Self reliance
Once again, traffic jams are the order of the day. Once again, taxis have become scarce, even when there is no typhoon. These tell-tale signs are unmistakable. The economy is recovering.
True, Hong Kong has just slipped into recession again. True, unemployment is at a record high. True, the economy contracted again in the second quarter, this time by half a percentage point. And true, deflation shows no sign of letting up.
However, the financial secretary has announced that the worst is over, and everyone seems to agree. The government has revised its growth forecast for the year from 1.5 to 2 per cent.
Government economist K.Y. Tang attributed the revised forecast to a strengthening of the world economy, growing numbers of mainland visitors and higher local spending.
Of these factors, the most obvious is the growing number of tourists from the mainland. Night and day, we are inundated with news about them and about the sudden shortage of hotel rooms, even about some of them arriving with bags of money to buy property here.
That seems to be the catalyst that sparked the 'feel good' factor. It is the psychology more than anything else that has changed. And because of the change in psychology, Hong Kong people are now more willing to go out and spend, and it is this domestic spending that is doing more than anything else to revive the economy.
While more mainland tourists are of course good, the numbers are not really that significant. We are told that with the launching of individual tourist travel in eight Guangdong cities as well as Beijing and Shanghai, we may get an additional 4 million tourists next year, for a total of 10 million. With each tourist spending an average of $5,000, this adds up to $50 billion-certainly nothing to sneeze at.
However, while the mainland is expected to send us 10 million travellers next year, Hong Kong travellers made 60 million trips across the border last year. What Hong Kong visitors spend in the mainland far exceeds what mainlanders are expected to spend in Hong Kong.
It is the sight of mainland tourists that has caused people here to loosen their purse-strings, which is what was needed for Hong Kong to recover. It was within our control all along. However, we needed something to happen to provide an impetus, so that we have the confidence to begin spending again. For that, we have to thank the mainland travellers and the central government.
Vice Premier Wu Yi is right to remind Hong Kong that the Closer Economic Partnership Arrangement with the mainland can help, but it is not a panacea. Hong Kong still has to rely on itself and not rely on the central government.
In fact, the central government may already have gone too far in its efforts to help Hong Kong. It has even told the Guangdong provincial government to charge less for the water it supplies to the special administrative region. But the price of the water is governed by a contract between Guangdong and Hong Kong. The central government is not involved.
Having the central government tell the provinces that they must do this or that for Hong Kong will ensure resentment against Hong Kong in Guangzhou and other parts of the country. In the long run, it will not help Hong Kong.
Rather, we should be dealing with Guangdong and other provinces on the basis of equality, and look for arrangements beneficial to both sides. Only when this happens can Hong Kong be sure that it has healthy relationships not just with the central government but with local governments around the country as well.
Frank Ching is a Hong Kong-based journalist and commentator
