Hong Kong’s future lies beyond the Greater Bay Area, though it’s not what the government would have us believe
Philip Bowring says instead of hanging onto the coattails of tech leader Shenzhen, Hong Kong needs a clear-eyed look at its competitive advantages and should set about removing the obstacles that impede their development
Science and Scientology. Algorithms and alchemy. Sometimes it seems our senior bureaucrats, past and present, cannot tell the difference. Pronouncements about the importance of industry, technology and research come thick and fast, as though imprecations to invisible gods.
They could, of course, simply be ignored but, on closer examination, they may reflect the chief executive’s obedience to Beijing’s bidding to speed the dilution of Hong Kong’s sometimes prickly identity and merge it into that amorphous mass deemed the Greater Bay Area, with a population almost 10 times that of Hong Kong.
But first, think about the past and present purpose of Hong Kong, a centre of international commerce, a location on the southeast coast of China and midway between Japan and Korea and Southeast Asia, born of freedoms of trade, currency and, to a degree, nationality. Then, it was the port business, merchandise trade plus banking and related services.
Today, it is much the same except that the seaport is less important and the variety of new service industries has expanded dramatically.
The notion that the manufacturing industry has a major part to play is typical of how little some who grew up in the 1960s and 1970s have learned since. The era of manufacturing was a brief interlude caused by the interaction of Shanghai industrial capital flight, cheap labour provided by refugees, and preferred access to some Western markets for textiles, garments, toys and light electronics.
Hong Kong firms still profit from the textile legacy, controlling much production and trade between East and West. But the city was no place for low-cost mass production. The electronics industry might have progressed as it did in Taiwan, but probably never had the scale, nor the links into Silicon Valley.
The notion that Hong Kong now has to try to graft itself onto Shenzhen’s electronics and IT industries is absurd – unless the aim is political. And that is without taking account of the dubious land deals involving the Lok Ma Chau loop.
Shenzhen has indeed prospered by becoming one the mainland’s centres of excellence in these fields. Good for it. But Hong Kong has plenty of actual areas of excellence which our immediate neighbours lack, and which should be more than enough to keep a mere seven million people prosperous and at the forefront of change.
Those who squawk about the Singapore example of promoting manufacturing as well as services should note the city’s importation of about a million low-paid workers. Residents (including resident non-citizens) comprise only 62 per cent of the workforce.
Low pay and foreign ownership explain why, although Singapore is a mature economy with an ageing population, private consumption is only 37 per cent of its gross domestic product, compared with 66 per cent in Hong Kong. Is that what Hong Kong wants? A million disposable labourers to operate factories and clean toilets?
Hong Kong’s problem is not that it lacks Shenzhen-style progress. It is that the service industries that it should have are held back by the very government which talks about technology and research, and private-sector profits mostly go to old family groups. Other types of service industries, such as garbage collection and petrol stations, remain low-paid and low-tech.
For years, it has been noted how far Hong Kong has fallen behind cities in Asia and Europe in using technology to help cure or ameliorate modern ills such as air pollution, waste of water and other resources, defilement of the oceans, slow and dirty transport systems, and so on. Waste disposal is in the dark ages and token gestures are made to plastics management. These are all things which need initiatives by governments, paid for either by users or taxes.
Where governments are elected, as in Taiwan or South Korea, actions have been taken thanks to popular demand. Here, they do not happen because they require decisions against vested interests with the ear of officials.
These include the interests which hold back what should be areas of excellence. Hong Kong has the expertise to be a major medical tourism centre. But restrictive practices by the professions plus the high cost of land make such private medicine very costly compared with Singapore, let alone Thailand or Malaysia. Banking has been retarded by the protection of the long-established names, just as payments systems have barely improved since Octopus arrived two decades ago. They do better in Kenya, let alone Shenzhen.
Meanwhile, older industries that still have a major place here suffer from regulations that reduce their competitiveness. The port may never be able to compete with lower costs across the border, but the money in shipping is not in shifting boxes. It is being a leading centre of ownership, registration, ship and crew management. These are the very international businesses on which Hong Kong should thrive in the future, as in the past.
Yet again, the future should be looking outward, not inward towards Shenzhen. Mainland and foreign business will both come here for expertise and freedoms.
As for taking advantage of the “Belt and Road Initiative”, that is more hot air from the government so long as it maintains myopia to most of Southeast and South Asia. None of Hong Kong’s universities offer degree courses involving the most widely used foreign Asian languages – Malay and Hindi – and most of its leading businesses make their money from local property and oligopoly, not international commerce.
The future is not in Shenzhen. It is in reformasi here.
Philip Bowring is a Hong Kong-based journalist and commentator