HONG KONG - Donald Tsang, who heads the government of one of the world's
richest economies, has been roundly criticized for failing to use his annual
policy address this week to confront problems facing Hong Kong since the global
financial crisis erupted a year ago.
A crash in trade, Hong Kong's lifeblood, with exports still down as much as 14%
in August compared with a year earlier, has led to rising unemployment, growing
poverty and an increasing gap between the city's extraordinarily wealthy upper
echelons and the low- or non-waged masses.
In outlining the government's initiatives for 2009-10, Chief Executive Tsang
conceded that the city's economy shrank 7.8% in the first quarter this year
compared with 12 months earlier, with
a decline in external trade without precedent "for decades".
"But as the economic downturn in the US began to slow, the Asian economies
started to improve," Tsang said.
Hong Kong's economy grew by 3.3% in the second quarter, compared with three
months earlier, reversing the contraction over the preceding four quarters. "I
am confident that, for the rest of the year, our economy will improve further
and gradually recover," Tsang said.
Second-quarter output is nevertheless still 3.8% down from the year-earlier
period, the third successive quarter of year-on-year contraction. Government
relief measures since last year amount to HK$87.6 billion (US$11.3 billion),
higher than the average for the Group of 20 economies, Tsang said. The spending
would raise this year's gross domestic product (GDP) by about two percentage
points.
Yet Tsang offered little additional relief even even though a record high of
1,230,000 people - one in six of Hong Kong's population - were living under the
poverty line in the first half of the year, according to a study released by
the Hong Kong Council of Social Service last month with a warning that a
widening wealth gap could lead to instability.
What relief Tsang did offer suggested a government with little in its pocket
rather than one whose fiscal reserves stood at HK$494.35 billion - or about
US$64 billion - at the end of March and one that had a HK$1.4 billion budget
surplus for the year - enough to cover government spending for 20 months.
Tsang, for example, said the proportion of nursing home places in subsidized
contract residential homes for the elderly would increase to 90% from 50%,
which meant the number of places going up by about 100, a change of little help
in clearing a long waiting list.
Tsang said the government is developing specific measures for promoting six
industrial sectors - education services, medical services, testing and
certification, environmental industries, innovation and technology, and
cultural and creative industries.
The private sector parts of these six sectors together directly contribute
about 7% to 8% of gross domestic product, and employ about 350,000 workers - or
about 10% of the total workforce, he said.
In developing the six sectors, the government plans to redevelop 1,000 old
industrial buildings, many of which were emptied as factories moved across the
border to mainland China over the past few decades. It is also to introduce a
HK$200 million cash rebate scheme for enterprises conducting applied research
and development projects. Beyond that, Tsang was short on details on how the
six sectors would be helped.
The government, often criticized for letting its older buildings be demolished
and its historical heritage along with them, also plans a HK$7 billion
preservation of the city's Central Market, a Bauhaus-style building constructed
in the late 1930s. This and similar moves to retain rather than demolish some
government buildings is part of plans "to enhance visitor flow and generate new
commercial vibrancy" in Central, the city's financial hub.
In a bow to the dreadful air pollution that shrouds Hong Kong more days than
not, Tsang said the government would also work with the two local power
companies to introduce an electric vehicle leasing scheme by the end of 2010.
He predicted that about 200 electric vehicles would be supplied to the local
market in the coming financial year. Secretary for the Environment Edward Yau
Tang-wah said last week the government would buy 10 electric cars from Japan's
Mitsubishi, for testing.
Cash coupons worth HK$100 cash are also to be handed out for the purchase of
energy-saving light bulbs.
Urban pollution in Hong Kong has jumped sixfold in the past four years, with
local vehicles more to blame than smog blown in from southern China's
manufacturing belts, according to a Reuters report this week, citing the local
English-language South China Morning Post. Mainland factories have often been
blamed in the past for the dense smog that regularly blankets Hong Kong's
harbor.
The chief executive also offered little to please those seeking political
reforms in advance of elections to be held in 2012, other than saying public
consultation would start next month on changes that might be made before the
polls. Wong Wing-ping, formerly secretary for the civil service, said in an
interview to the government-funded Radio Television Hong Kong that Tsang's
failure to mention Hong Kong's core values including the rule of law, free
speech and judicial independence, was particularly disappointing.
Leaders of political parties, academics and the public responded to Tsang's
address most strongly on his failure to address worsening poverty.
Tam Yiu-chung, chairman of the pro-Beijing Democratic Alliance for the
Betterment and Progress of Hong Kong, said the measures did not cover enough
low-income earners. In a press conference, he called for more measures such as
training for blue-collar workers.
Democratic Party chairman Albert Ho blasted the chief executive for turning "a
blind eye to the poor and disadvantaged. Inequality is a problem that is
getting worse, but the policy address hardly mentioned them."
Citing data from the General Household Survey of the Census and Statistics
Department, the Council of Social Service said there were 20,000 more people
considered poor compared with half a year ago. The poverty rate was 17.9% in
the first half of the year, compared with 17.6% last year.
The study also found that the rich-poor divide had widened over the past 20
years.
The median income of high-income earners is now 3.6 times that of low-income
earners, with high-earners' income jumping 34.7% over the past 20 years, while
low-income earners saw their pay drop 3.3% over the same period.
A security guard surnamed Luk, who works 12 hours a day for a meagre HK$6,000 a
month, said she was disappointed that the government ignored the needs of
low-income earners and claimed low-skilled workers would not benefit from the
development of the six pillar industries.
She called on the government to continue providing electricity transport
subsidies for people working away from their home districts, granted during the
past two years.
The struggle for work has intensified as the financial crisis has cut the legs
from under the city's trade with the rest of the world, affecting jobs at
ports, in transport, and at all levels of work involved in the increasingly
important financial sector. Seasonal unemployment at the end of July was 5.4%,
compared with 3.2% in August last year.
This week, a survey from the University of Hong Kong found that nine in 10
people in the city rate "labor and employment" as their biggest concern,
closely followed by "economic development."
Year-on-year, Hong Kong's exports have been shrinking since November, the
decline reaching minus 23% in February. A government spokesman said the export
outlook remains highly uncertain in the near term, depending on when weak
import demand in developed economies turns around.
Olivia Chung is a senior Asia Times Online reporter.
(Copyright 2009 Asia Times Online (Holdings) Ltd. All rights reserved. Please
contact us about
sales, syndication and
republishing.)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
