Once a Model City, Hong Kong Is in Trouble

> Hong Kongers don't care about the ideological differences between mainland China and HK,

Pretty sure some do. See the umbrella movement.

> This article takes an economic situation and tries to frame it as a political one

Seems short sighted to say politics and economy are unrelated. Politicians make laws that impact businesses.

It goes both ways, though - the tacit deal is basically that the HK tycoons do not challenge the Chinese Communist Party's monopoly on power, and the CCP doesn't challenge the HK tycoons' economic monopolies.

But, all in all, I agree. As I've written in another thread: The grievances of HK's population are real: a political and business establishment dominated by property tycoons (and increasingly mainland Chinese political factions) keen on maintaining their privileged position; huge economic inequality; a slow erosion of political liberties ("salami tactic").

That all, of course, gave rise to the Umbrella Movement in 2014.

However, given that the Chinese Communist Party is not inclined to weaken its grip on power, and extremely protective of the (perceived) territorial integrity of China, I don't really see how this will end well. :-/ Here's hoping.

For perspective, BTW: In 1997, HK's GDP was about one sixth of China's (even though China has 200x the people), and HK was an important conduit between China and the world: HK's port had more volume than Shanghai and Shenzhen together.

Today, HK's GDP is barely 3% of China's, and the ports of Shanghai and Shenzhen together have 3x the throughput of HK. (Just have a look at these pictures: http://www.dailymail.co.uk/news/article-2478975/Shanghai-por.... )

HK used to be hugely important for China. Now, it isn't, and with rising Chinese nationalism, HK is being seen more and more like an unruly and spoiled child.

I just crossed back to Shenzhen from Hong Kong yesterday. A few random observations...

In HK, a lot of the taxi drivers are old guys who can barely read, don't speak English or mandarin, and are a real hassle to deal with unless you are a Cantonese speaker. A lot of the taxis have weird fare manipulation lookup tables instead of correct metering. Although the mass-transit oriented stored value card, Octopus, was established decades ago, you still can't use it in taxis. Further, if you want to top it up, you literally can't top it up with anything smaller than HKD50 (USD$9) even if your fare costs less and you only have small denomination local money. There are no electric taxis, but plenty of rich people own Teslas. If you ask 20 odd Hong Kong banks about cross-border RMB payment APIs (HK is supposed to be a financial center, after all) not a single bank can offer you one. In fact, just to open a regular bank account is now so difficult standard waits can exceed 2-3 months (and success is far from guaranteed).

So what does HK still have to offer?

(1) A legal environment under Beijing's auspices but with nominal resistance to mainland corruption and manipulation.

(2) Superior international financial connectivity and services if you can get a bank account.

(3) Liberal visa-free travel policies for people from most countries.

That's about it.

Yes, I think comments like the above are intentionally trying to divert attention from your main points.

> Real estate is the best investment available in Hong Kong right now. Bar none.

Whether it still is now (prices having doubled since the 2007 bottom) is questionable, and depends hugely on political decisions.

> With all their capital tied up in real estate, the elites don't invest in startups or R&D.

Fully agreed. Not only that, it makes starting a small business extremely expensive.

> It's not a backlash towards conflicting political ideology, they just want the Chinese and their damn money out.

I'd argue the umbrella movement was borne of four related grievances:

* the enormous inequality (coupled with low social mobility)

* the extreme cost of getting your own flat (young workers live with their family for a long time, and have to save money for long time before they can put down a downpayment for a tiny apartment (they come in different sizes: shoebox, matchbox, coffin...))

* the gradual erosion of civil liberties

* and, yes, the desire for more political self-determination, e.g. universal suffrage or even independence.