When the People March
I had not intend to write anything on the blog for the next couple of weeks. But circumstances have motivated me to address the events unfolding thousands of miles away. I have been away from Hong Kong for quite some time for personal reasons. Because of that, I have not been on the ground to witness the mass of human expression over the course of the last two weeks. Instead, I am sharing photos taken by Joseph Wai-Hok Cheng, who is a local Hong Kong photographer.
For those of you unaware of what’s happening in Hong Kong, essentially a powder keg has been lit. The Hong Kong government’s attempt to pass legislation to facilitate extradition has motivated the people of the city to stand their ground. Given the odds of change, what is the point? The people of Hong Kong stood their ground in 2014, and nothing substantive happened to improve their bargaining position as stake holders to the city’s future. However, that was 2014. The world is a different place in 2019. Unintentionally, US President Donald Trump’s aggressive stance on trade negotiations with the Chinese trade representatives has made possible the reach and effectiveness of this challenge to the establishment.
Why this powder keg has been lit has everything to do with the current state of governance in Hong Kong. Essentially, the government of Hong Kong has been negligent towards the needs of the Hong Kong people. The discontent of the people is completely foreseeable. Since 1997 (after the British handed Hong Kong back to China after 156 years of rule stemming from predatory reparations forced at gunpoint during the Opium War), the cost of living has been spiraling out of control, especially with regards to the affordability of home ownership. On average, the younger population of Hong Kong has no hope of ever owning a home of their own.
The reality of home ownership in Hong Kong is impossible for the average Hong Kong resident. According to the Hong Kong government website and various international economic surveys, the average medium income of a Hong Kong resident hovers around US$2,100 per month. From that income, the average Hong Kong resident is expected to have the financial means to afford average Hong Kong home prices, which is around US$1,235,200 (according to CNBC) for an average home size of 470 ft² (or roughly 47 m² according to the South China Morning Post).
Given the metrics and reality of home ownership, the length of time required to pay off home financing is anywhere between 50 to 90 years, depending on principle, interest rates, and monthly payments (at roughly 70% of one’s monthly income). Of course, that is assuming that one can actually secure financing from any financial institution in Hong Kong, which is unlikely owing to strict compliance of risk assessment for issuing home financing after the Mortgage Crisis of 2008.
A generation of young adults are being lost to the very real prospect of no meaningful future. And to lay insult upon injury, the Hong Kong government just wants them to keep quiet and not be seen or euphemistically go away, so that the mechanism of progress can continue business as usual. The contempt that the Hong Kong government reveals to its most needy and vulnerable is unmistakable. Perform your duty unquestionably and obediently as a filial resident, so that Hong Kong can shine brightly on the world stage without the stain of embarrassment.
But what reason do the people of Hong Kong have to follow the expectations of the government? The income inequality in Hong Kong is inexcusable. In a city where wealth is flaunted by more Rolls Royce per capita than anywhere else in the world, there is an army of pensioners nearing the twilight of their lives performing the back breaking labor of sweeping the streets and gathering recyclable waste - just to live hand to mouth in subdivided windowless flats no bigger than a parking space. And up the social strata to the middle class, many young adults are forced to put their lives on hold because they do not have the financial means to move out from their parent’s home in order to start their own life and family.
The Hong Kong government has a fiscal reserve of nearly US$2 trillion. As of the fiscal year 2018, the Hong Kong government has had fourteen straight years of bumper budget surplus, averaging well over US$10 billion in recent years. The Hong Kong government earns most of its revenue from land sales to property developers. Because of this source of government income, a symbiotic relationship is invariably formed between the Hong Kong government and property developers.
In other words, as long as property values remain artificially high, receipts from government land auctions paid by developers will continue to be inflated. Government consistency in sound financial practices promotes stability in the Hong Kong capital markets, which in turn supports inflated property values and guarantees profitable sale receipts from government land auctions. This arrangement benefits Hong Kong property developers, because it reduces competition by increasing the barrier to entry. As for the inflated price of their acquired land purchase, that cost is passed down to the end buyer, which are potential home buyers in Hong Kong competing with deep pocketed investors and non-local Hong Kong buyers.
So as it stands, the majority of Hong Kong residents have no hope of ever purchasing a home, which means they have no hope of ever moving out, which means they have no hope of ever starting their own families. Given such an unpromising future, why would they not march on the streets to voice their utter contempt towards the government of Hong Kong? What more do they have to lose? Certainly not a home of their own? And certainly not the well being of a family depending on them.
Ironically, the opposite is true in Mainland China. By and large, most mainland Chinese citizens are much more upbeat about their future. But, that is because the central government has taken much more efforts to make home ownership possible - albeit restricted to each home buyers municipal registration (戶口), which is determined by the locality of their parent’s place of birth. Municipal registration aside, Chinese President Xi Jinping has declared that residential properties “should be for living in, not for speculation”, and has encouraged municipalities to find ways to make home ownership affordable.
The Chinese central government understands home ownership is a prerequisite for social order, and falling short of fulfilling that prerequisite will result in mass social unrest - given the relationship between home ownership and starting a family in a society based on Confucian values. Thus, it is no wonder that home ownership rate in China is at 90% across urban and rural areas (albeit ignoring residential realities of migrant working home owners). Moreover, 70% of Chinese millennials own their own home (according to the BBC). So it must come as a great surprise that home ownership in Hong Kong is at 49% (according to the government of Hong Kong). Even Singapore with a smaller land area than Hong Kong has a 90% home ownership rate, with 80% of its residents living in government built flats (according to The Economist).
