Date
23 January 2018
Chief Executive Carrie Lam Cheng Yuet-ngor has raised suspicions that her administration has close and mutually beneficial ties with business leaders. Photo: HKEJ
Chief Executive Carrie Lam Cheng Yuet-ngor has raised suspicions that her administration has close and mutually beneficial ties with business leaders. Photo: HKEJ

When crony capitalism rears its ugly head

According to media reports, the Task Force on Land Supply established by Chief Executive Carrie Lam Cheng Yuet-ngor has commissioned a private company, A-World Consulting Limited, to provide support for its initiatives to facilitate public participation over the land issue.

The contract has drawn media attention and scrutiny because the owner of that consultancy happens to be Sandra Mak, who was Carrie Lam’s public relations chief during her election campaign. The close connection between the chief executive and Mak immediately raised suspicions of government-business collusion.

However, in my opinion, “government-business collusion” isn’t exactly the appropriate and accurate phrase to describe business dealings between the task force and Mak’s company.

I would say “crony capitalism” is the right term to use here.

“Crony capitalism” refers to a political and economic system that is characterized by close and mutually beneficial relations between business leaders and chief government officials.

Simply put, in a society where crony capitalism prevails, it is mainly a company’s connection with the top brass, rather than its competitiveness or anything else, that determines whether it is going to thrive or not.

According to the “crony capitalism index” published by The Economist back in 2014, Hong Kong was ranked 1st among the 23 countries and regions that were studied.

In 2016, Hong Kong was incorporated into China and together rated as a single entity by The Economist, and China’s “crony capitalism index” ranking suddenly jumped from 19th in 2014 to 11th.

Some have blamed China’s sudden rise in the ranking on the rampant crony capitalism in Hong Kong.

To be honest, Hong Kong isn’t the only place where crony capitalism prevails. And crony capitalism isn’t necessarily a bad thing, as it is almost a worldwide practice for government leaders to find private companies which they know well and which they trust to cooperate.

The problem is, when crony capitalism has run so rife to such an extent that connections with top officials have become an overriding factor in determining which company will win government contracts, while all other elements such as qualifications and competitiveness are taking a backseat, then it will inevitably lead to the deterioration of our capitalist economy.

According to some studies, compared to the West, crony capitalism in the region often feeds on authoritarian, paternalistic and oligarch forms of government that are unique to Asian cultures. Given that, one shouldn’t be surprised as to why crony capitalism has turned so rife in our city.

This article appeared in the Hong Kong Economic Journal on Dec 14

Translation by Alan Lee

[Chinese version 中文版]

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RT/CG

HKEJ contributor

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