Hong Kong's wealth shows the flip side of Greek debt crisis
Among some of my European corporate friends, what's happening in Greece evokes a certain fascinating horror. But as a homeboy in Hong Kong, I can't say I share their intense interest. For one thing, aside from our similar-sized GDP, I can't see much in common between Greece and Hong Kong. We are actually slightly bigger as Greece's economy has been contracting over the past five years.
It seems we have the opposite problems. The Greeks are being weighed down by spiralling public debt, whereas we are being pulled back by a humongous surplus that keeps accumulating, yet we have no idea what to do with it. They can't spend money on essentials like public health care and paying pensioners; indeed Athens has had to raid some pension funds to pay creditors. We in Hong Kong gave away "sweeteners" worth HK$200 billion in the past five years!
So I was naturally intrigued when Financial Secretary John Tsang Chun-wah wrote in his blog at the weekend that Greece offered profound lessons, especially for those in charge of public finance like him. You can probably guess where he was going.
"Fiscal discipline isn't just about having a 'good-looking' balance sheet," Tsang wrote in Chinese. "It has a stabilising effect on society. In contrast, a fiscal crisis could have a terrible impact on society."
For Tsang, the spectre of Greece is not too far away if we fail to continue to be fiscally prudent. One supposes the roughly HK$2 trillion reserves we are sitting on is probably not good enough. We need to accumulate and make sure we don't commit any more to entitlement programmes from education to welfare and public health care.
But Hong Kong's deep-seated problems may be just the opposite of Greece's. Our huge reserves just suck that much financial resource out of the economy. Without making new social investments in education, public health and welfare other than one-off "sweeteners", we are helping to widen the wealth gap and mortgaging the future of the less fortunate and their children.
We are already seeing social instability with our angry youths and their mass protests like Occupy Central. When will people like Tsang realise our blind accumulation has become a problem?