Monitor
PUBLISHED : Tuesday, 25 February, 2014, 12:32am
UPDATED : Tuesday, 25 February, 2014, 12:32am

Who's more damaging, Hong Kong officials or Occupy Central?

Forget scare stories about looming disruption and economic costs from protests, these guys are amateurs compared with government bunglers

BIO

As the writer of the South China Morning Post’s Monitor column, Tom Holland attempts each day to make sense of the latest developments in business, finance and economic affairs in Hong Kong and mainland China.
 

Among the grievances aired at Hong Kong's weekend protest against media censorship were complaints that editors have been leaning on local journalists to stress the supposed economic costs of the Occupy Central democracy movement.

I don't know who these editors are, but evidently they know as little about economics as they care about press freedom.

Opponents of Occupy have been warning for months now that the movement will cause economic havoc in Hong Kong.

However, on examination their criticisms of Occupy are vacuous.

If people are concerned about the impact of traffic jams, it is the transport secretary they should be complaining about

The most common scare stories are that Occupy will cause traffic jams, deter tourists, damage Hong Kong's reputation as an international financial centre, scare off investors and make Beijing reluctant to give us more any more handouts from its regulatory goodie jar.

Let's take those one at a time.

First, no matter how numerous, disciplined and ably led, the Occupy protesters cannot hope to achieve the sort of snarl-ups the Hong Kong government manages every day simply by refusing to unify cross-harbour tunnel tolls.

Sure, Occupy might disrupt flows for a few days. But when it comes to causing lengthy and near immobile tail-backs every working day of the year, the city's officials are in a league of their own.

So if people are genuinely concerned about the economic impact of traffic jams, it is the transport secretary they should be complaining about, not the Occupy organisers.

Next, if the Occupy movement really were to deter tourists, it is likely many Hongkongers would be grateful.

In reality, however, the economic impact will be minimal.

The vast majority of the 54 million visitors who came to the city last year did so to go shopping. Some two-thirds of all spending by visitors to Hong Kong takes place in the city's shops. But the stuff they buy is all imported. That means only a relatively small amount of visitors' retail spending - around 20 per cent according to Monitor's 2013 estimate - actually contributes to Hong Kong's economy.

In any case, considering that Hong Kong isn't exactly short of shopping centres and that Occupy couldn't hope to obstruct access to more than a handful even if a blockade were its main objective, the economic effect on Hong Kong from any disruption to tourism is likely to be negligible.

As for damaging Hong Kong's standing as a financial centre, the city's reputation rests on the reliability of its legal system, the credibility of its regulators, the solidity of its institutions, the know-how of its financiers and the freedom of its information flows. None of those will be jeopardised by a few thousand protesters temporarily blocking some streets.

As Monitor pointed out last year, a long history of anarchist protests aimed directly at London's main financial district has done nothing to harm its world-leading status. Hong Kong's bankers have nothing to fear from Occupy except perhaps for a little minor inconvenience.

Next, there is the threat that Occupy could scare off foreign investors. This is ludicrous. Far from relying on foreign investment, Hong Kong is a sizeable net capital exporter.

Sure, in 2012 - the latest year for which figures are available - outside investors pumped HK$544 billion into the city. But that money, plus another HK$100 billion, immediately flowed out again as outward investment. In other words, Hong Kong doesn't depend on inward investment, and needn't worry about frightening investors away.

Then, there is the idea that Hong Kong won't get so many regulatory handouts from Beijing if Occupy goes ahead.

However, the people who preach this message forget that Beijing uses Hong Kong as a trial laboratory for liberalisation, not out of kindness, but in order to advance its own reform agenda. Slowing that process would hurt the mainland far more than Hong Kong.

Finally, it's worth mentioning that the one attempt by a critic to put a possible price ticket on Occupy-related disruption that I've seen came up with a potential cost of HK$1.6 billion.

That might sound like a lot to you or me. But it's peanuts compared with the HK$22 billion budget surplus for the current fiscal year that Financial Secretary John Tsang Chun-wah is expected to announce tomorrow.

That HK$22 billion is money sucked out of Hong Kong's economy by the government's insistence on raising more in revenues than it needs to fund its spending programmes.

So if Hong Kong's editors are really worried about the damage being inflicted on the city's economy, they really ought to be pointing their reporters at the demolition experts in Tamar, rather than the well-meaning amateurs of Occupy Central.

tom.holland@scmp.com

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