million … reward for information leading to her capture abroad.

“I actually just wanted to take a gap year after school,” Chloe, 19, who lives in London, told the BBC. “But I’ve ended up with a bounty!”

From Brian Kern/Kong Tsung-gan, a list of all the civil society, media and other independent organizations that have closed down in Hong Kong since 2019/NatSec. Quite a list, including Apple Daily. He also mentioned those groups still operating…

In one category are those that attempt to stick to their original purpose. Examples are the political party, League of Social Democrats, and the labor group, Hong Kong Journalists Association. Both have been repeatedly targeted by the regime for persecution. (There will be a future Hong Kong Repression Monitor article on LSD as a case study in the various forms of harassment they have had to endure. HKJA is subjected to constant petty persecution, from harassment of members of its executive committee to repeatedly thwarted attempts to book football pitches.) Independent bookstores largely flew under the radar in the first stages of the attacks on civil society, but after some of the bigger targets were wiped out, the regime has targeted independent bookstores for constant “inspections” by various governmental agencies. As a result, two have closed and others continue to operate under besieged circumstances. (There will also be a future Hong Kong Repression Monitor article on book censorship in Hong Kong which will focus on the persecution of independent bookstores.)

In another category are those that have “adapted.” This means they have ceased being critical of the regime and have largely “harmonized” their operations so as to avoid any attacks by the regime. Examples here are the Hong Kong Bar Association, which used to be strongly critical of the regime on legal issues and a bulwark against attempts by the regime to erode rule of law and human rights protections, and the Foreign Correspondents’ Club, which used to speak out on human rights issues in general and those pertaining to freedom of the press in particular, hosting controversial speakers and running the Asian Human Rights Press Awards. The public broadcaster Radio Television Hong Kong has also been harmonized: once an independent outlet similar to the BBC in the UK, it has become a mouthpiece of the regime, more similar to Xinhua in China.

Also mentioned in the list is HKPORI, subject of a HKFP op-ed…

The government needs to meet the expectations of the community. How do officials know what these expectations are except via credible, scientifically conducted, publicly available polls? This is what PORI delivers.

In 2018, the government declared that it sought to be transparent, open and accountable to the public “as much as possible.” Polling outfits like PORI and the media are part of the infrastructure for holding the government to account. They bring to public notice issues of concern to the public.

The relationship between the political class and polling is conflicted. Leaders praise polls that support them, but condemn polls, the pollsters and their methods when they do not. Leaders need to recognise that polls and pollsters are the message and the messenger. Credibility depends on delivering the good and the bad. In this, officials are mostly opportunistic.

A Jamestown Foundation China Brief article on apparent reconnaissance and sabotage against Taiwan’s undersea communications cables… 

Later in January, another Hong Kong-registered vessel was reported loitering for nearly a month close to the coast of southern Taiwan. The Vasili Shukshin, a Belize-flagged, Russian-operated cargo vessel, spent December 19, 2024 to January 14, 2025 in the general area from Kaohsiung to the Hengchun Peninsula. The vessel did not enter port and maneuvered on a track that made little sense in commercial terms. As one maritime analyst described it, “the vessel was aimlessly criss-crossing the area near Taiwan’s Fangshan undersea cable landing station for 3.5 weeks for no apparent reason.” It eventually exited the area and returned to the Russian Pacific port of Vostochnyy.

Also from Jamestown – what’s behind the odd leadership changes in the PLA?

…possible motivations include combating corruption, managing factional conflicts, asserting dominance as an aging autocrat, overcoming limited military service experience, and following successful historical precedents for control.

Inspired perhaps by chefs who lure suckers to special feasts of caviar with truffle and gold flakes, Ocean Park is offering exclusive VIP opportunities to ‘meet’ its baby pandas. Expect to pay…

…HK$1,500 each for a special, 30-minute visit before the park opens each day

…Each session will start at around 9.30am and can accommodate up to 40 people…

Perhaps wisely, considering how special tickets to see stars sometimes flop, the park’s chairman is managing expectations…

“For the sake of animal welfare, there will not be any activities for people to interact with or hold the giant pandas.”

The pair of panda cubs might not appear at the same time to meet the public because they are still young, Pong added.

Or maybe they find the whole concept offensive. “We feel like we’re living in a zoo sometimes,” one told me by phone this morning.

HKPORI will suspend its self-funded surveys and perhaps close down for good…

Pollster [PORI CEO] Robert Chung has been taken in by police to assist with investigations twice since PORI’s former deputy CEO Chung Kim-wah, currently in the UK, was added to a wanted list last December over alleged violations of Beijing-imposed national security law.

Robert Chung was first taken in for questioning on January 13, the same day the PORI office was raided. He was taken in a second time later that month.

PORI will “suspend all its self-funded research activities indefinitely, including regular tracking surveys conducted since 1992, as well as all feature studies recently introduced,” the polling organisation said in a statement on Thursday.

“HKPORI will undergo a transformation or even close down,” while CEO Chung “welcomes interested parties to take over the Institute,” the statement said.

As with David Webb’s superb on-line database, PORI’s opinion polls would ideally be adopted by Hong Kong U or some other university. But HKU actually cut ties with the polling group in 2019, leading Robert Chung to pretty much predict what is now happening.

Maybe the government should take it in-house. Who wouldn’t want accurate data on what citizens think?

