Big Lychee, Various Sectors

Who cares whether it’s Signal Number 1 or 3, or 8 or 10? HKFP explains them. The system dates from the era of sailing ships. As a mean editor who can trim 1,000 words to 300 with no problem, I would suggest that all you need is ‘nothing’ and ‘8’. The rest is pointless, unless you like ritualized crisis-building. If a typhoon is coming, just say so. 

In theory, the numbered Signals indicate specific conditions, like the distance of a cyclone. But in practice there seems to have been some storm-category inflation. Almost as if an ‘8’ today is what used to be a ‘3’. To make everything fuzzier, the authorities issued an unusual ‘pre-Signal 8 alert’ at noon yesterday. Then the actual Signal 8 at 2.20 (in Macau, they did it at 5.00). Schools had been shut the whole day, while businesses were closing by mid-afternoon. Seas were starting to get rough, so anyone who needed a ferry to get home would have to do so before services stopped. But for the other 99% of the population, the weather yesterday was pretty normal until well into the evening.

The obvious argument for bigger and earlier typhoon Signals is public safety. There was a time when the HK Observatory would hold off on the Number 8 until the last minute, when everyone had a couple of hours to get home (or to the pub). The brutes didn’t even give us enough time to panic-buy.

But some might wonder whether much of yesterday’s extensive announcements and Signal-raising were about making sure officials wouldn’t be accused of not doing enough. A few cynics might even think someone was amplifying a sense of impending potential danger in order to highlight how the government was boldly taking action to protect us. 

Which, in fairness, they have done, judging by the number of emergency vehicles zipping past my window this morning. But do we need the theatrics? Will they drag out the Number 8/9/10 hooplah into tonight?

The government announced a ‘Number 1 Standby’ (ie ‘nothing is happening’) signal just after noon yesterday, even though the typhoon was more than the usual 800 kilometres away. It then announced that it would put up the Number 3 by 9.40pm that evening and would ‘consider’ the Number 8 during the following (ie this) afternoon. It is now saying it will announce the number 8 at 2.20pm, and a ‘Pre-Number 8 Special Announcement’ two hours beforehand. Schools are shut today, as well as tomorrow. 

This is a big typhoon. Outlying islands will no doubt get a battering. Obviously, public safety is the priority, and emergency services need to be on heightened alert. But how does padding out the issuing of numbered storm categories and announcing early-warnings-of-warnings to the whole city really help? You have to wonder whether, in an effort to show everyone they are taking the incoming typhoon seriously, officials are inadvertently creating a greater sense of alarm. Now supermarket shelves have been stripped bare of bread, noodles and vegetables.

And will this continue after Ragassa has passed (which, believe it or not, it will)? Is the whole city going to stay shut down until Friday?

Non-panicky advice: get home in good time this evening and expect tomorrow to be a write-off.

There’s nothing Hong Kong loves more than an excuse to panic-buy…

Residents have begun to accumulate supplies in anticipation of the impending arrival of Super Typhoon Ragasa, while some retailers warned about potential price increases. 

In the flood-prone area of Heng Fa Chuen, residents were observed procuring additional provisions in preparation for Ragasa, which correlatively resulted in a modest increase in sales for local vendors. 

Businesses are projecting heightened foot traffic and revenue on the upcoming Monday and Tuesday, with some merchants indicating that prices may be adjusted based on the restocking situation.

There’s also a debate going on (somewhere) about whether taping windows up is a good idea.

HKFP op-ed on LegCo’s rejection of a government bill to establish a registration system for same-sex couples who married overseas. It describes some odd features of the process. The government did not hold a public consultation – but LegCo did. And that showed 80% opposition, despite a robust public opinion survey two years ago finding 60% support for same-sex marriage. And Beijing’s officials endorsed LegCo’s handling of the bill….

…The huge gap between public opinion (as shown in the scientific survey) and the LegCo vote reflects the unrepresentativeness of our “patriots-only” legislature. It also exposes officially identified “mainstream public opinion” for what it is – the opinion only of our officially selected patriotic political elite and their narrow band of supporters. 

The government’s lack of enthusiasm for its own proposal was palpable. Remember that only after the top court “kicked” the government did it do anything at all. For years, the government ignored the results of scores of lost lawsuits that exposed official mistreatment of same-sex couples. 

Indeed. The all-patriots LegCo would have voted for the bill if the authorities had wanted it, notwithstanding a few fundamentalist Christian members who show a curious obsession with gays. But the overall impression is that the government/Beijing’s officials were mainly concerned with asserting non-subservience to the court that ordered the change to the law.

