Jake's View

Hong Kong's strength lies in China's weakness

When China's economy is slowing down, when capital flight is rising fast and when there is talk of tighter controls, Hong Kong finds opportunity

PUBLISHED : Tuesday, 20 October, 2015, 12:01am
UPDATED : Monday, 16 November, 2015, 4:43pm

Only further economic integration with Guangdong can alleviate the erosion of Hong Kong's maturing economy and ageing population.

Dan Steinbock

Think tank wallah

Insight page, October 19


Let's try ageing population first. The bar chart shows you an analysis of population age by segment for China and Hong Kong and, yes, China has proportionally more young people and fewer older than Hong Kong.

But it is not a huge difference and, in the overall critical working age segments of 25 to 55 there is no difference at all.

So what is all this about erosion by ageing population? Anyone ever heard of one-child families? What country adopted that policy, I wonder.

Ah, but Mr Steinbock was referring to Guangdong, not all of China.

Yes, and I wish I could find an age breakdown for Guangdong but I cannot and I wouldn't trust it if I could.

The numbers might take no account of the millions of technically illegal immigrants who have no official residency permit for Guangdong and are therefore ruthlessly exploited by employers.

What a fine model for Hong Kong. It would certainly give us booming economic growth.

We could bring them in by the shipload from Indonesia and treat them like dirt (as if we don't already). We're not members of the International Labour Organisation anyway, so why should we care?

As to maturing economies, I think someone needs to make a trip to western Europe to understand what the term really means. But even if it could describe Hong Kong, I do not see much contrast in Guangdong.

Once again, I wish I had exact figures but the National Statistics Bureau does not publish up to date industrial production figures by province. All I have is trade figures that say Guangdong export growth is barely positive and imports are sinking fast.

It should be no surprise. Almost every week this newspaper features accounts of factories driven out of business in Guangdong.

Despite all the hoopla, the province's industrial base is not built primarily on fancy electronic high-technology but on low-technology plastic mouldings and cheap toys.

Call it the Hong Kong influence; opportunity merchants who went across the border 30 years ago to make key chains and fridge magnets and still turn out the same product line today if they are still in business, which increasing numbers of them are not.

The Trade Development Council puts on a big show for them every year, The Gifts and Premium Fair, the biggest in the world - plastic junk to stick into conventioneers' packs as free loot or to hand out as shopping mall attractions, millions of tonnes of the stuff for the world's pack rats.

This is what really underlies the Guangdong economy and it is not doing particularly well just now, so why should we want further integration with it?

Here is the truth of the matter for think tank pundits.

Hong Kong's is a parasite economy. We do what China cannot or, for various political reasons, will not do. It is a mutually beneficial form of parasitism but that is what it is nonetheless.

Its nature changes from time to time. We used to live from making toys and garments when China could not do it. China then took this business and we changed to trade finance because China could not yet do it.

It may happen at some stage that China can and will do everything Hong Kong does and there will be little left for us.

But this is no imminent danger when China's economy is slowing down, capital flight from it is rising fast and the talk is of tighter controls.

These are conditions under which Hong Kong's economy finds opportunity.