A few more things to read…

From Quillette – at the site of protests over a planned new giant Chinese embassy in London…

A war is coming to Britain’s streets—a war that pits those Hongkongers who have made the UK their home against a Communist Party that wants to make the UK its vassal. This war has nothing to do with the Woke/DEI propaganda that seems to constitute modern police training (if either of these new combatants were to shout “Racist!,” the police really would be in a position of some difficulty.) Things are about to get a lot more complicated, and Britain is not ready.

The Globe and Mail on Hong Kong’s Four Trails ultra-marathon – a 300km torture for only the fittest (and perhaps borderline insane), subject of a surprise box-office hit documentary.

Former Chief Executive Carrie Lam’s taxpayer-provided secretariat is to move from Pacific Place, where the rent is HK$5.6 million, to the government’s Immigration Tower, where renovation will cost a mere HK$2.8 million. (Look – gold toilets aren’t cheap these days.). The SCMP reports…

[Chief Secretary Eric Chan said] the government previously spent about HK$6.55 million to renovate her office in Admiralty but stressed it did not have to return the premises to its original state.

“The government liaised with the landlord, who agreed to take over the office in an as-is condition, and no reinstatement works will be required,” the chief secretary said.

Lam’s office came under scrutiny by lawmakers and the public when it was revealed the Admiralty space cost taxpayers an estimated HK$9.17 million in the 2023-24 financial year, including HK$5.67 million in rent.

Swires aren’t stupid. If someone had spent HK$6.55 million renovating an office I owned, I would sure as hell let them off returning it to its original state.

HKFP provides some additional context…

In 2017, Lam announced that the Immigration Tower would be demolished to make way for a new wing of the Hong Kong Convention and Exhibition Centre. Local media reported that the complex would be demolished in 2026.

Chief Executive John Lee confirmed last January that the demolition plan would go ahead as planned. “So while the redevelopment plan will go ahead, for the buildings that have been vacated, we should make good use of them,” he said.

“That is why we are now renovating the accommodation there, so as to allow the former Chief Executive to move in. I think that will save government money, and also that will ensure government resources are properly utilised.

‘Good use’. So after one year, it will be returned to its original state in a big way. And this is using resources wisely. It’s almost as if there’s: a) no budget deficit; and b) no-one who could find a more productive and economical short-term use for empty space in a prime location – just use it as a shelter for street sleepers if you can’t think of anything better. 

Has anyone explained why all four former CEs can’t share a pool of secretaries and drivers at the Kennedy Road site? (Or why they need any of this and can’t just make their own dental appointments and take a bus.)

Another thing: funny how we have a group of cops running Hong Kong, arresting people for their T-shirts and pushing inane pandas everywhere, and still you never hear anyone saying ‘Gosh, I miss Carrie Lam’.

While we’re at it – a transcript of Jimmy Lai’s trial on Tuesday is here. Scroll down to ‘15:22 Lai Calls Himself a Political Prisoner’.

A message from David Webb.

It’s not just me: Hong Kong really is infested with pandas. Aesthetically displeasing renderings of the creatures are all over public transport, on government publicity posters, in parks and foyers, and in senior officials’ speeches. Check under your bed. 

The word has obviously gone out that promoting the lumbering, dull-witted beasts is vital to promoting Hong Kong as a tourist destination. It could also be that our charismatic leaders calculate that getting the infantile citizenry super-excited by pandas will divert attention from the mood of stagnation permeating the city for some years now. 

And perhaps there is a deeper meaning to it all – a patriotic angle. Companies are now chucking cheap images of Ailuropoda melanoleuca on advertising hoardings and elsewhere, in a manner reminiscent of earlier political performances and pre-emptive cringing, such as embarrassingly forced enthusiasm for ‘Belt and Road’. (Maybe I’m showing my age: the hip buzzword du jour is ‘Hetao Shenzhen-Hong Kong Science and Technology Innovation Co-operation Zone’.)

If you thought you could get away from the animals by going to the post office to send something by registered mail, you’d be wrong…

Away from furry distractions – the Inter-Parliamentary Alliance on China (IPAC)has noticed that it is being talked about at the trial of Jimmy Lai (see here) . Its response…

We … categorically reject the false claims regarding Jimmy Lai’s involvement with our network. On days 130-1 of his trial, Jimmy Lai was questioned repeatedly by the prosecution and the presiding Judges about his alleged connection to IPAC.

…Jimmy Lai had no involvement in the foundation or operations of IPAC…

IPAC has repeatedly offered the Hong Kong Department of Justice (HKDoJ) the opportunity to review evidence material to Mr. Lai’s charges, and which is in our possession alone. To date, they have failed to respond. Their silence on this issue highlights serious deficiencies in Hong Kong’s contemporary legal system.

Ongoing attempts to link Jimmy Lai to IPAC are part of a broader effort to portray him as having orchestrated criticism of the Hong Kong authorities at home and abroad. This narrative is false … the reality is that the relationship prosecutors are attempting to construct did not exist. We condemn this fabricated narrative, reiterate our offer to rebut it, and call for an end to all unjust politically motivated prosecutions.

Two arrested for allegedly perverting the course of justice – helping people wanted by police following the 2019 protests. And police question relatives of Carmen Lau, former district council member and current ‘absconder’ with a HK$1 million bounty on her. She says it is because of her recent activities in the UK.

Which will be the first year with there are no arrests connected to 2019? Not this one. 

Some more on Trump as pro-China – Bill Emmot in Asia Times…

This brings in the final pattern that is emerging. The Trump teams’ mission to establish “America Alone,” to impose trade tariffs on allies to achieve “wins” and to withdraw from international collaboration is creating an open goal for China.

If Beijing wants to strengthen its friendships with the Global South or even with long-time American allies, it now has a huge chance to score.