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  • Dec 26, 2014
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Jake's View
PUBLISHED : Sunday, 14 October, 2012, 12:00am
UPDATED : Sunday, 14 October, 2012, 2:32am

Unlike in Monaco, mainland and Hong Kong systems do not mix

Loosening our border controls in the interests of 'integration' can only lead to chaos


Jake van der Kamp is a native of the Netherlands, a Canadian citizen, and a longtime Hong Kong resident. He started as a South China Morning Post business reporter in 1978, soon made a career change to investment analyst and returned to the newspaper in 1998 as a financial columnist.

Thousands pour in to apply for schools

SCMP headline, October 10

There is a very unusual street in Monaco. No fence runs down it, no barbed wire has been erected along it and no one patrols it. Yet home prices on one side are multiples of what they are on the other.

This riddle has a simple answer. One side of this street lies in Monaco and the other side lies in France. If you live on one side of the street, you pay no income and estate taxes. If you live on the other side, you pay the all-pervasive French taxes.

This difference creates a firmer border between the two than any wall surmounted by broken glass and machine gun towers. The Berlin Wall lasted only 28 years. This one has lasted hundreds and is under no threat.

You may say, of course, that Monaco gets away with it only through the sufferance of the French government. Let Paris decide to send in the troops and it's over.

True, but declaring Monaco a sovereign part of France would do little. Real integration could only be achieved by imposing the entire French legal and administrative system, most notably taxes. The immediate result would probably be a sudden increase in French social security payments as the Monaco economy falls apart. The bureaucrats in Paris know it and they let this leech continue its parasitic ways.

For our purposes, however, there is something additional worth noting about Monaco. Barely a fifth of the population are citizens. The rest of the 36,000 people who live there are outsiders, mostly French, taking advantage of the low taxes.

I am not saying we would see Hong Kong's population jump from 7 million to 35 million overnight if we open our border with China as fully as Monaco has opened its border with France. Monaco has more than twice our population density but things may not get that bad.

I think we are all agreed, however, that the influx on such an opening would be enormous and that we could never accommodate it without a crash in our living standards. That's why we keep 7,000 people hard at work in immigration.

I wish someone would point this out to our bureaucrats. They are all still on message about integration with China, not recognising what just a touch of integration has brought us.

First, we had our hospitals swamped by mainland expectant mothers, then we had the local economies and transport systems of our border towns overcome by parallel traders and now we have tens of thousands of mainland parents looking to enrol their children in Hong Kong's education system. A government study shows that the number of cross-border trips made by Hong Kong residents has declined from its peak in 2006. All of the increase represents mainlanders and Hong Kong people who have moved to the mainland. The children of this last group alone account for 17,200 crossings a day as they go back and forth to school in Hong Kong.

But the only reasons the study cited for it are Beijing's relaxation of visitor permits to Hong Kong and an old cross- border tariff reduction scheme that our bureaucrats have always trumpeted to little effect.

It's nonsense. The border has become too porous because we have let it become so in deference to belief that Beijing would like it so. Whether Beijing realises it or not, however, this has now produced not only isolated annoyance but economic turbulence.

We have a choice. We can immediately adopt all of the mainland's legal, social and economic ways, in which we case we won't need a border, or we can maintain our own systems in line with the Basic Law, in which case we need to restrain the mainland influx.

We do not have the choice of keeping both our ways and opening the border. Monaco can do it but we cannot. We will just get chaos. There is no such thing as partial integration of such different systems as ours and the mainland's. You take the one or the other. They don't mix.



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This article is now closed to comments

I am very curious how many of SCMP's readers are HK-born & raised. Once inside, people like to shut the door and decry "integration" to "outsiders". But this is ancient phenomenon, hardly deplorable.
Jake got it wrong in big part (for all my love of his posts). This has nothing to do with system incompatibility between HK and Mainland. Look at Shanghai, Beijing, or any of the mega-cities in China. 50% of the residents in Beijing or Shanghai were not born or grew up there. They all experience crippling growth in population and demand for social service in the past 30 years. HK is different, but hardly much different.
HK is now part of China. Deal with it or leave.
You bring a world of great ideas to the discourse and debate. Do you have anything else to enlighten us with?
That means nothing, considering the stark differences between our histories and politics. Taiwan is part of China too.
That means eventually China will take over every aspect of HK. Taiwan is next.
Don't forget who built the modern HK... You think it's the local HK'ers? Wrong. HK would still be a sleepy fishing village without the contribution from Brits and Chinese (especially Shanhainese).
The local population were just lucky to catch the ride.
You blithering ****, every single city/country that you consider successful in the history of mankind has benefited from some element or another. It could be political, social, technological. The U.S didn't reach its status because it was simply the BEST country in the world right? So are you implying that the U.S should thank the Brits for starting off the Industrial Revolution? Are you implying that the entire Western world should thank the Indians for Indo-European languages?
You are partially, correct….without the Glorious revolution, parliamentary democracy and the common law, America would not have gotten off the ground and would have ended up like Spain's colonies in South America.
116,000 a day more will be coming in every day when the new express rail line is finished...(HKD 80 Billion) ..according to Govt "low case" and then we have HKD 130 billion on a new runway because the airport is 20 million passengers short of design capacity as PRC short haul has taken the landing slots.....
It's clear that HK is not in control of its own border with China and people are being drawn in by osmosis. The end result of osmosis into a cell is often swelling and bursting, and that could be HK's fate if they don't do something about it. HK is an island of prosperity being drawn deeper and deeper into an ocean of relative poverty and deprivation, and without proper restrictions the only possible economic result will be HK's prosperity being diluted, wage rates falling, corruption rising etc etc.
Getting a grip on the border will be a start, but CY Leung will still have to work out what he can do to maintain prosperity even if he can stop people being sucked in. HK has to continue moving up the value chain into high-productivity sectors where it has a comparative advantage because making money through the transhipment of goods made in China or being the "back office" for Chinese factories won't sustain it for ever. HK really prospered for 150 years because it was a way in to a closed China, and a route out for people leaving China, but now that China is becoming increasingly open to the rest of the world HK needs to have a rethink.




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