Shanghai's new free-trade zone will have a bigger and quicker impact on Hong Kong than most people imagine, Asia's richest man, Li Ka-shing, said yesterday.
SCMP, September 18
But just what sort of impact will this be, Mr Li, and how quickly do you think it will come? Could you let us have your thoughts in more detail, please?
And the answer: "I hate to predict. But it will be faster than most people expect."
No answer at all, in other words. What we have here is a typical Li Ka-shing statement on political affairs. He doesn't make one often, but when he does, it is always directly in line with official pronouncements in Beijing. These thoughts are of great value. Taken along with an Octopus card they can get you a ride on the bus.
I believe he wobbled a little during the Tiananmen Incident in 1989 but certainly has never since done so. It is what we must expect. He is a man of business with interests throughout China, and these interests are best advanced by applause of official thinking. You might almost say he has a fiduciary duty to his shareholders to parrot the Beijing line.
I am not saying, mind you, that it is not worthwhile paying attention to his thoughts. But when a businessman of his stature wishes to say something noteworthy in a field that he understands, he does it by corporate acquisitions and disposals. Thus I think it is very much worth noting that he has put ParknShop on the block. He sees a developing trend in retail property returns or in retailing profit margins that is not yet apparent to the rest of us who have not had his long experience of these matters.
I wish I knew what it was that he sees there. I might have some instructions for my own stockbrokers if I did. But I do not see it. Perhaps five years from now, I will say: "Of course. I should have guessed it myself." By then it will be too late.
I do not, on the other hand, feel any great urge to know what he foresees for Shanghai's new free-trade zone. The reason I feel this way is that I don't think he sees anything there or, if he does, that it is no more than you or I can see.
The latest duo at the pinnacle in Beijing, President Xi Jinping and Premier Li Keqiang, have chosen to associate their names closely with the establishment of a yuan trade zone in Shanghai, and therefore our man of business does so, too. It is a good patriotic gesture and additionally an excuse for warning certain elements in Hong Kong to behave or lose out. This is the sum total of the merit of Mr Li's statements.
Most of all, I think the reason that Mr Li is so vague about what to expect from a yuan trade zone is that he really doesn't know what to expect, and the reason he doesn't know is that no one knows. The grand concept has been announced. The plans for bringing it into effect have not. The roof has been built. Don't move in yet.
I confidently predict that nothing will come of it. Beijing wants to open the capital account on the balance of payments because this is the mark of a modern sophisticated economy. It would mean that people across China are free to invest their money where they will, anywhere in the world.
It would also mean that Beijing can no longer direct domestic investment policies or the exchange rate of the yuan. The money will go where it will at the prices it likes. This implies a major surrender of central control over the economy. I believe that when the president and premier truly face this reality, they will recoil from it.
The restrictions to be placed on the Shanghai free-trade zone will therefore be so tight as either to exclude the zone from the Chinese economy or allow it no worthwhile privileges over domestic competition.
But whatever way it goes, Mr Li will say that it is a good thing and Hong Kong had better be careful not to offend the boss.