The Roots of Hong Kong’s Crisis
Hong Kong, the pearl of the East, lives in such turmoil. The ongoing political crisis and massive protests have drawn a large amount of international concern and attention. There are multiple explanations of what has happened in Hong Kong. Some may say it is for a “wider demands for democratic reform.” On the mainland side, some may argue, “The demonstrations in Hong Kong are not about rights or democracy. They are a result of foreign interference.”
However, people have ignored another very important aspect of the protests in Hong Kong: economics. Hong Kong does have a strong economy and it still plays an important role in international trade and financial services. However, under prosperity, there are extreme challenges that will lead to explosions in Hong Kong society. Unbalanced economic development, economic inequality, and the failure of the Hong Kong government to address economic issues has fueled the anger of the people and dragged Hong Kong into the current crisis. The extradition bill was just the spark that ignited society’s anger.
Unbalanced economic development is a major issue in Hong Kong. When we look back at the history of Hong Kong, the economic boom started in the 1950s and 1960s. Hong Kong’s economy had the opportunity to grow in those eras by developing the textile, electric, and light industries. Manufacturing became Hong Kong’s main industry until the 1970s when finance, real estate, and trade became the main driver in Hong Kong’s economy. Currently, financial services, tourism, trading and logistics, and professional and producer services are the four main industries of Hong Kong. These industries make up nearly 60% of Hong Kong’s economy.
However, the problem is that there are only limited high paying jobs in these industries. Many of these jobs either require higher education or do not have enough positions available. According to Hong Kong government statistics, the 4 major industries have fewer job openings. From 2013 to 2017, these 4 industries have only created 20,000 new jobs while more than 100,000 people joined the workforce. China’s rise has only made Hong Kong less competitive.
The unbalanced economy in recent years has led to extreme income inequality within Hong Kong. While the high paying jobs in these industries are decreasing, it is harder and harder for regular people to live today. Hong Kong’s Gini coefficient reached 0.539 in 2017, the highest in 45 years. This is also one of the highest in the world when it comes to the Gini coefficient. The highest monthly income is 60,000 Hong Kong dollars, about $7,700 more than the lowest. Meanwhile, Hong Kong has the second most billionaires, and 4th most millionaires living in the city. Yet, the poverty rate in Hong Kong, in 2017, was 19.9%. The medium monthly income is a mere $2,200 which compared to its GDP, it is a relatively smaller portion. We have seen the harsh living condition in Hong Kong for some of the poorest people. Only in Hong Kong will you see people living in cage housing. As the rich have made more money, everyday people suffered loses. This will build up anger and instability in any society.
Now, people may ask, did Hong Kong have the opportunity to avoid all these economic development issues? Yes, there were many opportunities, but the Hong Kong government missed almost every single one of these opportunities and conditions have worsened. Back in the earlier days, Hong Kong wanted to promote the manufacturing industry and public housing programs to provide a more diverse economy and housing opportunities for those who cannot afford to be housed in regular prices. However, none of these opportunities was ever successful. In the first policy address as the former chief executive, Tung Chee-hwa promised to build 85,000 affordable housing units for the public. However, the program failed due to mass protests from middle-class Hong Kong residents who lost drastically in the real estate market. The cancellation of public housing programs between 2004 to 2014 made housing affordability even worse. In the diversification of the economy, the Hong Kong government also failed. Tung Chee-Hwa also tried to promote programs such as Cyberport, a program that would have helped Hong Kong develop a solid technology industry. However, the program was begun at the wrong time, right before the explosion of the Internet bubble.
Hong Kong’s problem is a political issue within itself right now. However, the economic perspective is also something that we should be keenly aware of. We all understand very clearly, that when the economy is in bad shape, when there are not many opportunities left for young people in the labor market, or in the society as a whole, something will happen. These feelings of loss in Hong Kong eventually became the anger towards the government, and the extradition bill was just the spark that ignited the social conflicts in Hong Kong.
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