Waching daily Aug 3 2017

On the 1st of July this year, a very special anniversary was celebrated...

20 years has passed since Hong Kong stopped being part of the United Kingdom and returned

to the People's Republic of China.

They did this under the model: "one country, two systems".

As you know, although China is a dictatorship, Hong Kong was incorporated into the country

as a "Special Administrative Region" where the "Basic Law" applies.

This is a law that grants the citizens of Hong Kong a list of rights and liberties which

would be unthinkable in the rest of China… perhaps with the exception of Macau.

Besides, Hong Kong has its own currency, its own immigration policy, as well as its own

police, customs and courts.

So, in its everyday life, the country works almost as if it were an independent country…

But, hold on a minute here, because I did say "almost"...

Beijing's interference in this island's politics has been getting more and more intense,

and don´t think Beijing is being discreet about about, not at all in fact.

We already told you about it here on VisualPolitik how pro democracy advocates have been tortured

and killed...

So, in order to celebrate this 20th anniversary…

Xi Jinping made his first visit to Hong Kong.

He is the president of China after all.

XI JINPING IN HONG KONG

Well, Xi Jinping's visit was loaded with symbolism, since it has happened at a time

when China has been receiving lots of criticism about Hong Kong.

The visit, dear friends, lasted for three days, and in this short period of time, the

Chinese president has decided to make things pretty clear.

"Any attempt to endanger national sovereignty and security, challenge the power of the central

government [...] or use Hong Kong to carry out infiltration and sabotage activities against

the mainland is an act that crosses the red line, and is absolutely impermissible."

Xi Jinping

In other words, for Beijing all that stuff freedom of speech and democracy in Hong Kong

has a lot of limits, and they are certainly not going to allow any activist or politician

to let things get out of hand and challenge Beijing's control in any way.

And, hey, Xi Jinping didn't just limit to let them go with a warning… absolutely not.

The president of China also used his visit to preside over the largest military march

in the history of Hong Kong… with Chinese troops, of course.

He also attended the inaugural speech of Carrie Lam, the new Chief Executive in Hong Kong,

who is sort-of like the president of the island...

Anyway, Xi Jinping, is the "superior authority", and even though the Basic Law clearly forbids

him from meddling in local politics, he did take the opportunity to ask the new Chief

Executive two things: First, he asked about the passing of an anti-subversion

law in order to convict all dissidents who dare to defend such things as democracy or

independence for Hong Kong.

And second, the approval of a plan of "patriotic education" for the youth...

Yep, you heard it right.

That is what happens in dictatorships, they like kids to be educated about their obedience

to the regime.

So, as you can imagine, Hong Kong citizens are not especially willing to do this… and

on the 1st July 60,000 people demonstrated demanding more freedom and democracy.

"I urge the people of Hong Kong: do not give up ... Once we give up then we will for

certain slowly deteriorate into what is becoming of China today".

Avery Ng, the chairman of the League of Social Democrats.

That is what things are like in Hong Kong, and here at VisualPolitik, we will continue

to pay close attention to the developing situation (don't forget to subscribe if you haven't

or ready for updates).

So now that this 20th anniversary has taken place, there are some questions we can't

help but ask:

How did Hong Kong do in the last 20 years?

Has it changed much?

And what is the current situation?

Well, let's have a look.

HONG KONG IS STILL HONG KONG

Perhaps the best news after these 20 years is that Hong Kong is, simply, still Hong Kong,

a city completely different to the rest of China.

Let me elaborate here...

Hong Kong is still the wealthiest and freest city in China.

Courts work, the media are not under the control of censorship, and political debate is vibrant…

Vibrant enough, in fact, that protests against China are quite frequent.

In fact, a demonstration for freedom with more than 60,000 people against Xi Jinping's

visit is a good example of this.

Furthermore, during these years, economic growth has been an average of a 3.3% every

year, andthis is a decent figure.

It might not be as high as in other Asian countries like Singapore, or some non-Asian

countries, like Ireland, but it is still higher than the growth rate of most rich countries.

The fact that, during this time, more than 1 million Chinese have moved to Hong Kong

in search of a better future.

The city has also consolidated its position as a leading financial city globally.

The number of publicly listed companies on the exchange has increased three times since

1997 and market capitalization reached $3.2 trillion by 2016, that´s equal to almost

all Germany's GDP.

Also, with 60 million tourists a year, Hong Kong has also become quite a power in the

tourist sector.

However, hold on a minute, because the country is also showing symptoms which could indicate

that their model is getting obsolete.

THE DOWNFALL OF A SINGLE MODEL?

It is true that economic growth on this island has been decent, but it is also true that

is has slowed down with time.