As for the role of public opinion – the whole post-2019 ‘patriots-only’ move away from competitive elections tells you all you need to know. The system is designed not to be representative. 

An SCMP op-ed…

The decision by a majority of legislative councillors to vote down the same-sex partnerships bill has been presented by officials as some kind of triumph for the system of government. In fact, it sets us on the road to a slow-burning loss of credibility about our commitment to the rule of law.

A total of 71 members voted against the bill earlier this month, with just 14 in favour and one abstention. The outcome was widely reported in the overseas media, most directly highlighting that this was a direct rebuttal of a ruling by Hong Kong’s top court.

The narrative since put forward by some officials is that, despite the negative outcome, the process was a success because it showed all three branches of government carried out their duties faithfully according to the law. The judiciary interpreted the relevant law independently, the executive responded appropriately by putting forward legislation to remedy the adjudged illegality and the legislature exercised its free judgment.

This is pure sophistry. A significant minority of Hong Kong citizens have been denied certain rights that our Court of Final Appeal ruled they should have by law. The promise by the government to examine what might be done administratively to minimise the damage to those concerned is welcome but insufficient.

Another HKFP take on the subject here.

Also from HKFP – whatever happened to ‘Night Vibes’?

Launched in September 2023, the government’s Night Vibes Hong Kong campaign was once billed as the marquee push to revive tourism and domestic spending post-Covid. Performances, cultural events, markets and tours were promised, offering “festive and vibrant” experiences along the harbourfront and beyond.

By January 2024, it had expanded into Day x Night Vibes @ 18 Districts. As of the first quarter this year, more than 60 events had been held, officials said. But earlier this month, when a pro-establishment party urged Hong Kong to boost its “night-time economy,” reporters noticed that the campaign’s dedicated website had quietly vanished.

…into (presumably) the night.

Admit it – you hadn’t noticed, right?

Jessie Lau in Prospect on the 10th anniversary of the film Ten Years…

Now banned in Hong Kong and Mainland China, Ten Years captured Hongkongers’ anxieties in 2015 over what their home may become by 2025, in a series of haunting vignettes depicting the potential impact of Beijing’s increasing control over the semi-autonomous city. Filmed on a tiny budget of just HK$500,000 (£47,400), it was an instant hit upon release, selling out screenings across the city before it was pulled from commercial theatres following pressure from Chinese authorities. When it unexpectedly won Best Film at the Hong Kong Film Awards a year later, Beijing barred the broadcast of the ceremony on the mainland, calling it a “virus of the mind”.

I was a journalist covering the film awards for local media in 2016—an era of relative press freedom that now feels like a lifetime ago. I still recall the shock that reverberated across the auditorium that evening: the moment of utter silence, followed by rapturous applause. The flash of cameras from the press area, as we all flocked forwards, scrambling over one another, for our front-page shots. The look of disbelief on the executive producer’s face, as he stepped onto the stage and spoke about how the award represented hope in Hong Kong; how it belonged to us all.

For anyone who thinks an EV factory makes sense in Hong Kong – a good Reuters story on China’s car glut…

China has more domestic brands making more cars than the world’s biggest car market can absorb because the industry is striving to hit production targets influenced by government policy, instead of consumer demand, a Reuters examination has found. That makes turning a profit nearly impossible for almost all automakers here, industry executives say. Chinese electric vehicles start at less than $10,000; in the U.S., automakers offer just a few under $35,000.

Most Chinese dealers can’t make money, either, according to an industry survey published last month, because their lots are jammed with excess inventory. Dealers have responded by slashing prices. Some retailers register and insure unsold cars in bulk, a maneuver that allows automakers to record them as sold while helping dealers to qualify for factory rebates and bonuses from manufacturers.

Unwanted vehicles get dumped onto gray-market traders like Zcar. Some surface on TikTok-style social-media sites in fire sales. Others are rebranded as “used” – even though their odometers show no mileage – and shipped overseas. Some wind up abandoned in weedy car graveyards.

These unusual practices are symptoms of a vastly oversupplied market – and point to a potential shakeout mirroring turmoil in China’s property market and solar industry, according to many industry figures and analysts. They stem from government policies that prioritize boosting sales and market share – in service of larger goals for employment and economic growth – over profitability and sustainable competition. Local governments offer cheap land and subsidies to automakers in exchange for production and tax-revenue commitments, multiplying overcapacity across the country.

Another hub idea: rather than assembling EVs, how about disassembly of aircraft?

