Policy Priorities
Chief executive John Lee Ka-chiu will deliver the third of his scheduled five policy addresses next month. Given the realities of the timescale for turning new initiatives into completed actions, it is probably the last chance for him to make his mark in history for something other than enactment of national security legislation (important though that is).
I have a suggestion about what Lee’s next major target should be, but I start with some general comments by way of introduction.
First up Lee must be completely frank about Hong Kong’s economic prospects in the next few years. According to authoritative commentators such as Professor Kishore Mahbubani, retired Singapore diplomat and former President of the United Nations Security Council, the coming decades will be dominated by a clash for primacy between the United States and China. That means the squeeze on our country --by way of trade barriers, obstructions to investments, normal business and technology dealings, possibly even including outright sanctions at some point – is going to be a fact of economic life for the foreseeable future.
Hong Kong, as China’s international financial centre and primary business bridge, is right in the middle of the bullseye. There is no sense in sugarcoating the situation. Hongkongers are knowledgeable – they see the monthly retail sales statistics and the boarded-up shops – but also resilient. They can handle the truth, but will have no truck with flimflam. Our recovery from the social unrest and pandemic has therefore been slow and our GDP has only just got back to 2018 levels. Future growth will also be modest as it is constrained by US measures.
Paradoxically, this is precisely the time we must back away from the wolf warrior vocabulary that has come to dominate recent official statements. Terms like “shameless” “smear” and “slander” may well be true – indeed even stronger ones might be fully justified – but are counterproductive. They are like water off a duck’s back to our opponents, while alienating our potential friends. They make us sound like unruly teenagers squabbling in the schoolyard.
Hong Kong is one of the most pro American cities in Asia. For example, their films and music are prominent in our entertainment sector. If other places spent as much per capita on US goods and services as we do, their country would be struggling with surpluses instead of deficits. So the recent set of measures taken by Congress is illogical. It is also unprincipled. But logic and integrity are values in abeyance at senior political levels in America right now.
How best to respond then? Simple: Hong Kong should continue to provide a warm welcome for individuals and companies from around the world, resist the urge to shoot back, keep our lips buttoned and let the facts on the ground speak for themselves. If things are going to get ugly, let the situation stay at the Washington/Beijing level.
The pressure on GDP growth naturally carries over into public finances. We have been running deficits now for several years, which we have been able to fund by drawing on historical accumulated surpluses and by borrowing money at modest interest rates. But our net reserve position (cash in hand less bonds outstanding) is beginning to look thin. It follows that scope for major new spending initiatives is limited.
Whatever resources can be scraped together must be focused on housing. This can be done in two ways: ensuring that public bodies like the Housing Authority, Housing Society and Urban Renewal Authority always have sufficient funds to continue construction of desirable schemes; and by foregoing revenue. Land ready for development must continue to be brought forward for sale on schedule and if it is not snapped up by private developers it should instead be developed by a public body for HOS purposes. We give up the revenue but flat production continues.
It would be even better if this policy shift were accompanied by legislation to set minimum flat sizes.
There is one further refinement on housing I would recommend to Lee, and that is to declare a state of social emergency on the subject of subdivided units. He is holding back a report by the special task force on what to do about this deplorable situation, no doubt to say something next month. Lee must commit to setting new standards and shutting down all units that cannot meet them within his term of office, resettling anyone who would be rendered homeless in the process.
The next few years are going to be tough for Hong Kong so there is one further thing Lee has to do and that is bring the community together. That means finally drawing a line under the social unrest of 2019 and 2020. Even former secretary for justice Elsie Leung Oi-sie – hardly a milk and water liberal – called earlier this month for those who took legal responsibility for their actions during that period to be given a second chance. Four years ago she was among the hawks welcoming enactment of the national security legislation as it would enable these same miscreants to be prosecuted.
Lee should build on this initiative by ordering everyone arrested during that period but not charged by the end of this calendar year – the half way point in his term -- to be freed from police bail or other restriction. No more yellow or blue from now on, only green. Divided we cannot win, United we cannot be defeated.
There you go, Mr Lee, your place in history. And who knows, perhaps at long last my BBS.