At the crossroads
The critics have had a good run lately, smearing mud and pointing fingers in a way that implies Hong Kong has failed to live up to expectations. Never mind specific candidates or policy preferences; this is about Hong Kong, and whether our mostly laissez-faire approach to business regulation and government services is still valid.
Without question, it is. We may have our faults, but when it comes to delivering the goods, Hong Kong can't be beat. From a moderately interesting trading port and later a modestly successful manufacturing centre, Hong Kong has grown to be the most talked-about example of how to get the balance between business and regulation right. Milton Friedman didn't point to Sydney, Madrid or Caracas as the best possible example of capitalism; he named us.
We have every right to be proud of Hong Kong, but we also need to be aware that the freedoms and opportunities we've enjoyed cannot be taken for granted. The things that make Hong Kong unique need to be protected and cherished, or they will be lost.
Broadly speaking, Hong Kong has three unique characteristics that have emerged from its ability to push back against the floodwaters of regulation and nanny statism. First, we are the only business and financial centre recognised by both London and New York as the up-and-coming threat to their joint control of the global economy. This isn't about populations, growth rates or research scientists. It is about laws, regulations, taxes and the confidence to guide capital flows through a financial system unlike any other on this side of the world.
Second, we have no competition for the title of best business centre in the world's most dynamic region. The world's top business service companies have selected us as the major hub in Asia. Clustering together the very best accountants, banks, insurance companies, financiers, consultants and managers creates a synergy that cannot be easily duplicated. Any company servicing business on a global basis that doesn't have a major presence here simply isn't trying.
Third, and perhaps most important of all, we are part of China. We are an integral part of the process that raised more people out of poverty, in a shorter amount of time, than at any other point in history. The dramatic reduction in poverty, the explosion of productivity and the resulting surge in consumption, investment, trade and prosperity over the past 30 years is unprecedented. Hong Kong facilitated the flow of capital, goods and people that made it happen, and we continue to be the most trusted place for international companies to interact with the rest of China. We are also the place the leadership trusts to conduct experiments such as the liberalisation of the renminbi. We're on the inside of the greatest story of our age.
Hong Kong's unique characteristics were won through hard work, not luck. We fought hard to break the back of corruption, and now can boast of having the most honest and independent judiciary in the Asian half of the world. We took the hard decision to link our currency to the US dollar, and then rode the waves of inflation and deflation without giving in. And, we showed that a change in sovereignty doesn't mean a change in the philosophy that governs business and the relationship between the regulator and those being regulated.
Yet, Hong Kong's great positioning remains fragile. In recent years, it has threatened to break apart for lack of clean air, predictable policies and sensible politics. Today, as we prepare for a new administration to take the reins of power, we have a solid foundation to build on, but we also need to make sure our blueprint takes us to where we want to go. We face pressure from abroad to tighten our regulatory regime, so as to enable companies and financial institutions in the developed economies to better compete with us. Because their governments constrain their activities, we are expected to change how we conduct business.
We also feel pressure from within to redistribute wealth from those who have it to those who do not. This pressure is harder to resist. Society, we are told, expects those who succeed to do more than pay taxes. The one million-plus taxpayers, barely 20per cent of our people, are expected to pay for all government services. More, those who succeed to a level that invites recognition are also now expected to address issues such as housing, education and welfare.
Populist pressure for more regulations is a worrying trend, which threatens to do more harm than good. We saw the effects of this with the minimum wage, and even more ambiguities contained within the competition bill threaten to damage businesses and our overall competitiveness.
The business community wants to play its role in ensuring Hong Kong's prosperity. We will do so because it is good for us, good for society and good for our future. We can only accomplish that by building on the foundations of this great city that have served Hong Kong so well.
Anthony Wu is chairman of the Hong Kong General Chamber of Commerce