'Given the uncertainty about global growth prospects, a recession next year is a clear and tangible risk for Hong Kong.' Nigel Chalk IMF mission chief for China and Hong Kong I like expressive adjectives, too, but it's hard to picture a clear and tangible risk. If it were clear it would be more insurable prospect than risk and if it were tangible we could touch it. Mr Chalk has in any case avoided this vain attempt by forecasting continued growth rather than recession for us. One must make allowances, however, when looking at the International Monetary Fund's regular reports on Hong Kong. These people do not have the freedom enjoyed by nasty, irresponsible, muck-obsessed journalists. They are part of the system. They have to say nice things. Thus the first sentence of their appraisal speaks of Hong Kong's record as 'dynamic and compelling'. It keeps the welcome mat glued down for them at our government's front door, you see. And if the rest of the appraisal has that ponderous wordy ring of 'ho-hum-nothing-new-here', well, let's not have it said again that a journalist is your first stop if you want to be told the obvious. Although I expected sesquipedalian circumlocutions I thought we might at least get a meandering warning of the dangers of misallocation of capital. The report might, for instance, have hinted that we need not be quite so gung-ho on that HK$67 billion high-speed railway to the border when it was only undertaken at Beijing's behest and Beijing is now reconsidering its entire high-speed railway programme. Not a word of it. The danger is an external one and the specific danger is external shock from Europe. The IMF, you must remember, is naturally euro-centric. By international (unwritten, closed door) agreement, its chief is always a European and may even have time to think about his job when his attention isn't ... ahem ... centred on ... ahem ... other pursuits. The prescribed remedy for what the future may hold for Hong Kong is exactly what you would expect: If you're going too fast, slow down. If you're going too slow, speed up. What an insight. As I say, don't look for a journalist any longer if you want to be told the obvious. And the way to speed up if events in Europe cause an external shock to our economy is to 'be ready to deploy a significant and immediate fiscal stimulus and, depending on the severity of the shock, consider extraordinary measures to support the financial system.' But how to deploy a fiscal stimulus when we have already embarked on an explosion of infrastructure projects and cannot find enough workers for them? How to deploy more than our government is in the process of deploying now with a payment of HK$6,000 to every resident? We are already at near maximum fiscal stimulus mode. How to support the financial system when our US dollar peg does not allow the monetary authority to print money at its own choosing and the IMF itself lauds the peg? How to give everyone more confidence in the system when everyone already knows that our government will blithely guarantee every dollar of deposits in the system (but could never be good for that guarantee in a real calamity)? And here is one more question. Do we really need to worry? European Union boosters at the moment are taking advantage of monetary difficulties to try to create a powerful federal state out of countries whose voters have been at best equivocal of this initiative whenever asked. This crisis is at least partly a manipulated one. I'm far from sure that it is as big as it is claimed to be. But, even if it is big, our economy is nowhere near as reliant on Europe as it was 30 years ago. We don't need Europe's money. We are providers of capital, not recipients of it and Europe also accounts for only a minuscule proportion of our exports. Hong Kong's greatest weaknesses lie not in Europe but at home. My point in all this is a simple one. A respected international agency has a valuable role to play here as a meaningful economic critic and the IMF is admirably suited to be that agency. In my view, however, its Hong Kong mission is proving itself too timid for the role. This shoe doesn't fit. Cinderella, where are you?
