Let's set the record straight on what works for Hong Kong

PUBLISHED : Thursday, 21 October, 2010, 12:00am
UPDATED : Thursday, 21 October, 2010, 12:00am

Hong Kong cannot expect to just depend on its financial industry and property boom for growth. It requires new thinking in economic and industrial policy, which many free market dogmatists regard as sacrilege.

Anthony Cheung Bing-leung,

Out of reach, SCMP, October 20

Warning: turn this page quickly before you are contaminated with incorrect sentiments. Sacrilege is practised here.Let us examine Professor Cheung's premise more closely.

He is absolutely right in saying that we cannot depend on just finance and property.

There is a reason for this. Finance accounts for only about 15 per cent of our gross domestic product and property, including both real estate services and construction, for only another 8 per cent. Our economy is a good deal wider than he seems to realise.

This is not the first time I have had cause to wish that members of the Executive Council would make use of the wide range of statistics available to them from the Census and Statistics Department. Shoot from the hip is how they mostly seem to form their thoughts.

Here is another example - 'Hong Kong's strong position as a global financial and investment centre ... also drives up the costs of living.'

Not for the past 12 years it hasn't, as the first chart shows. Our consumer price index is still below its 1998 peak and the gross domestic product deflator, a much broader measure of costs, far below it.

Then we get 'low-income workers see little prospect of moving up the wage ladder or sharing the fruits of economic growth'.

I now refer you to the second chart. We currently have 916,000 professionals and associate professionals (one grade up from technician) in employment. That's 339,000 or 58 per cent more than in 1996, the first year for which I have figures.

We also currently have 449,100 machine operators and craft workers in employment. That's 220,000 or 33 per cent fewer than in 1996 and, yes, the figures show, just as you would expect, that the first group is paid considerably more than the second.

So could you please cite your source, Professor Cheung, for the assertion that low-income workers see little prospect of moving up. The hard evidence says that there has been enormous upward mobility.

And if you wish to tell us, as some of your less educated colleagues are occasionally prone to do, that 'real' people at the grass-roots level 'know' these figures are all wrong, then surely you are obliged to tell Donald to give our statistics department the boot. No statistics at all are better than ones so dramatically false. But let us continue. Professor Cheung says we require 'new thinking in economic and industrial policy'.

We shall refrain from saying that someone who has fed at the public trough all his life is likely to find any hands-on experience of industry 'new'. We shall refrain from saying this as he has nothing new to suggest anyway.

His suggestions were competition law, minimum wage and transport subsidy, at which point he started to run dry and referred to matters the Tsang administration has shown 'willingness to study'.

This all relates to regulation of industry, Sir. It tells us nothing about the industries that will actually carry us forward. If you truly want economic restructuring, you will have to think more about what we can do, rather than what we must not.

And if you actually study this question (or is study for students only?) you may, in fact, find that the market forces you disparage have done a wonderful job of picking the industries on which Hong Kong's prosperity is based. What do you say, Sir? Shall we back a winner again?

You would rather have the loser, would you?

Very well, but let me correct you on one final point. When you say that public policies should now be more 'values-based', do you mean to tell us that government officials up to this point did it only for the money?

Past public policies were indeed, as you say, fiscally driven and conservative.

These are pretty good values to me, better ones on which to base public policy than what you seem to prefer but cannot elucidate. I think, in fact, that my view of things represents the common Hong Kong values system.