Why people in Hong Kong scoff at China’s grandiose Belt and Road plans
City traffic returns to normal. But we are still trying to decipher what Beijing really means when they want Hong Kong to cooperate with them on the Belt and Road strategy.
As a former officer in the World Bank Group, I have worked in and visited all of the Belt and Road countries financing public infrastructure and poverty alleviation projects. No Hong Kong company has the necessary skill set to meaningfully sustain an operation in those countries.
Hong Kong’s property developers will find that building flats and jacking up floors on a site in New Territories is a lot easier than in Kazakhstan. Even our local global infrastructure firms like Cheung Kong Infrastructure are focussed on investment rather than construction. They prefer working in safe, overseas legal environments.
One Belt and Road offers real, national security benefits for China. But, that region is so alien to Hong Kong businesspeople. Given the region’s history, mainland Chinese and Russians (who are already there because of a vested interest in oil pipelines) are more compatible.
Today’s harsh banking regulations make the Belt and Road countries virtually unbankable due to the
Know Your Customer (KYC) and anti-money laundering (AML) standards. Sanctions that even the Hong Kong Monetary Authority (HKMA) are trying to enforce over countries like Iran, Syria make it impossible for Hong Kong companies to do business. Money transfers are difficult to make from most of the Belt and Road-based banks. Loans will require multilateral guarantees by the likes of the World Bank or the Asian Infrastructure Investment Bank.
How ironic is it that the Belt and Road Summit occurred at the same time as the 50th anniversary of the Cultural Revolution. It is unlikely that the Chinese government can ever rally China’s population to a national collectivist cause.
In the ’60s, China was an isolated and uneducated nation without a middle class. The country now has a capitalist class structure. People are becoming educated enough to be cynical of the government. People see themselves as individuals trying to improve their own lives. A globally integrated economy means that a Tiananmen Square-style suppression would send its economy and society back to the dark ages.
Belt and Road is a nostalgia trip to a time when the Communist Party could inspire the marshal glory of the proletariat. That is why Hong Kong people, with an intellect cultivated with liberal education and an uncensored internet are so perplexed and derisive of this monumental project. They can, for better or worse, think for themselves.
But Hong Kong can contribute one key ingredient: money. Belt and Road will become a money pit. Journalists observed that the tycoons and bureaucrats who attended the dinner and state leader Zhang Dejiang’s keynote speech were looking awfully grim and sombre for such a joyous state visit.
Maybe Hong Kong’s best and brightest knew that a multibillion-dollar collection plate would soon be passed around. That’s the easiest way to placate Beijing.
Because it’s all about the money. Hong Kong ‘s paramount value to Beijing is to act as a world-class financier to fund China’s ambitions. Anything else that citizens consider essential for social stability – democracy, self-determination, independence, a high degree of autonomy, property prices – are trivial banquet conversation. Hong Kong, this is your life. Welcome to it.
Peter Guy is a financial writer and former international banker