Thursday, August 30, 2007

The Financial Black Hole

Recommended reading:-

The Great Financial Crisis: James Petras (Counterpunch)

On Market Predictions in the Current Chaotic Environment: Richard C. Cook (Countercurrents)

Wednesday, August 29, 2007

Food for Thought - The Irony of Capitalism

In this article, Frank Lin tells us about the lack of compassion of America’s middle class and wealthy for those left to destitution in the stratum of abject poverty.

Self interest and profit motive, the cornerstone of capitalism, while responsible for showering enviable wealth upon the American people in the last century, has not only brought about an unbridgeable chasm between the rich and the poor, but has also hardened the hearts of the more privileged.

Capitalism has always condoned merciless competition and survival of the fittest, and people embracing this conceptual system of economic organization have always been well aware of the inevitable outcome of inequalities under such a system. But even the staunchest of supporters would admit that whoever wins under this system does so because of a confluence of good skill, hard work and good luck. Men are hardly equal at birth, much less the shares of luck that they are destined to enjoy after birth.

The irony of capitalism is that while it rewards those hard-working risk-takers on the grounds that an individual is the rightful owner of the fruits of his labor (and a good deal of luck), it also abets inequalities in incomes and hence social stratification of individuals, which defeats the ideal of individual liberty that it promises.

Lin’s article reminds me of this observation by Paul Bowles, author of a new book titled “Capitalism”:-

“It is true that in responding to consumers’ material wants, wherever they come from, for the majority of the population in most countries, the capitalist system performs this function reasonably well, and particularly well for wealthy individuals with trivial desires. However, it fails miserably to fill the needs of those who have no demand because they have no income. The rise of homelessness on the streets of every Western city in the past 30 years and the permanence of food banks demonstrate that capitalism is failing to meet many people’s daily wants even in relatively rich societies.”

Tuesday, August 28, 2007

A Poem by Mr. Xin, a Metal Worker

One of the metal workers who went on strike in the last couple of weeks handed a Local Action member three poems, which have been posted by Chu Hoi Dick on the InmediaHK website.

The first one of the three poems is reconstructed from a famous lyrical poem called Man Jiang Hong (滿 江 紅) written by Yue Fei (岳 飛), who was a patriotic general of the Southern Song Dynasty, when he was 30 years old. The other two poems are also reconstructions of classical poems by famous poets. I find the first one to be the best of the three and have translated it below. Beneath my translation is a translation found on Wikipedia of the original poem for easy comparison.

My Translation of Mr. Xin’s Poem:

“My wrath is on government-business collusion,
As we laborers toil through sweltering heat and fierce rainstorms.
Our deeds are done on dusty sites and we often work right into the night.
Vile businessmen don’t have a conscience; they are beasts whose aim is to exploit.
Our humiliation of a decade is still not vindicated.
The pain of laborers will never be soothed.
Let us keep up the strike until we have our way.
Despite hunger and insult, we swear we will make businessmen pay.
Let us begin anew to recover our dignity, before we bundle rods.”

Wikipedia Translation of the Original Poem:

“My wrath bristles through my helmet, the rain stops as I stand by the rail.
I look up towards the sky and let loose a passionate roar.
At age thirty my deeds are nothing but dust, my journey has taken me over eight thousand li (里 – about ½ a kilometer).
So do not sit by idly, for young men will grow old in regret.
The humiliation of Jing Kang still lingers.
When will the pain of his subjects ever end?
Let us ride our chariots through the Helan Pass.
There we shall feast and drink barbarian flesh and blood.
Let us begin anew to recover our old empire, before paying tribute to the Emperor.”

Sunday, August 26, 2007

Reminiscing.....(Part 3)

“I’m not sure about choosing Europe – it is expensive and it seems only older people like to travel to Europe…” I mumbled to myself as I was flipping through some travel brochures and pamphlets.

“Nonsense, Alice. Young English people love to travel through Europe with their knapsacks. If you decide to take a long vacation, there’s no place better,” came my boss’s kindly rebuff. “I’m sure you’ll love it. Besides, it will take your mind off things for a while,” he gently coaxed me.

The sadness and loneliness that had taken me hostage for months before making this travel decision was just overwhelming. I felt that if I didn’t take a break then, I would just collapse under the weight of depression. My mother, after struggling hopelessly for six months to fight lung cancer, had passed away the previous fall. At the time, it was the beginning of summer and the idea of an escapade to Europe was just so tempting.

