In an interview conducted jointly with the Financial Times, Wall Street Journal, and New York Times yesterday, the city’s chief executive CY Leung, warned of the threat to entrenched privilege represented by the extension of democratic rights. “If it’s entirely a numbers game – numeric representation – then obviously you’d be talking to half the people in Hong Kong [that] earn less than US$1,800 a month,” he said in reference to the median per capita wage. “You would end up with that kind of politics and policies.”
Demonstrators interviewed in today’s FT report added to the impression that economic grievances are fuelling the demands for greater democracy. The report, behind a paywall, follows:
Economic inequality underpins Hong Kong’s great political divide Josh Noble in Hong Kong Financial Times October 21 2014
Economic inequality underpins Hong Kong’s great political divide
Hong Kong’s protest movement – now more than three weeks old – has largely focused on definitions of universal suffrage and various methods for electing political leaders.
However, many of those taking part also feel economically disenfranchised by a system they blame for leaving a generation locked out of the housing market and making an already troubling income divide even worse.
On Monday CY Leung, Hong Kong chief executive, appeared to confirm protesters’ fears when he warned in an interview with the Financial Times and other foreign media that a fully open voting system would lead to populism by shifting power towards low-earners.
While Hong Kong’s establishment has stressed the importance of protecting the interests of the business community, many in the street believe political change is needed to fix economic imbalances.
“We need to think if Hong Kong should stay an international financial centre and a paradise for global capitalism,” said Rebecca Lai, a 47-year-old NGO worker at a protest site in Mongkok district. “We need to think if this is still good for the citizens.”
Hong Kong’s low-tax, laisser-faire style of government has created one of the world’s most successful economies. The territory’s per capita GDP has soared from below $7,000 two decades ago to about $38,000 now.
In the annual “Ease of Doing Business” report compiled by the World Bank, Hong Kong ranks second again this year, recognition for a city that has fostered a number of globally successful business empires.
However, that economic dynamism has come at a price. A fifth of Hong Kong’s 7m people live in poverty, according to the charity Feeding Hong Kong, while the income gap is the widest in the developed world.
Loose monetary policy across the globe post-financial crisis has contributed to worsening inequality in many places, as asset prices have risen while wages have stagnated.
But Hong Kong’s experience has been among the most extreme, owing to its unique position of importing interest rates from the US through its currency peg, while benefiting from rapid Chinese growth across the border. The richest 10 per cent of the Hong Kong population now controls 77.5 per cent of the wealth, according to Credit Suisse research, up from 69.3 per cent in 2007.
House prices have soared, making them the most expensive in the world. Average prices are now 14.9 times median household income, according to consultancy Demographia, compared with 7.3 times in London and 9.2 times in San Francisco. Inflation has also remained high as costly retail space and a tourist wave from China has fed into the pricing of everyday goods.
“Look at this street – it’s all jewellery shops and medicine shops,” said Catherine, a 30-year-old protester in the Causeway Bay shopping district, who declined to give her surname. “All the small restaurants have gone. We cannot eat gold.”
The leaders of the protest movement have also highlighted their concerns about inequality, the lack of opportunities for young people, and the power of the wealthy.
“We are not slaves to anybody. We are not slaves to Li Ka-shing,” said student leader Lester Shum to the crowd demonstrating outside government headquarters last week. The reference to Mr Li, a property tycoon and Asia’s richest man, was met with loud cheers and rapturous applause.
Mr Leung acknowledges the severity of the problems facing many of Hong Kong’s young and underprivileged, describing housing in particular as a “major concern”.
“Social mobility, for a combination of reasons, is not as good as what we – my generation – enjoyed 30-something years ago, and we need to address that,” he said on Monday. “We need to do more.”
Many protesters see an overhaul of the electoral system as the only answer. They want to take political power away from the 1,200-member committee that picked Mr Leung, and is set to vet the candidates for the 2017 election under current reform plans.
In contrast, Mr Leung’s answer is to target faster economic growth. “An economy that grows at a high rate should provide the social mobility that young people deserve,” he said.
However, many people on the streets complain that only a handful of super-rich tycoons, many of them property developers, have felt the benefits of previous booms, especially in the years since Hong Kong rejoined China.
“The Hong Kong economy has been flying since 1997. It has skyrocketed. But a lot of people don’t enjoy the success,” says Eric Yeung, a 26-year old protester, who works in a hospital. “We are earning our money to feed this small group of people. They get richer, while we get more underprivileged. Our burden has become heavier.”