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11 December 2023

Trouble looms over Hong Kong

By Martin Baker
And so to Hong Kong, and one of the most intriguing questions in today’s business world. It’s an issue broad enough to make most students of economic and political philosophy swoon: What is the political cost of economic success?

I cannot promise to offer the journalistic equivalent of the Universal Theory of Everything in answer to this question, but I do believe that Hong Kong is a crucible of political and economic change, where some of the most vibrant forces on the planet meet at a huge and endlessly exciting crossroads. One of my favourite rhetorical devices is synecdoche – taking the par for the whole, using a small story to paint a bigger picture.

And, for me, the story of Hong Kong has it all. Hong Kong is where East meets West, where liberal capitalism meets centrist instruments of political control (I hesitate to use the epithet “Communist” here), and where the notion of individualism meets a long-standing obsession with the collective.

It’s a microcosm of a changing, conflicted world. Let me start with the evident economic success, albeit tempered by the financial crisis.

The first point of call for most international travellers is, naturally, the airport. The approach to Hong Kong used to be a nail-biting affair. As I sat in the jumbo threading its way through the skyscrapers on the way to Kai Tak, I could see Hong Kong Chinese matrons attending to their family washing. At least, I think I remember that – I’m not an anxious person, but I have had a couple of flight dreams involving the approach to the old Hong Kong airport.

Fortunately, all that’s gone. The Beijing government negotiated hard before it allowed work to begin on the new airport. Essentially, it would not allow the works to go ahead until it was 100 per cent certain that it would re-gain control of the former British colony. Well, Kai Tak is dead, and long live Hong Kong International. It is sparkling, spacious and boasts the best business and first-class lounges in the world – but you have to be travelling on Cathay Pacific to enjoy them.

The docks with their giant cranes on the way in to the city are as stupendous as ever. It’s difficult not to be transported back to my childhood days, playing with Meccano, when I see them. These are pieces of kit so huge they infantilise the observer by dint of their sheer immensity.

The centre of the city is, at first glance, just as it ever was. There seem to be as many Westerners (nicknamed Gwailos – pale ghosts – by the locals) as before. And the Mandarin Oriental is still marvellously accommodating and as immaculately run. To see East meet West in the most enjoyable, up-market fashion, a visit to The China Club, sited in Central District in a Bank of China building, is a must. The food is pretty good, but secondary to the floor shows (tea-pouring, noodle-making, dancing) and the ambience.

One way of alluding to the East-West culture clash is to retreat into the immediate past (immediate, that is, in the context of a civilisation that for thousands of years had already had exquisite poetry, pottery, clothes and manners at a time when we British were painting ourselves blue and resisting the advent of Julius Caesar).

When you walk into The China Club, you feel as though you’re entering the set of the period movie, Chinatown. It’s difficult not to keep glancing around the room in search of Jack Nicholson.

The walls are draped with ironic posters celebrating Mao Tse Tung, and lots of fascinating art which is a hybrid of eastern and western cultures. And the place bustles. The mix works.

So far, so good, then. But there’s a but. There was something not quite right about the Gwailos on the street, and, I discovered over dinner with some very affable Australian private-equity investors (yes, they still exist – just), that the expatriate community is diminishing. The Chinese are educating their brightest students abroad, then giving them the jobs formerly done by expats – at a fifth of the cost. The Westerners I’d seen in the street were numerous, all right, but many of them were students and backpackers, not business people.

It also seems that gambling is in decline. The smart new casinos in Macau are suffering, it seems. There’s massive capacity, but we all thought, in the boom years at least, that the demand was infinitely elastic. Not so.

Unemployment is up to 4.6 per cent, the highest since October 2006. But that’s just a statistic. The real economy of Hong Kong isn’t reported in any set of government figures.

In effect, Hong Kong has always been self-regulating. The world of business knows cash, a bargain and a handshake between individuals. The individual has always been more important than any government in Hong Kong.

That sense of self is being constantly bolstered by the consumerist ethic.

Clothes, cars and jewellery – the outward signs of wealth and importance – are incredibly important in the city. For most of us, I’m sure, these are superficial trappings. But to many, the Gucci jeans (even if they are fake and manufactured a few hundred kilometres north) define who they are and what they stand for.

There’s an argument ventilated by many Chinese that there’s an in-built dualism in the national psyche. They say that the individual is intensely proud of him or herself and cannot bear to lose face, etc, but that beneath this, there’s a commitment to the larger whole, the collective, the society.

Well, that may be. But I suspect that the central government – a tiny elite running a vast country – is going to have a hard fight persuading consumers to remember the collective in a few years’ time. Luxury goods are a non-edible form of fast food.

They are satisfying in the moment, a must-have. But, once greedily consumed, people want more, more, more. For the moment, appetites are sated, but before the next generation matures, I predict trouble.


- Martin Baker is a journalist, author and commentator on international business affairs