The next day I made all the necessary bookings and by mid-July, I was all set to go.

The first stop was London. Oh, London, the snobbish city with its snobbish taxi-drivers! My first impression of the city had already been tarnished at the Gatwick airport immigration checkpoint before I had the chance to experience the rudeness of London taxi-drivers. I was quite put off by the immigration officer's racist attitude when he "interrogated" me (I can’t remember the details) for 15 minutes! That bad experience may well be the reason why I haven’t been to the place again for more than 30 years!

The two days that I spent in this proud city were used on the Tower of London, museums, bookstores, parks, department stores and candy shops. The only thing that impressed me was the sumptuous breakfast tastefully served at the hotel (can’t remember the hotel name now). But even that was spoiled by stone-faced waiters who had eyebrows on their foreheads.

On Day 3, I boarded the cross-channel ferry bound for Calais, France, with a tour group of about twenty people, most of who came from England and Scotland. From Calais, we were to tour four countries by coach: Belgium, Germany, Switzerland and France.

As there were only three young people (including me) in the group, David, a Scot who ran his family business in Cumbria, M (I can’t remember his name), a Pakistani accountant, and I quickly became acquainted with each other. Throughout the rest of the journey, the three of us always stuck together in our ventures. We chatted, sang, joked and played together – none of us had a moment of dullness ever since we met.

One of the earlier stops was made at Rudesheim, Germany. One evening, the three of us left the group after dinner and sneaked out to a bar strip that was near the River Rhine. It was filled with young people hanging out and making merry and the place oozed with vivacity. The image of us sitting on the patio of a bar by the moonlit river, caressed by a gentle fragrant breeze while having ice cold white wine and lemon sherbet, has never left my memory.

The trip continued smoothly until we got to Interlaken, Switzerland, where I had my first dose of bad luck. One day, as we sat in front of the calm rippleless lake that mirrored an azure sky and told each other ghost stories, M suggested that we race each other to a big tree about 50 yards from where we were sitting. This we did and I ended up last, breathless, and the two young men started poking fun at me. After that, we took a long walk in the woods around the lake until dinner time.

By the time we headed back to the hotel that evening, I was dead tired. As I was packing up stuff for the excursion to the Jungfrau mountain planned for the next day, I discovered to my aghast that I had lost my purse containing all the cash that I was carrying! That cash was meant to pay for the excursion. Although I still had a traveller’s cheque with me, that was supposed to pay for my expenses during my intended one-week stay in Paris, which was the last stop of this trip. How could I be so careless - I must have dropped the purse while I was running in that race! But it didn’t help to feel guilty now – I had to face the music. There was no other choice but to withdraw from the excursion.

When I announced the bad news to my two friends the next morning, they tried to console me and offered to search the coach seats for my purse, which search, as expected, resulted in nothing. I was nevertheless grateful for their gesture. David even offered to pay the excursion for me, but I told him that I couldn’t accept his money. I decided to stay behind and explore the town on my own that day.

On the 12th day, we arrived at Paris, the city of my dreams. I had booked a bed-and-breakfast room in Saint Germain for a week, as I planned to leave the tour group at this last stop and continue my stay in Paris. After two days of venturing around famous landmarks and enjoying sidewalk café espresso, I said goodbye to David, M and the tour group.

Two days after the farewell, the second mishap descended on me. This time, I was conned by a tourist photographer at the plaza outside Louvre museum. Now in hindsight, I was probably a targeted prey as I was wandering about all alone and looking quite gullible. The con man came up to me and asked if I would like a photo taken. I was naïve enough to think that it would probably not cost too much to have a photo taken and so I agreed. After he had taken the photo of me, he produced a set of five prints and asked me to pay a total of 50 francs. It was a lot of money (my b&b room only cost me 25 francs a night)! I had never asked for five prints! What a jerk! Mad though I was, I dared not refuse to pay. And my French wasn’t fluent enough to argue with him!

