A Few Quick Thoughts on Hong Kong

To the cabbal of real estate developers who run Legco and Hong Kong: 

They that sow the wind, reap the whirlwind

You guys have had it pretty good the last decade or so. Post SARS the government surfed a wave of Chinese growth and real wage growth was enough to cover the pernicious rise in housing costs, food and energy. Regardless, while lining your pockets the man on the street was doing well enough - not great, but not terribly - to keep quiet and take the view that so long as China kept on throwing up business opportunities he might catch a smaller wave and ride it to comfort and prosperity and in some way imitate your success.  

From 2009 though you all seemed to forget that the social compact with Hong Kong’s people and the detente with China was a fragile one. It was founded upon real wage growth for the median and bottom quartile Hong Kong resident and a sense of openness and real mercantile opportunity, thus ensuring that there was no will for constitutional or political change. You allowed wages to stagnate especially when compared to housing costs whose rise can be charitably described as completely insane. You allowed a lot of useless capital flows to come in from China to be laundered in your property market making life utterly unaffordable for most people in Hong Kong and lining your pockets. It worked well - until now.

Now, without putting too fine a point on it, you are screwed. You assured Beijing you had the situation under control and that you could keep simmering discontent under control. You patently have not and are no longer credible in Zhongnanhai. You played running dogs to Beijing and allowed an enormous growth in inequality in Hong Kong and played the patriotism card and now cannot run to your own Cantonese people. Maybe you can just pull all your wealth offshore and run - no doubt many of you will - but your days of being credible are over. Worst perhaps, is that the best way for Beijing to gain credibility among the average Hong Konger might be expropriate some of your wealth and impose a sales tax and perhaps property controls like Singapore, as well as assisting in locating illicit funds squirreled away in apartments in Central. 

You’ve ruined Hong Kong, and perhaps the only way for Beijing to not have to harm civilians is to harm your commercial interests. May well they do so.    

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