Further, savings have collapsed and the future seems worse, and not just for the political

situation.

"This is probably the worst time in 20 years for Hong Kong".

John Tsang Chun-wah,  Former Financial Secretary of Hong Kong.

There is an increasing feeling that Hong Kong hasn´t succeeded in adapting to the modern

economic environment, and that there is a risk of them becoming a short of cheap, tacky,

theme park for businessmen and tourists.

Maybe it is in the cities of the Pearl River Delta where the lack of drive from Hong Kong

can be better understood.

This is the region which Hong Kong belongs to, and traditionally, the city had been the

centre of attention.

Today, this is just not the case.

Take a look at Shenzhen, for example.

This Chinese city was nothing but a poor fishing town of 50,000 inhabitants 30 years ago.

Today, Shenzhen in a massive city with a population of more than 15 million people.

It has as many companies in the Fortune 500 as Hong Kong and it is an important high-tech

centre which holds notable companies like Tencent and Huawei.

Well, many believe it is Shenzhen, not Hong Kong, who is destined to be the major player

in the area...

And consider this other stat: in 1997, Hong Kong represented 20% of the Chinese economy,

today it is less than 3%.

That illustrates well just how much things are changing.

"Hong Kong's economy is stuck, with remarkably little change to show for the last two decades".

Simon Cartledge.

And the truth is: no, this has very little to do with luck.

Hong Kong has made many significant mistakes.

So, well, what are the major ones?

Well, these two are a good place to start:

First, there is the housing market, which has been a total disaster.

Real estate prices in Hong Kong have gone through the ceiling.

The prices are so crazy that most of its citizens know the only chance they have to get a house

is to get a public one.

And the odds of that happening are really low.

And when there aren't enough houses available, all spaces become very expensive, and this

makes it complicated for start-ups and new companies to establish themselves here.

And this triggers crazy situations like this one:

"Hong Kong Parking Space Sells for Record $664,300".

Bloomberg.

https://www.bloomberg.com/news/articles/2017-06-14/hong-kong-parking-space-sells-for-record-664-300-ming-pao-says

And, the problem here is not a lack of land, not at all, less than 25% of Hong Kong´s

surface is urbanised and there are other possibilities, like using the sea.

Land is definitely not the issue.

Look, Hong Kong has a very free economy, the freest in the world according to the Index

of Economic Freedom, but it is not free when it comes to land, housing and town planning.

In Hong Kong, the government is the one in charge of the housing sector, and it has been

a complete failure in the last few decades.

"There are over 200 hectares of land available for building in the urban areas.

The shortage of housing is real but that is because of deliberate manipulation of the

market by the government."

John Wright, a barrister and chairman of Friends of Sai Kung.

Pay attention here, because housing developments have been frozen because of a law from the

colonial times.

For decades, the local government leased farmers land in order to grow rice.

These communities support the government in Beijing and nobody wants to mess with them.

It's a totally crazy system…

And some are suspicious, and they have good reason to be...

The government may have tried to garner favour from some oligarchs with big real estate deals…

Some convictions have showed this corruption and have confirmed the suspicious links between

government workers and the real estate magnates of Hong Kong.

That might explain why 7 of the 14 richest real estate investors globally are from Hong

Kong.

And that leads us to another issue, the growing amount of crony capitalism…

AN UNCERTAIN FUTURE

Most people agree, capitalism has lost strength in the last years to a system with a similar

name, but a totally different essence, and that is "crony capitalism."

"Under the British, the government was pro-business but not of business.

Since 1997 business interests have been baked into the political system.

Conflicts of interest have multiplied.

Cronyism has grown".

The Economist.

In many sectors, competition has been replaced by well-connected oligopolies and monopolies.

And the worst is things are getting worse as China is regaining power in the city.

As an example, the Liaison Office, which is like the Chinese delegation there, is even

giving out loans with better conditions to "friendly companies" in order to increase

their influence and political power.

Want to know what is required to get one?

Well, you need connections...

And to make it all worse, this is all surrounded by the political conflict that we have already

told you about...

Anyway, it is Carrie Lam's mission to address all these problems.

But her legitimacy is also questionable, after all she wasn't elected by the citizens,

she was elected by a group of people who are led by Beijing's directive.

There was a time, dear viewer, when Hong Kong was thought to be the city on a hill for China's

political change.

Unfortunately though, things look quite different nowadays.

And the question becomes: What will be the future of Hong Kong?

Will it be the light or the shadows that win?

Well, now it is your turn, please do leave your opinion in the comments below, as well

as in this survey.

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Also, check out our friends at the Reconsider Media Podcast - they provided the vocals in

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And as always, thanks for watching!