My memory of Paris has been discolored by the years like a faded photograph. But my stay was not spoiled by that little episode. The lovely tree-lined Seine river and its tranquil ambience, the glass boats, the quiet winding cobblestone streets, the ornate churches, the chic boutiques, the quaint patisseries, the morning strollers carrying their baguettes, the lonesome youth in the park who engaged me in casual conversation in a lazy afternoon, the loquacious old man who talked incessantly about politics which I didn’t understand, the warm smile on the face of the kind lady who served me breakfast at the guest house, the self-absorbed painters on Montmartre……

My trip to Europe would have meant nothing to me in all these years without my vivid memories of the places, the people, the trivialities and the interaction between myself and the people I met. Those images, although long buried under the tide of my subsequent years of living, will always occupy a special niche in my heart.

That thought brings me back to the reality in Hong Kong. The authorities can do all they want to demolish buildings, piers, markets, neighborhoods and even livelihoods in Hong Kong. But thank god they can neither touch our memories nor the sentiments these memories invoke, be they memories of her historic places, graceful architectures, people or happenings. Memories are the inviolable private property of those who care to remember. Our present and our future are built on our past.

Friday, August 24, 2007

Development and the Environment

In Ordinary Gweilo’s post “Out through the Window”, he says: “In Hong Kong (and large parts of China) that means designing buildings that can be kept cool in the summer without excessive use of air-conditioning. It's not happening, is it? Developers prefer to throw up apartments with thin walls and hardly any insulation. Even if you are sceptical about global warming, surely it has to be a good thing to be cooler in the summer and warmer in the winter without having to pay a small fortune to CLP or HK Electric?”

Another blogger Daai Tou Laam has a post “Government Listens to Elite, Masses Can Suck on a Tailpipe” where he delivers a news release about the Town Planning Board’s rejection of an application by the environmental group, Green Sense, to reduce the density of a West Kowloon site and to include a 10-meter wind corridor in the proposed development. The rejection apparently came through because of objections from the developer and owner of the site, Sun Hung Kai Properties, on grounds that the application infringes on their private property right and could threaten investor confidence.

Then there was Li Ka Shing’s comment on TV that if the density of a development site were reduced, it would adversely impact government’s treasury as well as citizens’ income.

Here are some observations:

Thin walls without any insulation means less quantities of concrete and would be a plus on cost-savings for developers. Air-conditioning charges would be the homeowners’ or tenants’ liability once the built apartments are sold, and thus are not the developers’ concern.

Lower density eats right into developers’ profits and is and must remain a taboo. Developers would naturally not want to comply with any of the environmentalists’ requests that would cost them more money, especially if market conditions do not allow them to pass on the additional cost to consumers.

Li was not wrong in pointing out that government would also stand to lose in terms of land revenue as lower density on sites would mean lower land premium receipts for government.

Can it be any clearer that from the developers’ standpoint, cost and profit concerns always trump environment concerns?

On the other hand, if there are no specific environmental regulations either in the building code or in the lease conditions, then a developer does not have any legal responsibility to comply. By the same token, based on the concept of the rule of law, government is also contractually obliged to let a developer build to whatever density ratio that is written in the Conditions of Sale (i.e. lease conditions) of a site and under current building and planning regulations once that site is sold (as in the above case).

All in all, the above situation and incidence suggest there is an urgent need for a revamp, with public input, of existing land development policy, building and planning regulations in light of the growing social demand for greater efforts on environmental protection and more livable neighborhoods. It may also be time for government to review the sustainability of a land revenue-reliant fiscal structure.

Thursday, August 23, 2007

Pier Movement has Deeper Meaning

People may have missed the key issue in the Star Ferry and Queen’s Pier movement if they think that it is just about retaining the piers as two pieces of heritage structure. It’s much more than that, as Local Action member 周 思 中 explains in his article.

Below is my short translation of the key points in the article:-

“The Star Ferry and Queen’s Pier movement has always been based on four fundamental principles:-

(1) The citizens’ user right and participating right relating to public open spaces;
(2) Democratization of the city planning process;
(3) Preservation of Hong Kong’s historical spaces and structures;
(4) Resolving issues relating to Hong Kong’s history, identity and decolonization.

Starting from the 1950s, the public open spaces surrounding Star Ferry, Queen’s Pier and City Hall have always been the historic venue witnessing Hong Kong people’s strife to develop and establish their own citizenry character with dignity and self-respect.

