Lam makes progress but there is no room for com­pla­cency

China Daily (Hong Kong) - - COMMENT - PETER LIANG

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.

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