Ignored lessons in economic development
Updated: 2013-01-10 06:14
By Hong Liang (HK Edition)
In what was supposed to be a New Year message on his official blog, Financial Secretary John Tsang Chun-wah warned against "blind" pursuit of new industries as called for by more and more economists, to address the social ills arising from an imbalanced economic growth that is mainly driven by the financial and property sectors.
Rejecting wide-spread criticisms that the government lacks long-term vision, Tsang wrote: "We must understand that a new industry takes a long time to nurture and develop, and its success is not guaranteed." He may sound clever in citing a dialogue in the latest James Bond movie: "Sometimes the old ways are best."
But this is not the time. The "old ways" that have been driving economic growth through asset inflation are destroying the middle class, resulting in a widening wealth gap that has become the main source of public discontent.
Some commentators have scoffed at the frequent public demonstrations against the establishment and fierce opposition to almost any government policy proposal as nothing more than an indication that Hong Kong people love to complain. Their show of ignorance in this matter apparently is shared by many policy makers.
The many young rebels against Tsang's "old ways" are not without a cause. They have genuine reasons to feel betrayed by market forces that are shaped by what Tsang called the "conventional economic pillars," finance, logistics and trade, tourism, and professional services. He left property out of the list. But everyone in Hong Kong knows its overbearing influence on almost every other sector of the economy.
"The four conventional pillars have become our major economic backbone because they have the edge," Tsang wrote in his blog. "While developing new sectors, we should make more effort to expand the edge of the pillar industries."
But for what? That is the question many frustrated Hong Kong people are asking. To be sure, the "pillars" have sustained Hong Kong's economic growth in the past several years despite a global downturn. But such growth is not seen to have brought improvement to the livelihood of a large segment of the population, or created many opportunities that can facilitate social mobility for those at the lower end of the social scale.
For that reason, more and more economists are calling on the government to take the initiative in nurturing higher-value added manufacturing industries that can generate new opportunities for entrepreneurs and create secured and well-paying jobs for skilled workers. Of course, it takes time to establish a new industry and the risk of failure is real enough. But such considerations should not be taken as excuses of doing nothing.
If they were, none of those "pillar" industries would have existed. Rather than being "conventional", the groundwork for the development of the financial industry, as it is today, was laid in the late 1970s by the government. Tourism didn't become a "pillar" until the government took the initiative in 2003 to make arrangements that facilitated the massive inflow of millions of mainland tourists every year. Nobody is saying that the government should abandon the pillar industries. What Hong Kong people want is for the government to at least produce a credible plan for the development of new manufacturing industries that can help balance economic growth.
The author is a current affairs commentator.
(HK Edition 01/10/2013 page3)