According to information on hand, civic movements that occurred in these public open spaces range from the 1965 residents’ protest against tax hikes, rent hikes and price hikes, to the 1966 蘇 守 忠 's anti-Star Ferry fare increase hunger strike, to the early 1970s’ 保 釣 and Chinese language movement. Apart from hosting these incidences, the spaces also serve as the Philippine domestic helpers’ weekend “refuge” in a consumerist city. All these scenes are evidence that Hong Kong people understand and know how to exercise their civic rights in this city. The colonial government and the Royal Hong Kong Police Force can and may have good reason to disregard this piece of history. But as Hong Kong citizens, particularly now that colonial governance is ten years away from us, can we ignore it? Can those experts in history ignore it?

The history of civic protests deeply impacts Hong Kong’s social progress, be it in the arena of economy, religion, education or healthcare, and cannot possibly be a question that could be answered with a simple yes or no. Not only does Hong Kong’s heritage policy and heritage administration structure need to be changed, the more important thing is to discuss and treat with care the conceptual question of what kind of historic preservation is needed, given the current historical stage Hong Kong is in.”

I found this video on Sham-Shui-Po Boy’s website, which is a good speech by a HKU professor during the Queen’s Pier movement. In case you missed it, here it is:-

Wednesday, August 22, 2007

Hong Kong Mental Health Volunteer Group

I've almost forgotten all about a request from one of my readers, Benita Chick, to help promote her website which was set up to help mental health patients and their family members and friends.

Here is a link to that website:

I hope this would help a little. Benita, keep up the good work!

Monday, August 20, 2007

Are Property Booms and Busts Unavoidable?

Below is my abbreviated translation of a recent article by 徐滇慶 on titled “Developers Collude to Push Up Prices, Rendering Control Measures Futile”, which seeks to identify the underlying causes for persistent and rapid price rises in China’s property market and the possible causes that could lead to a reverse course.

It is interesting to see that those listed causes for price rises all have something to do with human nature and what Henry George referred to as the fundamental principle of the law of rent: that “men will seek to gratify their desires with the least exertion”. After all, who wouldn’t want wealth that comes not from hard work but simply from just owning a piece of land or property?

Empirical evidence shows that the causes cited in the article are not indigenous to mainland China, but apply to most places with a capitalist system including Hong Kong, although the “developer collusion” cause may be less obvious in western countries. The key concern here is that going overboard in property will always induce an economic bubble and usually leads to painful consequences when it deflates, as history has repeatedly witnessed. While the Japan and Hong Kong property carnages are still fresh in people’s memory, a similar scene is unfolding in the U.S. with credit complications. It is anyone’s guess if China will be able to avert what looks like a natural but unpalatable feature of capitalism.

Translated Article:

“Between 2000 and 2004, property prices in western markets except Germany and Japan shot through the roof and have become a hot topic for research and study.

Given the painful lessons from the Japanese economic debacle in the 1980s and the Asian financial crisis in 1997, a lot of academics have focused their attention on analyzing how speculative demand leads to a housing bubble being formed, as well as on the relationship between financial crisis and housing speculation. Some of them have been studying the basic factors that cause property prices to bloat and some have been analyzing the inherent link between rapid rises in property prices and a bubble economy. These studies are still ongoing and have reached interim conclusions. The results of these studies should lend some light on the investigative study of the internal mechanism by which China’s property prices have been skyrocketing.

What have caused China’s property prices to rise incessantly? Apart from the demand factor, there are four other factors that have caused dogged upward movement in prices:

(1) Properties are a durable commodity and can last up to 50 years with low depreciation rate. In most cases, purchasers buy properties just because they are worried that prices will keep rising and thus it makes sense to buy sooner rather than later. Once they have bought a property, they naturally wish the price to go further up. Therefore, it is not practical to expect purchasers to restrain their buying desire and help cool down the market; on the contrary, they would actually be a pushing force.

(2) For most homeowners, the property they own is their core asset. When the price of their core asset rises, they would feel rich even though they are not thinking of selling it and this feeling makes them happy and hopeful of further price appreciation. Such expectation often has a self-fulfilling effect on the price trend.

(3) Property price rises bring extra profit to developers. No doubt developers are the major pushing force behind the housing market. Most developers’ gearing ratio is 75 percent. That means only one-quarter of the total investment fund is the developer’s equity, while the remaining three-quarters are borrowed funds. For every price rise of 1 percent, the developer’s return on equity will grow 3 percent.

