ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Roots of the Hong Kong Crisis

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Hong Kong, the Pearl of the East, lives in much 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 “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 perspective of the protests in Hong Kong, which is, economics. Hong Kong does have a strong economy, 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 the Hong Kong society. The unbalanced economic development, enlarged inequality, and the failure of the Hong Kong government in addressing economics issue fuelled the anger of the people and dragged Hong Kong into the ongoing crisis. The extradition bill, in my opinion, is just the spark that ignited the society’s anger.

Unbalanced economic development was a major issue of Hong Kong in recent years. When we look back at the history of Hong Kong, the economic booming started from 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 picked up the main role in Hong Kong’s economy. The Reform and Opening in China in 1979 further fuelled the development of Hong Kong in trade and finance. Currently, financial services, tourism, trading, and professional services and other producer services are the four main industries of Hong Kong. These industries have attracted 47.3% in the labour force and are contributing 57.8% to its gross domestic product (GDP). However, the problem is that there is only a limited stock of high paying jobs in these industries. Many of these jobs either require higher education or do not have enough positions available for the people. According to the Hong Kong government statistics, the four major industries have fewer job openings. From 2013 to 2017, these four industries have only created 20,000 new jobs while more than 1,00,000 people joined the workforce. The rising of China as an international economic powerhouse has made Hong Kong even less competitive in these traditional advantageous industries.

The unbalanced economy in recent years led to extreme income inequality within Hong Kong. While high paying jobs in these industries are decreasing, it is harder for regular people to live day-to-day. 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 biggest billionaire, and fourth biggest millionaire 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 when compared to its GDP, is a relatively smaller portion. The world has seen harsh living conditions in Hong Kong for some of the poorest people. Only in Hong Kong will you see people living in cage housing. The richest of the rich have made more money than ever in Hong Kong while every day people suffer from loses. This has built anger and instability in its 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 them. In the earlier days, the Hong Kong executive officer wanted to promote the manufacturing industry and public housing programmes to provide a more diverse economy and housing opportunities for those who cannot afford to house in regular prices. However, none of these opportunities was ever successful. From the real estate perspective, in the first policy address of the Chief Executive, Tung Chee-Hwa promised to build 85,000 affordable housing for the public. However, the programme failed due to mass protests from middle-class Hong Kong residents who lost out drastically on the real estate market. The cancellation of public housing programmes between 2004 and 2014 made the housing affordability even worse. In the diversification of the economy too, the Hong Kong government failed. Tung Chee-Hwa also tried to promote programmes such as Cyberport, a programme that would help Hong Kong to develop a solid technology industry. However, the programme was born 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 a bad shape, when there are not many opportunities left for young people in the labour market, or in the society as a whole, something is seriously amiss. 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 within Hong Kong.

Henry Huang

Washington DC

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