Commentary: It's Hong Kong's elites who have failed the city

Commentary: It's Hong Kong's elites who have failed the city

A powerful, but oft-ignored factor underlying the frustrations of Hong Kong’s people is inequality, say China experts Andrew Sheng and Xiao Geng.

Carrie Lam on TV Hong Kong
A man watches a television showing Hong Kong Chief Executive Carrie Lam speaking during a live press conference, at a restaurant in Hong Kong on June 18, 2019. (Photo: AFP)

HONG KONG: Since China regained sovereignty over Hong Kong on Jul 1, 1997, the city has prospered economically, but festered politically.

Now, one of the world’s richest cities is engulfed by protests, which have blocked roads, paralysed the airport, and at times descended into violence.

Far from a uniquely Chinese problem, however, the current chaos should be viewed as a bellwether for capitalist systems that fail to address inequality.

A CLASH OF CULTURES?

In times of crisis, it is easy for emotion to overwhelm reason, and for dramatic and deceptive narratives to take root.

This tendency is exemplified by media reports that frame the unrest as a clash of cultures symbolising a broader global struggle between autocracy and democracy, or references to a “fight between two civilisations,” as Hong Kong legislator Fernando Cheung put it.

Such narratives often treat “democracy” as synonymous with improved welfare – a characterisation that is not borne out by the facts.

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As famed political scientist Francis Fukuyama has conceded, centralised, systems can deliver economic outcomes that are superior to decentralised, inefficient democratic regimes.

It is also worth pointing out that officials like Cheung are free to criticise China’s government on the international stage.

Protests in Hong Kong have now entered their third month
Protests in Hong Kong have now entered their third month AFP/Anthony WALLACE

A LOOMING MILITARY CRACKDOWN?

Those who think that China’s government will resort to a military-led crackdown forget Sun Tzu’s dictum that winning wars without fighting is the “acme of skill”.

China’s government is well aware that if Hong Kong becomes a political or ideological battleground, peace and prosperity will suffer in both the city and on the mainland.

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Given this, it is willing to go to great lengths to uphold the “one country, two systems” arrangement that forms the basis of its sovereignty over Hong Kong.

CONSIDER INDEPENDENCE?

What China’s government is not willing to do is consider independence for the city. Like a parent dealing with a frustrated teenager, China views the current upheaval as a family matter that must be resolved internally.

The appeals of some Hong Kong protesters for outsiders like the United States to intervene are not only unhelpful; they fail to appreciate the long and destructive track record of US-led “democracy-building” efforts around the world, from Central America to Central Asia.

The reality is that Hong Kong is already operating as a living experiment in how the rule of law and electoral democracy can work within the Chinese context.

The move by HSBC signals the end of an era of cheap cash in Hong Kong and could have an impact on
A view of Hong Kong. (Photo: AFP/PHILIPPE LOPEZ)

The city ranks 16th in the World Justice Project’s Rule of Law Index, right behind Japan and ahead of France (17th), Spain (21st), and Italy (28th). On electoral democracy, however, there are significant challenges, which have little to do with the mainland.

THE UNDERLYING INEQUALITY

A powerful, but oft-ignored factor underlying the frustrations of Hong Kong’s people is inequality.

Hong Kong’s Gini coefficient – in which zero represents maximum equality and one represents maximum inequality – now stands at 0.539, its highest level in 45 years. By comparison, the highest Gini coefficient among the major developed economies is 0.411 (in the US).

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This inequality is most starkly apparent in housing. The per capita residential space in Hong Kong is just 16 sq m (172 sq ft), compared to 36 sq m (387 sq ft) in Shanghai.

Moreover, whereas nearly 45 per cent of Hong Kong’s residents live in public rental or subsidised housing, 90 per cent of Chinese households own at least one home.

Hong Kong's housing prices are among the world's most expensive, with many residents
Hong Kong's housing prices are among the world's most expensive, with many residents living in increasingly cramped conditions at spiralling costs and small businesses struggling to survive sky-high rents. (Photo: AFP/Anthony Wallace)

Yet, despite having fiscal reserves of more than HKD$1.2 trillion (US$147 billion), Hong Kong’s autonomous government has failed to address inequality.

INFLUENCE OF REAL ESTATE INTERESTS

The city’s Legislative Council – whose members are elected through a complicated process based on proportional representation – is too politically and ideologically divided to reach consensus.

Unable to push through tough reforms to subdue vested interests, as China’s government is doing on the mainland, the Council is also vulnerable to the influence of real-estate developers eager to block measures that would lower prices, such as the allocation of land for more public housing.

Some companies are reportedly hoarding large amounts of unused rural land, either directly or through shell companies, precisely to constrain supply.

Hong Kong’s protesters believe they haven’t been heard. But it is the city’s own elites, not China’s government, who have failed them.

Hong Kong’s leaders were so thoroughly out of touch with ordinary people that the protest movement took them by surprise, despite signals from social media and the press.

Sky-high prices and the cost of living outstrip many ordinary residents' salaries in Hong Kong,
Sky-high prices and the cost of living outstrip many ordinary residents' salaries in Hong Kong (Photo: AFP/Anthony WALLACE)

BETTER CHANNELS BETWEEN PUBLIC AND POLICYMAKERS

This means that, beyond addressing concrete problems like high housing prices, Hong Kong will need to reopen channels of communication between the public and policymakers.

This will not be easy – not least because the protest movement lacks any clear leaders. But some consensus on how to move forward as a community will be needed to ensure the government’s legitimacy while it implements needed reforms.

It will take time for Hong Kong to recover from these months of upheaval. But all Chinese, from Beijing to Hong Kong, know that there are no quick fixes or decisive battles.

Progress is a never-ending series of small steps, many of which must be made in difficult conditions. The only way to succeed is with humility, patience, wisdom, and a sense of shared destiny.

Andrew Sheng is Distinguished Fellow of the Asia Global Institute at the University of Hong Kong and a member of the UNEP Advisory Council on Sustainable Finance. Xiao Geng, President of the Hong Kong Institution for International Finance, is a professor and Director of the Research Institute of Maritime Silk-Road at Peking University HSBC Business School.

Source: Project Syndicate/sl

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