Another point is that in a rising market, even when a project is completed, a developer can choose not to sell out the completed units all at once if they expect future price appreciation will be greater than their carrying cost. They will simply hold on to the units, thereby squeezing the available supply, to maximize their return.

There are a number of prodigious developer groups who are known to manipulate the property market by collusion, enabled by their dominating market shares. Unless something can be done to restrict their market shares, none of the cooling measures such as raising interest rates and other administrative controls like regulating land grant procedures is going to be effective. As long as they can exercise dominance in the market, they can easily pass on to consumers any additional costs like interest rate cost and land cost.

(4) Local government officials are prone to take a rising property market as a sign of economic prosperity. Besides, it also brings them higher tax revenue and other grey area income. So they would only be happy to see an upwardly mobile property market.

On the other side of the coin, there are factors that could cause the market to reverse, apart from wholesale appropriation of assets, natural disasters, economic depression and financial crisis, and these are:-

(1) If some drastic negative economic fundamentals surface, like an abrupt rise in long-term real interest rates or dramatic changes in the tax system, these could cause the property market to tank. However, given the serious lag in reforming China’s tax system, all the various taxes that have been introduced as cooling measures are in fact useless as such.

(2) Relaxing land supply may apply some pressure on prices in the short term. In big cities like Beijing and Shanghai, the increase in land supply in 2006 was seen as an effective coolant. However, in the coastal cities where land is becoming very scarce, this measure is simply not workable.

(3) Experience shows that short-term restrictive measures like tightening monetary supply, directly taxing speculators and some price rise capping measures can have a cooling effect. However, such measures cannot be effective over the long term, as these would be off set by people’s natural expectations of price appreciation.

To make a final judgment on the causes of property price rises and falls would be crucial to improving and regulating China’s property market and preventing a financial crisis. The most urgent thing to do now is to establish a high quality research institution to collect and analyse all relevant data.

Generally speaking, it appears that all the abovementioned price rise causes are present and strongly visible in the property market, whereas none of the price fall causes is obvious. Based on this observation, we can conclude that property prices will continue their upward trend in the near future.”

Sunday, August 19, 2007

Reminiscing.......(Part 2)

In the 1970s, my life revolved around Central District as I ventured into working life, landing my first job with one of the three famous British “hongs”.

Hong Kong at that time was very much under the influence of British corporate interests, which occupied commercial buildings scattered on Queen’s Road Central, Des Voeux Road Central and Connaught Road Central.

Prince’s Building used to house many shipping and trading companies like World-Wide Shipping, Hutchison, Jebsen Trading etc.; Union House (later named Swire House) carried the Swire Group, Wheelock Marden (which moved to old Lane Crawford House in 1973) and a host of lawyer firms; old Jardine House on Pedder Street had been home to the Jardine/Hongkong Land group before it moved to Connaught Centre, now called Jardine House, in the mid 1970s; while old Lane Crawford House, Gloucester Building and Edinburgh House (now The Landmark) catered to space needs of different types of commercial enterprises and professional practices.

A number of the old buildings had impressive styles of architecture.

My own favorite was the old Lane Crawford House on Des Voeux Road Central, flanked on one side by Bank of East Asia and the other by Gloucester Building. It was a six-storey Victorian style (I think) building clad in greyish granite stones with a mosaic glass-adorned facade and equipped with grand marble staircase. Tasteful window dressing of the Lane Crawford department store on the ground floor made the building even more charming.

Another of them was the old General Post Office building (situated at the junction of Pedder Street and Des Voeux Road Central). It was built in 1911 on the newly reclaimed section of Pedder Street and was a typical Edwardian style construction of granite and red brick. I only have a faint recollection of its interior – it had very high ceilings decorated with ceiling fans. As for the exterior, I found this photo:-

In 1976, the building was torn down to make way for the MTR Central Station and World-Wide House, and the GPO was relocated to Connaught Place on the waterfront.

Another memorable building was the old HSBC building at No. 1, Queen’s Road Central, built in 1935. Its design was of the Chicago school style of architecture. I recall that the bank used to give away to customers red plastic money-saving boxes in the shape of the bank building, with a coin slot at the top and a key-locked flap at the back. The little red box instilled in our generation the good concept of money saving. Here is a photo of the building:-

In place of the old building was built in 1985 the new HSBC building of Norman Foster fame.

