As Hong Kong’s longtime rival Singapore celebrates the 50th anniversary of its independence, our chief executive said his government should play a proactive role in the economy so it will benefit from growth in the mainland economy.
Hong Kong and Singapore have been direct competitors in the regional economic arena, as both places are among the most competitive in the world in economic terms.
But it is a fact that a sovereign Singapore, the people of which have shown solidarity with their government, has outperformed Hong Kong in the past decade in economic diversification and growth in gross domestic product.
Since its handover to China in 1997, Hong Kong has strictly followed Beijing’s policies regarding economic development, focusing on mandatory integration with the mainland and aligning itself with President Xi Jinping’s idea of “one belt, one road” despite the lack of concrete plans for its implementation.
In other words, Hong Kong has abandoned its own economic development plan since 1997 and its policies are designed to satisfy the needs of Beijing in its efforts to cement the Communist Party’s rule of China.
So, it is not surprising that Chief Executive Leung Chun-ying said Hong Kong’s long-held economic policy of “positive non-intervention” — in which business decisions are largely left to the private sector, with the government playing a minimal role — is now “outdated”.
Leung did not give details but said that in the face of increasingly intense global competition, the government now has to lead and coordinate with businesses.
One of the key points Leung mentioned is competing with Singapore in seizing the business opportunities from China’s “one belt, one road” plan.
Leung said Hong Kong will set up offices in the Southeast Asian country to attract enterprises to invest in Hong Kong to take advantage of these opportunities.
But frankly speaking, there is still uncertainty about the concrete plan behind China’s “one belt, one road” initiative.
It’s more or less a program of regional economic cooperation rather than a plan for China to invest in the countries involved.
Singapore, which has been a key hub of Southeast Asia, has a geographical advantage that allows it to collaborate with other countries in the region.
That’s why Singapore attracted the regional offices of big Chinese firms like Alibaba Group Holding Ltd. and Lenovo Group Ltd. (00992.HK).
On the contrary, Hong Kong has lacked a macroeconomic plan for a long time, since the British colonialists introduced the government’s “positive non-intervention” policy.
The government believed in the market deciding the city’s economic development, rather than having officials without front-line experience intervene in the economy.
That’s the reason Hong Kong’s manufacturing industry faded out in the 1980s and was replaced by tertiary industries such as tourism and financial services in the 1990s.
Now Beijing is still relying on Hong Kong unique advantages in the financial sector to help state-owned enterprises to raise funds in the international market.
That’s evidence of China needing Hong Kong rather than Hong Kong needing China.
Leung’s new policy mindset could raise the concern among the public that the chief executive will take advantage of it to reward his supporters, given that he needs to secure their votes during the nomination and election for the chief executive in 2017.
Some lawmakers wondered whether the increase in the government’s role in economic development could offer it additional opportunities to allocate resources to firms that support the chief executive rather than allotting them with the good of Hong Kong in mind.
If that happens, Hong Kong will become a personal enterprise for those supporting the chief executive, with the public interest neglected.
Hong Kong and Singapore are facing the impact of globalisation.
Singapore has been successfully leveraging its competitive advantages of the rule of law, an efficient government and a diversified cultural environment to outperform Hong Kong, especially in technology development.
Hong Kong, however, has failed to develop its own economic plan capitalizing on the city’s own uniqueness but has merely focused on the unnecessary integration with the mainland, which will transform Hong Kong from “Asia’s world city” to merely being a “superconnector”.
Leung’s words suggest Hong Kong has formally abandoned its own economic development to settle for a role in China’s overall game plan.
That’s why, in future, it will no longer be appropriate to speak of Hong Kong and Singapore as economic competitors.
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