'We must see the poor don't become poorer'
Donald Tsang Yam-kuen acknowledges the wealth gap in Hong Kong is increasing but says his government is focusing on ensuring the poor do not become poorer rather than narrowing the divide.
Describing the wealth gap as 'a worry of capitalism', the chief executive said the city's problem was particularly acute because of its social and economic structure.
'In Hong Kong's case it is even more serious because of two reasons. First of all we are a servicing centre, particularly a financial centre - then the most capable people, the most intelligent service providers, come to Hong Kong to live and settle. They are making tonnes of money every month,' he said.
Tsang added that at the same time 150 people were migrating to Hong Kong every day from the mainland. 'Most of them are unskilled and poor. So you always have this problem of people making a lot of money unrestrained, and we have people coming in from the bottom of the ladder. 'The bottom is unable to rise. But the top continues to rise. Because of our competitiveness, Hong Kong is getting richer over time, and then those people making high incomes - more than HK$10 million a month through the financial services - are making more and more. So you know when we measure the gap, the gap will enlarge throughout over time,' he said.
Tsang said his government would maintain the level of welfare services in the city and protect the poor.
'The most important thing is the floor will not fall. The floor ... means a whole spectrum of services we are providing, in terms of housing, medical, education and welfare as well as money dispersement every month. We are not diminishing all that.
'What is important is that we will ensure enough social mobility for people to move up the ladder,' he said. 'Those who are poor today will not be poor five years down the road.'
'When people are talking about bridging the wealth gap, one has to realise that it will always exist. It has existed since the time when capitalism was invented.'
Talking about the economy, he said he was still worried about a double-dip recession and warned that trade protectionism could trigger a downturn, since the world economy was so closely connected.
'In the United States, where the unemployment rate is running at double digits, and not falling quickly, and the mid-term election will take place this year we know what American politicians will do.
'It is quite likely that they will be going the same way as they did in 1930 and 1931 during the last major recession.'
By doing so, sufficient protection and other measures would be generated in the US, triggering retaliatory measures stronger than those in the 1930s. 'Then the double-dip would be more or less guaranteed. We just hope that will not happen.'
Mr Tsang said comments made by US President Barrack Obama in Congress about protecting American industries were scary.
The chief executive said his government was closely monitoring the housing market and would introduce measures to cool it when necessary. He said housing prices in Hong Kong were still generally affordable, with people paying about 36 per cent of their average income for their mortgages.
'Roughly every year there are 8,000 to 9,000 people who want to join the ownership ranks. And against that, there are 900,000 home owners who do not wish the price of flats to fall. So a balance has to be struck somewhere.
'The vocal side are those who want to buy flats. Those quiet people are those who already own flats, but these quiet people would be very, very angry if they discover through some silly measures of the government the prices of flats fall, representing their total life savings. So one has to be very careful on what to do. But I can say I have sufficient armoury in the bag to cause the market to fall.'