Those were days of affluence for the British taipans and corporate executives. The chairmen of the hongs used to own enormous estates in Shek O and Peak mansions. Some of their senior executives used to be nested in luxurious flats on the Peak. The Mandarin Hotel and Hong Kong Club were favorite lunch spots for taipans and expatriates. The stately Peninsula Hotel was often chosen as the venue for company annual staff parties at Christmas.

For most Chinese white-collar staff though, everyday life was light years away from such opulence. But those who had jobs could still have a pretty decent living. Junior office workers at large British firms had opportunities to pursue further studies to get promoted or change jobs. Upward mobility in society was possible if one worked sufficiently hard at it.

It was habitual for local office workers in Central to have occasional dim-sum lunches at the Union Restaurant 於 仁 酒 樓 (on the top floor of Union House) and Gloucester Restaurant 告 羅 士 打 酒 樓 (in Gloucester Building), and to regularly have lunch boxes from On Lok Yuen 安 樂 園 , or rice noodles with succulent barbecued goose at the famous Yung Kee 鏞 記 on Wellington Street. They also had the option of subscribing to home-made lunches delivered to offices.

There was one special afternoon-tea snack that I particularly cherished – it was introduced to me by a Portugese colleague at my first job. The snack was an open face grilled cheese sandwich specially made by Club Lusitano on Ice House Street and it tasted so delicious! That colleague, whose name was Cavalho, was a kind chubby gentleman who treated me and other co-workers to lunch at that Club several times. Sadly, he died when I was in my third year on that job.

As far as I can remember, if there was any envious sentiment amongst the working class towards the British bosses in those days, it was not noticeable, as the latter always tried to be humane and reasonable in their dealings with local staff. Expatriates and local staff on the whole got along reasonably well. From my own experience, I will say that I am forever grateful to two of my former British bosses (one at my first job and the other my second) who threw me a lifeline when I found myself in hot water. Both of them did it out of compassion and genuine concern for a subordinate.

Thursday, August 16, 2007

Land Supply Shortage? What Shortage?

With the opening of the Western Corridor and the Lok Ma Chau spur line, and the recent publication of the Bauhinia Foundation Research Center’s report named “Building a Hong Kong-Shenzhen Metropolis”, the New Territories property market has begun to buzz with excitement. Real estate agents expect to see much interest in Tuen Mun, Yuen Long and Sheung Shui residential properties from Shenzhen buyers. Some are coming armed with bags of yuan for down payments, according to some agents. But caution is also holding back the agents’ exuberance: supplies are abundant, especially in western New Territories.

If the policies recommended in the report materialize, Shenzhen residents will soon be able to shuttle freely between Shenzhen and Hong Kong by the swiping of their smart cards at the border. Lining up to welcome them, other than the agents, will be Hong Kong’s mighty developers, as they couldn’t be happier to find a new pool of purchasing power for their built or to be built flats in the New Territories.

Under the same policies though, large tracts of land in the Frontier Closed Area (covering 2,800 hectares) and the Hetao area owned by Shenzhen (covering 96 hectares according to a mainland blogger) are to be developed. After all, Hong Kong does not have a land shortage problem, does she?

Tuesday, August 14, 2007

China's Gini Coefficient and Market Economy

This is my translation of an article by Xue Cong on titled “Is Market Economy A Sure Cause for Wealth Disparity?” (dated August 14, 2007):-

"Recently Mo Yu Xi’s 'the wealthy need to be protected' theory has stirred up heated debate in society. He said 'The difference between market economy and planned economy is that the former is centered on equality of individual (right) while the latter focuses on equality of the economy (income). In the former case, as one individual differs from another in that each has his own level of capability and share of luck, this inevitably leads to unequal distribution of income. In the latter case, equality in the economy is achieved by suppressing the more talented individuals, at the expense of individual right equality.'

Our generation and Mo’s generation have suffered immensely under a planned economy. If we were given a choice, we would not hesitate to opt for market economy.

Before we make such a choice, maybe we should follow this logic and gather some data to verify whether such is really the case: that those countries with more effective market economies are the ones that have more serious income disparity, while those with planned economies are the ones that have less serious disparity. A few days ago, the Financial Times reported a study by the Asian Development Bank, which reveals that China and Nepal are countries that have the widest income gap in Asia, while Japan, South Korea and Taiwan have much more equal income distribution. In our urge to learn about market economy, should we follow Nepal’s example, or that of Japan, South Korea and Taiwan?

