Lam makes progress but there is no room for complacency
Carrie Lam Cheng Yuet-ngor has a lot going for her in her new job as chief executive of Hong Kong. Within two weeks in office, her popularity surged to a comfortable level of 63.7 percent and her net approval rating rose 15 percentage points to 19 percent, according to results of a survey by the University of Hong Kong.
What’s more Lam’s performance, marked by a tone of reconciliation, at her first question and answer session in the highly divisive Legislative Council has won not only the expected applause from the pro-establishment camp but also a rare acknowledgment from many members of opposition parties.
The notable progress she has made in such a short time in the difficult task of mending the political divide that threatens to tear apart the city’s social fabric owes much to her first policy initiative of spending an additional HK$5 billion on education.
What has impressed Hong Kong people most was that the government had taken the care to consult all stakeholders, including those in the opposition camp, in working out the details of the initiative.
The public feel-good factor is further augmented by a bullish economic outlook based on the improved global environment. In the United States, the robust job market and rising consumer spending have underscored steady economic growth. There were strong indications in recent months that the European economy is stabilizing. More important to Hong Kong, the Chinese mainland economy has regained its growth momentum.
Borrowing costs are going to increase. But the fear of a sudden large interest-rate rise in the US that could send global asset markets into a tailspin has been allayed by a statement from Federal Reserve Chair Janet Yellen that has practically ruled out such a possibility, at least in the foreseeable future.
Some economists predict Hong Kong’s GDP growth this year will reach 3 percent, the high end of the government’s earlier projections. They expected a rise in the growth of exports, comprising mainly re-exports to and from the mainland, in the second half. The decline in retail sales has leveled off while capital expenditure on infrastructure is expected to continue to increase.
Few things in Hong Kong can stoke the public mood more than a good stock-market rally. The latest rally was of particular significance because it was driven by well-recognized blue chip stocks, including the major banks, backed by credible track records going back many years rather than the tech stocks of the new economy, with dubious earning streams.
It is important for the good of Hong Kong that Lam builds on her popularity with the public rather than risks losing it by addressing contentious issues that do not necessarily have to be resolved in the short term.
Since Lam took office on July 1, even the wild property market has shown a little restraint in flaunting its excesses. Property agents have reported a slowdown in sales of new apartments in some projects. It’s too early to tell if the property market fever is beginning to cool off. But some bank analysts have predicted a drop in home prices of as much as 20 percent from the current level in coming months.
The mad rush to buy properties appears to have been checked somewhat by growing public confidence in Lam and her housing team in the government to deliver on the long-standing promise to increase the supply of housing in the private and public sectors. What this boils down to is a matter of trust as she has not produced a housing policy that is different from the existing one, other than a proposal to create more subdivided flats which can be rented to needy families at subsidized rates.
With public trust on her side, Lam has a fair chance of deflating the property market bubble by simply sticking to the original time table of housing supply and achieving the goal which eluded her predecessor.
Despite her rising popularity, public support for her administration is far from assured. Much will depend on her success in delivering a solution to the much-maligned offset mechanism of the Mandatory Provident Fund pension fund scheme that practically denies retired workers their due severance pay from employers. The government has said it will produce a winning formula acceptable to employers and employees by the end of this year. Meanwhile, it is important for the good of Hong Kong that Lam builds on her popularity with the public rather than risks losing it by addressing contentious issues that do not necessarily have to be resolved in the short term.
It’s time for conciliation rather than confrontation.
The author is a veteran current affairs commentator.