Weekend Question 2: Is China Going to Leave Hong Kong’s Economy Alone Forever?
ANSWER: It doesn’t look like it. And that’s not good news.
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A Friday subscription-only Wall Street Journal editorial tells us what’s happening:
Hong Kong boasts one of the world’s wealthiest, most flexible economies. In the 1960s, the city industrialized; in the 1970s, it exported; in the 1980s, it moved its manufacturing base to mainland China; in the 1990s, its service sector blossomed. Today, average unemployment hovers between 3% and 4%; growth is forecast at around 6.2% this year, 5.5% next year.
(Hong Kong’s Beijing-appointed chief executive Donald) Tsang has a better idea. The government needs “to act when there are obvious imperfections in the operation of the market mechanism,” he wrote. Perhaps he’s forgotten a few recent government ventures. Take Hong Kong Disneyland, to which the territory shelled out HK$23 billion ($2.95 billion) in subsidies. After a year, the park has proved a flop. Or Cyberport, a government-backed entree into the hi-tech era. Now it’s just another property development.
Maybe Beijing can help, Mr. Tsang says. At an economic summit earlier this month, he lectured Hong Kong policy makers on the need to pay close attention to China’s latest five-year plan.
China would be well-advised to leave Hong Kong alone, as it has mostly done for the nine or so years since Great Britain handed over its former colony. In fact, the mainland should be imitating Hong Kong if it wants to break through once and for all from Third World squalor to First World player. The kind of state control of supposedly “private” enterprises exercised by Beijing is NOT the long-term answer.