Let us now take a look at the global situation. I have found some GINI coefficient ranking statistics compiled by the United Nation. In these statistics, the higher the grading means the more unequal the society. China’s coefficient is 0.447 and is among the thirty countries that have the widest wealth gap. I could not find any developed country whose rich-poor gap is worse than China’s. For example, Denmark, Japan, Sweden and Norway rank No. 1, 2, 3 and 5 as the most equal societies and their respective GINI coefficient are 0.247, 0.249, 0.25 and 0.258. Even the United States, who is well known for having great wealth inequality, has a coefficient of 0.408; Germany – 0.283, Britain – 0.36, and France – 0.327. Those economically advanced countries with ratings over 0.40 include only the U.S. and Singapore (0.425), but they are still lower than China’s figure. As for those countries whose rich-poor gap is worse than China’s, they are mostly the poorest countries like some African countries, Sri Lanka and Haiti, plus some developing countries whose economies are a notch better, like Brazil, Mexico, Argentina and Chile.

From those statistics we can come to the conclusion that a market economy, particularly a healthy market economy, will lead not to wealth disparity, but rather, to even distribution of wealth. Wide rich-poor gap is usually found in countries who do not have market economies, or whose market economies are defective (e.g. some African and Latin American countries).

The so-called 'equality' in our planned economy era was no more than self-indulgent wishful thinking. During that time, although inequality was not expressed in monetary terms, it exhibited itself through the urban-rural gulf, which was a creation of the planned economy. Now Mo Yu Xi suggests creating a separate GINI coefficient for each of the urban and the rural. It is tantamount to concealing the inequality created under our very own system. And then on the strength of such data to declare that our rich-poor gap is not that wide, and the important thing is to protect the rich! How could that be convincing?

I am not qualified to judge whether wealth inequality in China is at an alarming level. But not only has the Asian Development Bank’s study pointed out that China is one of the Asian countries with a noxious wealth gap, it has also warned that this trend will persist into the future. If things continue at the current pace, it will not be long before China catches up with some poor African countries in her GINI coefficient rating. And those countries hardly have any social stability, or political stability, let alone economic prosperity."

Monday, August 13, 2007

Why Did Financial Markets Crumble?

Last week, we saw a panicky meltdown of global stock markets (with the exception of those in China) with the U.S. Federal Reserve, European and Japanese Central banks all scrambling to pour money into their respective financial systems in an attempt to avert potential credit crunches. What on earth is happening?

Philip Bowring in his Asia Sentinel article tries to identify the proximate causes, which lie with the structuring and shady operation of the global financial markets, while Max Wolff at The Huffington Post helps us understand in his blogpost the ultimate causes, which emanated from the United States’ build-up of the housing bubble along with unmanageable sub-prime debt.

Sunday, August 12, 2007

Reminiscing .....(Part 1)

Causeway Bay in the 1960s was a relatively tranquil and laid back part of Hong Kong Island, especially the quadrant that adjoins Happy Valley, roughly bounded by Leighton Road, Lee Garden Road, Percival Street and Hennessy Road. Most of the lands in the quadrant are owned by Lee Hysan’s clan, which the tycoon bought in 1923 from the Jardines Group, then known as Jardine’s Hill.

There was a route that I used to take on foot to and from school. The route ran along Percival Street, passing Hysan Avenue and turning right at Lee Garden Road, then turning left at Leighton Road, and after a few blocks, put me right at my school’s doorsteps. It was a very pleasant walk, especially along tree-lined and airy Hysan Avenue, where the tasteful Lee Gardens Hotel stood (and still stands) on one side, and understated (and now demised) Sunning Hotel perched on the other, accompanied by other unobtrusive low-rise buildings.

On Percival Street, where Happy Valley-bound trams used to and still run before meandering further towards the racecourse, there was a Chinese-style western food restaurant (what some people call 豉 油 西 餐 , soy-sauce western food) called 椰 樹 餐 廳 (Coconut Tree Restaurant). It was located near the Russell Street/Matheson Street junction. Even to this day, I can still remember how good their Russian borsch used to taste. They used to serve a 3-course daily special (called 常 餐 ), which included a soup, a main dish and dessert which was usually ice cream, and this could be had for HK$4.50. My monthly allowance then was HK$8.00, which had to cover all expenses including stationery. So, the daily special could only be a very rare treat for me, however much I liked the food.

