Neither violence, nor Beijing, can fix Hong Kong’s housing shortage and lack of a social safety net
- Many Hongkongers have lost out due to economic changes, and many have deep-seated distrust of mainland China
- The Hong Kong government must first address their financial insecurities, before it can work on fostering a sense of Chinese identity
To find a way forward, one must recognise that the current disturbances reflect deep-rooted, but until now largely latent, anger and discontent among lower-income groups in Hong Kong, especially younger people. The discontent and perceived lack of hope provided the environment for domestic and foreign agitators to succeed.
There are two main sources of local anger and discontent. First, economic globalisation has indeed benefited every country and region in the world in the aggregate, including mainland China and Hong Kong. However, while globalisation brought prosperity everywhere, it also created winners and losers.
Unfortunately, though there are, in principle, enough gains for everyone to be better off, the free market cannot compensate the losers. It is up to each government to undertake redistribution of gains from economic globalisation so that everyone wins. This has not been done in most countries and regions, including Hong Kong. It has resulted in stagnant or even declining living standards for the lower-income groups and soaring income and wealth disparities.
It does not matter that the bill requires “double criminality”; for example, a Falun Gong follower from the mainland will not be sent back because it is not a crime to practise Falun Gong in Hong Kong, and the extradition request has to come from the highest prosecutorial authority of each country or region.
It will take time to alleviate fear and build mutual trust, which requires more interaction between Hong Kong and mainland residents rather than less. It will take even longer to generate a sense of national identity among young people. But this we must do; Hong Kong will always be a part of China. What the Hong Kong government can do now is start working on Hong Kong’s livelihood problems in earnest immediately.
The most pressing problem is residential housing for the lower-income groups. It is unconscionable that so many people have to live in cages and tiny, unsafe, subdivided flats. But this problem is of Hong Kong’s own doing. Around 7 per cent of Hong Kong’s land is for housing. More than 60 per cent is used for country parks or other green areas. A very slight reduction of the country parks, say 1 per cent, will provide ample land for public housing. Of course Hong Kong should also undertake land reclamation at the same time.
How Carrie Lam can cool the anger – address the housing crisis
Hong Kong’s government must take the lead to increase the supply of land for affordable residential housing. Once it becomes credible that land supply will increase, expectations will change and the price of land and resultant price of housing will begin stabilising. Real estate developers who accumulate sizeable land banks will know it is time to develop and sell.
There may be fearmongering that an increase in land supply will lead to a collapse of the private housing market, affecting middle-class households who own their homes. But as long as the new land is used primarily for public housing, its impact on the prices of private flats should be limited.
To be trusted, government must listen harder to all Hongkongers
Unfortunately, the SAR government has an ideological aversion to long-term planning. The principle of “positive non-interventionism” has been ingrained in the mindset of some of our bureaucrats since British rule, but it is a luxury Hong Kong can no longer afford. The government must also stop relying on land sales as a critical source of revenue and end the high land-price policy.
Violence cannot solve Hong Kong’s problems. The rule of law, a core value and a key comparative advantage of Hong Kong, must be upheld.
Beijing also cannot solve Hong Kong’s problems. It is up to the people of Hong Kong to plan and work together to solve their own problems peacefully and rationally.
Lawrence J. Lau is Ralph and Claire Landau Professor of Economics, Lau Chor Tak Institute of Global Economics and Finance at the Chinese University of Hong Kong