2019-08-26 Bloomberg Businessweek

(Frankie) #1
◼ ECONOMICS Bloomberg Businessweek August 26, 2019

26


blocksand“cardboardgrannies”pickingthrough
rubbishinsearchofrecyclables.Anaspirationfora
shareofthosericheshasbeenreplacedbya grow-
ingsenseofhopelessness.
Ho-FungHung,a professoratJohnsHopkins
Universitywho’sa Chinaexpert,saystheeco-
nomicmalaise,combinedwitha perceivedlossof
culturalidentityandfrustrationata lackofpoliti-
calvoice,is drivingyoungpeopleintothestreets.
“Participants come from all economic back-
grounds,”hesays.“Whatbindsthemtogetheris
a sharedsensethatthereis nofutureforthemin
HongKong.Comparedwiththeirparents,theywill
livea lowerqualityoflife.”
Thenumbersbearthatout.Medianhomeprices
climbedto20.9timesmedianhouseholdincomein
2018,accordingtoDemographia,anurbanplanning
consultingfirm.Thatcompareswith12.6timesfor
Vancouverand11.7timesforSydney—twoothercit-
iesoftencitedasamongtheworld’spriciest.Huge
demand,coupledwithconstrainedsupplyina
marketdominatedbya handfulofdevelopersand
cashed-upbuyersfromthemainland,hasactedas
a powerfulcocktailtodriveupprices.
That’sasincomes,whichusedtofaroutstrip
thoseonthemainland,havestagnatedinrecent
years.Wagegrowthforthoseemployedinthepri-
vatesectorinChinesecitiesandtownswas8.3%
in2017-2018,accordingtotheNationalBureauof
Statistics,whileHongKong’swas3.9%fromMarch
2018 toMarch2019,datafromthecity’sCensusand
StatisticsDepartmentshow.
Localsoftenfindthemselvesoutspentinthe
city’smarble-cladmallsbyweekendtouristsfrom
Beijing,Shanghai,orShenzhen,thoughinrecent
weeksthenumberofmainlandtouristshasfallen
sharplyinresponsetotheprotests.Almost1 in
5 residentslivesbelowthepovertylevel,accord-
ingtoa governmentreportfrom2017.It’sunlikely
thingshavegottenmuchbettersincethen,despite
government measures authorizing a modest
increaseinsupportforthepoor.
It’snotthatyoungHongKongerscan’tfinda
job.It’smorethatthepayfromavailableworkfalls

shortofprovidingthelivingstandardsneededfor
a stablefuture.Unemploymentforthoseage15-24
was 8% at the end of 2018, according to the World
Bank. In mainland China, it was 10.6%.
Sze Chan, a 20-year-old who designs menus for
restaurants on a freelance basis, has been on the
front lines of the protests in recent weeks. “Young
people in Hong Kong are very confused about the
future,” she says. “Unless you get support from
your family, it’s impossible for one to live. And with
so little left every month, you can’t even have a
decent wedding banquet when you marry, let alone
buy a home.”
Chan at least has the option of still living at home,
without which things would be much tougher. “The
young people go on the streets not just because of
the political situation—the government’s inabil-
ity to address social issues plays a role, too. If it’s
just about the extradition bill, there wouldn’t be so
many people out protesting,” she says.
A survey by Radio Television Hong Kong, the
Institute of Asia-Pacific Studies, and the Chinese
University of Hong Kong conducted on June 11-18
found an increase from the previous year in the
levels of dissatisfaction across all areas of public
policy, including social welfare and education.
That’s apparent even to some of the city’s “haves,”
because “people see no hope, they look for blame,”
saysAllanZeman,whoseLanKwaiFongGroup
ownsrestaurantsandpropertyvaluedatmorethan
HK$4billion($510million). “The first one you look
to blame, of course, is the government, which is not
helping you, and China.”
The sense of diminished opportunity is ampli-
fied by Hong Kong’s declining significance to the
mainland, whose own economy has become more
open as a result of market reforms. Analysis by
Bloomberg Economics found that in 1992, 45% of
China’s total exports went to Hong Kong, while 12%
went there in 2018. In 2000, Hong Kong’s financial
sector output was 39% of that on the mainland,
whereas it’s 6% today. While neighboring Shenzhen
transformed itself from a fishing village into a global
tech hub over a 40-year period, Hong Kong had an

Priced Out
Ratio of median house price to
median household income in
selected markets* for Q3 2018
ChangesinceQ32013:
Decline(housingmoreaffordable)
Increaseof0.1to 1
Increaseofmore than 1
No change

AFFORDABLE UNAFFORDABLE SEVERELY UNAFFORDABLE

San
Francisco

San Diego Toronto

Miami London

Pittsburgh New York Bristol-Bath, U.K. Melbourne

Atlanta Singapore

St. Louis Hartford Tampa Dublin Brisbane, Australia Auckland

4 8

2000 2018

40%

20

0

● Hong Kong’s financial-
sector GDP as a share
of mainland China’s
financial-sector GDP
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