Further down Percival Street and where the trams make a 90-degree bend stood the once majestic Lee Theatre. In my humble view, this was one grand piece of architecture that should have been preserved in the name of cultural heritage.

It had a grandiose dome-shape rooftop, an elegant stone-clad exterior and exquisitely ornamental interior which boasted of a grand revolving stage and three-tier seating lodges. Completed in 1925, it was built as a filial gesture of Lee Hysan’s towards his mother who was a Canto opera fan. If only for sentimental reasons, Lee’s offsprings should have considered keeping the theatre from the wrecking ball. It’s a pity that they decided to sacrifice cultural and sentimental values for money.

In my early childhood, I accompanied my grandmother on numerous occasions to watch culture-rich operas at Lee Theatre, which left an indelible mark on my mind. How I loved the fancy shiny opera costumes and the ambience of the theatre. And how I drooled but my craving was denied every time a snack hawker passed by carrying a wooden tray stacked with candies and soft drinks! Then, as a teenager, I used to take my siblings to Lee Theatre to watch Sunday matinees - Walt Disney cartoons.

Apart from Lee Theatre, there were four cinemas in Causeway Bay that no longer exists now. These were: New York Cinema 紐 約 (at the Percival Street/Hennessy Road junction), Capitol Cinema 京 華 (at the western end of Jardine Crescent), Hoover Cinema 豪 華 (at the Hennessy Road/Jardine Crescent junction) and Roxy Theatre 樂 聲 (opposite Hoover).

Capitol used to show Mandarin films made by Shaw Brothers, while the other three cinemas used to feature western films. Of the latter, I liked Hoover best and frequented it most because it had plush seats that could be inclined. It was here that I got totally hooked on Hollywood and awed by great films like Gone with the Wind, War and Peace, Ben Hur, Sound of Music, Ten Commandments etc.

Thursday, August 9, 2007

It's China's Choice!

I came across this interesting article today:-

As a Chinese, I can only wish the best of outcomes for China from the international sport event. Having said that, I must admit I am not very optimistic.

My pessimism stems from the fact that bad habits die hard – and I’m not referring to the spitting either. Thousands of years of imperialism have instilled in Chinese people a tendency to conceal the truth, especially in the presence of emperors or rulers, as telling the truth might bring on disasters or even death upon oneself and one’s family. During the Cultural Revolution, this tendency was carried to the extreme in the whole society – lying and denial became a way of life, which was necessary for survival.

Though it is understandable that China wants to show her best face to the world during the Olympics, it does not help her progress if she continues using propaganda to trumpet her strengths and hide her weaknesses. The western media are landing in China for one purpose – to find out the truth by experience about this rising nation. From now up to and during the actual games, China will be under the scrutinizing eye of world class media workers. For them, propaganda is propaganda, not truth.

Globalization has helped put China on the economic world stage; it has also catapulted her towards western values and beliefs like open and accountable government, open competition, human rights and freedom of the press. Rather than hiding behind the shield of denial, saying that China has its own unique characteristics, which she does of course but not good as an excuse to reject outright those values and beliefs, it would be in her interest to let down her guard, accept constructive criticisms, understand, learn from and let herself be understood by the developed world before, during and after this international event.

Wednesday, August 8, 2007

China's Land Reform Quandary

Today there is a story posted on ESWN named “The next land revolution?” by Li Datong. Interestingly I’ve just come across an in-depth article on this rural land issue in the July issue of Land Lines by the Lincoln Institute of Land Policy, called “Housing Rural Migrants in China’s Urbanizing Villages”, which is worth reading. Here is the link:-

The conclusion of the article is as follows:-

“Overall, China’s urbanizing villages are a realistic and effective solution for providing affordable housing to rural migrants in the short run. However, the current village redevelopment program will be a planning action undertaken at the expense of rural migrants, and the economy in general, unless alternative housing options can also be created for them.”

Bottomline is: affordable shelter is paramount for China's underprivileged class, just as social stability is paramount for her economic progress.