Given this reality, the government of Hong Kong’s resolve to fast track this extradition bill would seem out of touch. This is why there were two million people marching on the streets in Hong Kong this past Sunday. The Hong Kong government has gotten their priorities mixed up. Instead of serving the people, they misguidedly drafted legislation to demonstrate an unnecessary show of loyalty to the Chinese central government. In truth, their loyalty would have been better demonstrated if they served the people better by making home ownership attainable. Had they done so, there would not have been such a groundswell of public unrest.
We in the West can fault the Chinese central government for restricting personal freedoms or government cronyism. But to be perfectly objective, the Chinese government would never be as negligent in ever allowing such mass social unrest to happen in the mainland on their watch because of unattainable home ownership. From a management perspective, I just cannot believe how an issue of case law could be blown out of proportion by government bureaucrats.
The best way the government of Hong Kong can serve the Chinese central government is by serving the people of Hong Kong better. Improving the standard of living for the people through proper governance is the best way to instill loyalty to the mainland in the hearts of local residents. Despite the current discontent that has been thoroughly expressed over the current Hong Kong government, most local Hong Kong residents are very patriotic to China - or at least that has been my experience, speaking anecdotally.
From a pragmatic perspective, this extradition legislation makes no practical sense from both an economic and political perspective. I am fully aware that the Chinese central government wants greater control over political dissent and capital outflow from its citizens. But seriously, what good would eroding the One Country, Two System do? If anything, keeping Hong Kong as a separate jurisdictions makes the city far more valuable to China than making Hong Kong become another Beijing or Shanghai behind the Great Firewall of Chinese law.
If not for the Hong Kong Basic Law, there would not be the free flow of foreign capital and talent in Hong Kong. It is why more qualified Western hospitality workers, educators, and artisans are willing to work in Hong Kong, which is really the reason why top tier international financiers are more willing to relocate to Hong Kong with their families. The creature comfort offered by Hong Kong’s international community cannot be replicated as completely in major Chinese cities, given the inherent limitations from living behind the Great Firewall and lack of English language fluency. Thus, the influx of foreigners working with local Hong Kong people and mainland Chinese emigre drive innovation and productivity, which makes Hong Kong the most vibrant and diverse financial capital in Asia.
Strategically, it is in China’s interest to maintain the status quo - despite the potential risks - owing to the benefits of foreign capital and expertise. Besides, the threat of political dissent is greatly exaggerated, given that the majority of Chinese citizens are actually deeply patriotic to the state and not fluent enough in the English language to care about YouTube or Facebook. Fact is, the majority of monoglottic Chinese speakers are just peachy with Youku and WeChat, which many in the West may find difficult to believe.
Still, I understand why the Chinese central government exhibits a penchant to quash political dissent. I have lived in many cities in China, so I know how China works. Essentially, there are too many over zealous officials at every level of government prone to human frailty. Many make bad decisions, because they think they are doing what their superiors want. Frankly, I believe this is why the Hong Kong government along with officials from the mainland Department of Hong Kong, Macao, and Taiwan Affairs decided on pursuing this unsound piece of legislation. It is because they thought their superiors wanted it.
In reality, what their superiors really wanted is for them to do their jobs in serving the people so that social order and patriotism can be fostered. But instead, they took a shortcut by drafting unsound legislation in order to make themselves look good in front of their superiors. In the end, all this shortcut has managed to do is cause public unrest, which is exactly the opposite of what the Chinese leadership wants - a peaceful and prosperous Hong Kong patriotic to China. What they got instead was a complete failure in micromanagement stemming from incompetence. Sadly, there is nothing new with that organizational behavior. It is a blunder that I have experienced first hand in collaborating with Fortune 500 companies.
That said, serving the people of Hong Kong by finding a real solution for attainable home ownership would be vastly more difficult to accomplish. For that reason, I can understand the appeal of this extradition legislation from the perspective of the Hong Kong government. They just thought it would be easier than doing real work. Well, they were wrong.
There are many in Hong Kong who are truly passionate about the underlying reason motivating the ongoing expression of civil unrest. To their credit, it is not my intent to marginalize their efforts. But in truth, the majority of disenfranchised Hong Kong residents marching in anger towards the Hong Kong government have yet to reach a level of awareness in which the loss of personal freedoms can actually be appreciated. Borrowing from the works of Abraham Maslow, and his Hierarchy of Needs, one can hardly demand personal freedoms if the basic need for survival and shelter has yet been satisfied.
Admittedly, there are many who truly appreciate and understand the ramification of what this proposed legislation mean. However, many more regard it as the final straw, given the government’s unmistakable negligence towards their fiduciary duty to improve the lives of average Hong Kong people. Mind you, this does not mean the people of Hong Kong would have accepted this legislation without a fight if housing were affordable. However, the extent of mass support would have been significantly less, if the needs of the people were met.
As it stands, the needs of the people have not been met. For that reason, the extent of mass support has been monumental. When the government fails to carry out its duties, the people will invariably respond like this.
Special thanks goes to Joseph Wai-Hok Cheng for sharing these photos on this blog. All images shared with permission from Mr. Cheng.
All images were photographed in black and white film and digitized on a Nikon Coolscan 9000 film scanner, by Mr. Cheng.
Note - the language of this blog entry was deliberately written with considerable restraint from a technical perspective. This approach was undertaken in hopes that this collaborative effort would reach a wider audience without artificial obstruction in dissemination.