2019-08-26 Bloomberg Businessweek

◼ 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