In the SCMP (where else could it be? – a Chinese academic thinks the country could use West Germany’s approach to absorbing Taiwan …

Beijing could incentivise Taiwan to reunite with the Chinese mainland by learning from German policies adopted after the fall of the Berlin Wall, a Chinese government adviser told a security forum on Wednesday.

Zheng Yongnian, a political-science professor from the Chinese University of Hong Kong, Shenzhen, said Beijing could consider steps such as financial support and unconditional citizenship for Taiwan residents.

He hinted that mainland China had the means to adopt measures similar to some of Germany’s post-reunification policies, such as a “solidarity tax” and exchange rate parity.

He told the Xiangshan forum in Beijing that when the East adopted the Deutschmark months before reunification, the East German mark was worth far less than the West’s currency “but they treated one East mark as equal to one West mark – that gave many ordinary [East German] people incentives to side with West Germany”.

He added: “The current exchange rate between the Chinese yuan and the New Taiwan dollar is roughly one to four, and I think that could work.”

He also cited the German government’s nationwide “solidarity tax” – initially 7.5 per cent, later 5.5 per cent – on income and corporate taxes to fund infrastructure and integration, hinting that mainland China could adopt a similar approach.

The levy raised the equivalent of hundreds of billions of euros and is still being paid by the top 10 per cent of earners today.

The Deutschmark thing is irrelevant, as a ‘One Country, Two Systems’ policy would leave Taiwan with its own currency. Anyway, West Germany made that pledge because the DDR’s currency was non- convertible, unlike Taiwan’s (though like China’s). Which brings us to the main problem with this academic’s proposal: German reunification involved a rich and democratic region absorbing a poor and unfree one. (Hence the solidarity tax – a wealth transfer to help the East catch up.) In the case of China and Taiwan, it’s the other way round: you’re trying to lure a free society with a developed economy into being taken over by a developing authoritarian one. 

The academic would be better off asking how things might have worked out if German reunification had involved West Germany being ‘incentivized’ to be ruled by the East German communist regime.

Chief Executive John Lee took just under three hours to deliver his policy address. He mentioned a few major initiatives – notably the ‘Northern Metropolis’ – that aren’t new. Some minor positive measures, including free high-tech prostheses for amputees, and less red tape for food outlets. Some banal obscurities, such as allowing dogs in restaurants. And a load of desperate (or optimistic) proposals to boost the economy, involving yachts, AI, gold, green (!) maritime fuel bunkering, Greater Bay Area intermodal something, streamlining license applications for Low Earth Orbit satellites, and encouraging tokenized assets, tokenized deposits, tokenized money market funds and tokenized bonds, with help from a supervisory sandbox. 

Hong Kong’s fundamental challenge is accepting and adapting to a world in which the Mainland’s post-Mao economic boom – the huge easy skim – is over. Which doesn’t bear thinking about. So frenetic micro-management it is. 

Joel Chan lists the hubs…

Wasn’t there also a reference to an ‘immersive, thematic travel hub’? Something to do with halal food? Or maybe I dreamt it.

Just time for a link for history types – an Asia Times article by Francesco Sisci comparing the impact of geography on political, military and philosophical development in ancient China and Rome. (Also, some wacky nationalistic Chinese ranting in the comments section.)

I think this was supposed to be kept under wraps before tomorrow’s policy address. Either way, this Bloomberg story is a sign of desperation among Hong Kong officials trying to reposition the city’s economy…

Hong Kong is in talks with several Chinese electric-vehicle makers to establish local EV manufacturing, according to people familiar with the matter, as the financial hub looks to advanced industries to diversify its ailing economy.

The city’s officials aim to develop an EV assembly base — a relatively complex process requiring advanced skills, the people said, asking not to be identified discussing private deliberations. They are weighing potential sites in Hong Kong’s New Territories that border mainland China, they added.

The talks have included state-owned automaker FAW Group, one of the people said.

Hong Kong has “been proactively facilitating the development of strategic industries, including advanced manufacturing” as part of its 2022 I&T development blueprint, the city’s Innovation, Technology and Industry Bureau said in response to a Bloomberg News query. FAW didn’t immediately respond to a request for comment.

Hong Kong is turning to new industries to spur growth after years of economic challenges fueled by political crackdowns, Covid isolation and a property slump, which have undermined the city’s status as a premier financial hub.

