Leung needs to do more explaining
Chief executive-elect Leung Chun-ying campaigned on the motto 'seeking change while preserving stability'. Nonetheless, business sectors were concerned that his reforms would upset stability. They might have been more worried had Leung been more explicit about the views he expressed in a recent Xinhua interview. In remarks seen as suggesting a step back from free markets, he said government should intervene to prevent market failure and keep property prices at a level affordable to the public. He added that, under the principle of big market, small government, there was excessive reliance on a market-oriented economy. 'Therefore, I propose prudent adjustments ... in maintaining fair competition.'
High property prices are a clear case of market failure for lower-income groups, but Leung omitted to mention the government's contribution to the problem in the supply and pricing of land, zoning restrictions and so on. Policy in this area is ripe for overhaul, as he has promised, but not just as a result of an excessive reliance on free markets. Measures to bridge the income gap should also be considered. There is no conflict in helping poor people in real need when 'free' markets have failed them.
Hong Kong's reputation for economic freedom is founded on the free flow of trade, commerce and information and a free labour market. But only in the telecommunications and broadcasting markets are consumers protected by law to ensure free competition. Meanwhile, the outgoing government has been watering down a new competition bill in a bid to win enough support from business-friendly lawmakers to have it passed into law. There is, therefore, plenty of scope to ensure fair competition. But Leung will run into 'free-market' opposition from business monopolies, cliques and cartels that rig markets and prices from property to utilities to basic consumer goods. Given that he campaigned on livelihood issues that divide the community, he needs to spell out what a more interventionist stance means.