Lionomics a challenge to HK?
Amonth ago, we celebrated the 16th anniversary of Hong Kong’s handover to the Chinese sovereignty. Yet there is a danger that after a period of time, we celebrate these milestones — just because we celebrate them. Our students entering university today do not remember what it was like when Britain was the sovereign power. In another 10 years, even the parents of university students will forget. What we can celebrate is the fact that such a momentous event occurred without crisis, without bloodshed, in a smooth and seamless transition that means it is easy to feel that Hong Kong has not changed very much.
Hong Kong must also celebrate that the central government has held true — indeed religiously true — to the principle of “One Country, two Systems”. Of course, Beijing has legitimately lobbied for its viewpoint in Hong Kong’s political arena and has been so successful that the traditional opposition “ready for office” has been superseded by a vociferous rainbow coalition of disparates. Opposition politicians all have a lobbying cause of their own — again legitimate. This however makes it difficult for the ordinary voters to choose such opposition as they do not seem representative and certainly not organized enough to run a government. To have leading politicians called “Mad Dog” and “Long Hair” is not the easiest way to recruit non-politicized support.
Yet we also have made our government and ministers increasingly accountable. The Independent Commission Against Corruption has created in Hong Kong a center where corruption is very low — lower than in many Western democracies. The Securities and Futures Commission is strict and fearless in making our investment markets as clean as any.
In a sophisticated economy with accountable ministers, power brings responsibility. Franklin Lam Fan-keung was a member of the Executive Council, the highest decision-making body in the city, until Thursday. Even though the Department of Justice decided there was not enough evidence to follow up insider-trading allegations, he nevertheless resigned. Ministers must be above repute or they become damaged goods and a millstone to their colleagues. Even if charges are dropped, the fact that a minister is exposed to such accusations implies an error of judgment. It is a reality of politics; a natural selection by which we end up with a society that provides not equality — but equality of opportunity for everyone.
These elements are important to Hong Kong’s economy and society because we are a city under threat. Hong Kong is finally in danger of losing ground to the major cities on the Chinese mainland. We are losing our skills edge. Many mainlanders are now educated in the best universities and have developed good work experience over the last decade — there is a big talent pool given its 1.3 billion people. If there is still a need on the mainland, skilled Hong Kong people will work there.
The new economic policies of Premier Li Keqiang, termed “Lionomics”, are of such importance that it conjures up memories of Deng Xiaoping’s visit to Shenzhen in 1992 to reinforce his message that “to get rich is glorious”. Lionomics is a unique mix of powerful supply-side policies designed for the Chinese economy alone. Rather than buying growth by putting money into the economy through infrastructure spending and low interest rates, “supply-side Lionomics” seeks to encourage growth by removing obstacles.
These new measures are being announced almost daily and coalesce into three areas. They are the reform of economic structures such as the tax system and financial systems; the relaxation of the plethora of confusing and conflicting rules and regulations that burden modern China with wasted costs; and the rebalancing of an economy, and the wealth gap, from high growth to one more sustainably mature.
A more efficient mainland can only be good for Hong Kong. But if so many of the activities now done in Hong Kong are undermined, we will be less able to act as the middleman. The proposed Shanghai Free Trade Zone, the relaxation of customs procedures, and the almost daily removal of restrictions on the trade of the RMB will cannibalize financial and commercial business from the SAR. Even the reduction of corruption, a major target of President Xi Jinping, may restrict the influx of wealthy mainland tourists to Hong Kong.
Lionomics with its reforms, relaxations and rebalancing is likely to be a challenge to Hong Kong. Our need is to accept the challenge and our hope is to become more international. We must use the asset of being a globally recognized, clean society that encourages equality of opportunity and the global skills of our residents. The city can easily be the third great economic pole of the world after London and New York but to do it we must discard our tendency to be Little Hongkongers.