What ‘advanced skills’ would be needed, and does Hong Kong have them? And what competitive advantages does Hong Kong offer? As the story mentions, Hong Kong has high land and labour costs. While you can import workers, you can’t import sites suitable for large-scale manufacturing complexes. How can an EV plant possibly be viable unless the taxpayers subsidize it with cheap land? Then there’s existing overcapacity in the Mainland’s EV industry…

…with factories producing only half of their planned output — and a bruising price war that has forced a rare government intervention.

One possible reason for locating such operations offshore would be to avoid tariffs on Mainland-produced EVs. But surely it would make more sense to build the plants in Vietnam, Indonesia, Brazil or somewhere where costs are much lower and there’s a sizable and growing local market as well as export opportunities. 

Mega-events that fall flat, endless ‘hubs’, visas for supposed talent, an insatiable longing for millions more tourists, crypto, and now car assembly. Perhaps we should have some sympathy for the civil servants who are given a near-impossible mission: come up with ideas to rejuvenate the economy – but keep real-estate prices/land valuations high and (if you’re getting funny ideas about creative industries) put ‘national security’ above everything.

Transit Jam digs into the Missouri Synod Lutheran church’s complaint against HK International School and finds that they are demanding…

• all other religious teachings … are dropped … no comparative religious studies;

• festivals outside Christian festivals to be strictly prohibited;

• an end to all acceptance and promotion of homosexuality, same-sex marriage and transgender-affirming care…

Whenever I think about Lutherans (about one minute once every five years), I have visions of trendy female Swedish pastors and that completely nuts architecture in Iceland – and forget who they are named after. It seems these guys (no women clergy) are pretty orthodox. Could be an interesting court case.

Ronny Tong’s think tank used to be called Path of Democracy, but has now renamed itself PoD Research Institute. Adjusting to the new order in Hong Kong. It still conducts a survey asking people if they are satisfied with the Legislative Council’s performance. The question might have made sense when the public elected representatives of their choosing to hold the government to account. But these days, LegCo members are, in effect, appointed by the government specifically to agree with it. It’s not a question of whether the public are satisfied with the legislature so much as whether they perceive one actually exists in any meaningful way. (For the record, the majority are dissatisfied.) 

Update from HKFP…

[Tong] said the think tank did not intend to avoid “democracy” in its name, but added that the word could have a political connotation that may impact the credibility of its research.

By ‘did not’, we mean ‘obviously did’.

We ease ourselves gently into another week with a sneak preview of Wednesday’s policy address: the CE’s neckwear. 

For decades, policy addresses and their attendant ‘consultations’ have been heavy on ritual rather than substance, not to say quantity over quality. If there is anything worth looking for this year, it would be signs of seriousness – or desperation – about the economy. I’ve heard talk of at least one proposed measure that sounds borderline absurd. We’ll see.

A quaint way to put it: Hong Kong lacks the ‘necessary conditions’ to do the Lantau mega-reclamation…

The exorbitant [HK$580 billion] price tag for the reclamation has raised concerns, especially amid three consecutive years of government deficits.

It would total 1,000 hectares. Plans to use existing land in the New Territories will yield 30,000. 

For well over a century, non-profit, non-government schools and hospitals have been granted land by the Hong Kong government on the understanding that they would serve the public good. But some of the institutions involved have since morphed into exclusive enclaves of the rich.

According to an SCMP story (HKFP one here), the Lutheran Church – Missouri Synod cofounded the HK International School in Repulse Bay back in the 1960s. Nowadays, the school is debenture-hungry, charges around HK$250,000 a year in tuition and is sitting on a nest egg of HK$2.8 billion (unless that’s a typo). The church isn’t happy…

“The LCMS believes that HKIS today … has become a school for the rich and the privileged few, not an economically and socially inclusive school for all of Hong Kong as intended and agreed,” it said.

The church said the association had generated cumulative net operating surpluses of nearly HK$800 million over the past five years, with the amount in 2024 reaching almost HK$300 million.

“Personally, I find them grossly excessive. You look at the amount of their reserves, and if I were looking for money, I’d say: this is a great, nice job. But this is not a profit organisation. This is a charity. This is a non-profit. It’s not just for the rich,” [church official Christian] Preus said.

The church said the management had kept demanding more payments from parents, including regularly increasing school fees, selling priority access debentures, repeatedly seeking funding and donations even in cryptocurrency, and charging student training and competition fees, despite having substantial financial reserves.

It argued that the school should use the funds to reduce school fees and provide significantly more scholarships and financial aid.

It also revealed that the school had spent HK$1 billion to build a new “student activity centre”, which included two gymnasiums, four tennis courts, a fitness centre, an indoor golf simulator, a dance studio, indoor rock-climbing facilities and the institution’s third indoor swimming pool.

Third? Maybe the Greater Bay Area can hold the Olympics there.

Mark Simon adds…

HKIS very hostile to special needs, and the addition of large numbers of mainland parents has not added anything in terms of the school seeking out any type of roll in the community for the disadvantage[d].

A modest proposal: in exchange for continuation of their leases, require these schools and hospitals to admit (say) a third of their students/patients from the general public, for fees matching what it would cost the public-sector institutions. Otherwise, start paying market rents.

(We could add cheap land allocated a century ago for essential electricity, gas, dockyard and other utilities, which (after the companies were acquired by property giants) were later converted into far more profitable housing rather than returned to the government. Then there are private clubs. And let’s not forget commercial/residential mega-developments on sites granted for places of worship. But this is a city where the main museum complex is expected to convert real estate into luxury homes.)

The EU’s annual report (‘so-called’) on Hong Kong. While it criticizes developments in human/civil rights and local autonomy, most of it is a surprisingly thorough account of other economic and social issues. If I were the government PR department, I’d cut and paste big chunks of this for the official year book. Still – government not a fan.

HKFP on LegCo’s rejection of a government bill to recognise same-sex partnerships…

…with just 14 out of 86 lawmakers voting in favour.

A total of 71 lawmakers voted against the bill on Wednesday, while one legislator, Doreen Kong, abstained.

It was the first time the opposition-free legislature voted down a government bill.

Lawmakers resumed the debate on the Registration of Same-sex Partnerships Bill, which sought to give limited rights to same-sex couples whose marriages or civil unions are registered overseas, on Wednesday, after a summer recess.

…Lawmaker Maggie Chan, who brought a sign to the meeting reading “Resolutely opposed to the Registration of Same-sex Partnerships Bill,” said the bill “rocks the foundation of the monogamous and heterosexual marriage system in Hong Kong.”

…The Court of Final Appeal gave the government two years to pass a framework for recognising same-sex partnerships. The deadline is October 27.

The Standard adds…

…Secretary for Constitutional and Mainland Affairs Erick Tsang Kwok-wai expressed disappointment regarding the result, emphasizing that the rejection does not represent any impact or influence on the rule of law, but serves as a demonstration of the sharing of responsibilities as well as mutual respect among executive authorities, the LegCo and the Judiciary.

…He noted that lawmakers are elected to represent public opinion, and the rejection of the bill indicated that there remain divergent opinions both within the Legislative Council and among the public. The issue of same-sex partnerships is highly controversial and needs additional time for further examination. He added that the government respects LegCo’s decision and will further discuss and study the issue with the Department of Justice.

Tsang added that the government has made every effort to gain support from both the public and lawmakers and has fulfilled its obligations within the timeframe set by the Court of Final Appeal. Although the result did not align with the government’s legislative proposal, Tsang said the process served as a positive example of how each branch of government fulfills its constitutional duties under the Basic Law. 

The CCP, in line with Leninist ideology, openly rejects separation of powers. Officially Hong Kong does have independent executive, legislative and judicial branches. But Beijing officials have always maintained that the city is ‘executive-led’, and in recent NatSec-era years have openly stressed that LegCo and the courts have a duty to support the (CCP-appointed) government – the all-patriots legislature being designed to have no opposition. It is hard to square talk of ‘sharing of responsibilities’ or ‘seeking public support’ with this.

If the authorities had demanded lawmakers’ support for the bill, they would have had it. Some might think the vote reflects Beijing’s disapproval of gay rights – or civil-society activism of any sort. For what it’s worth, the big pro-Beijing parties in LegCo seem to see gay rights as an unhealthy ‘Western’ thing. Ultimately, this looks like a way to put the (non-NatSec) courts in their place.

Many years ago, I looked at the Lantau reclamation proposal and declared it to have ‘not going to happen’ written all over it. For a while, it seemed then-Chief Executive Carrie Lam and her bureaucrat/engineering buddies were actually serious about spending half a trillion bucks or more on something we already have. More recently, the money has run out, and someone, somewhere noticed that the New Territories has lots of underused land. RTHK reports…

Secretary for Development Bernadette Linn on Wednesday said the government does not have a timetable for the Kau Yi Chau project, and that the reclamation works off Lantau would not be carried out within this current term of government.

In a written reply to lawmaker Lo Wai-kwok, Linn said her bureau also thinks it is inappropriate to continue environmental impact assessment procedures without a timetable for the reclamation work.