TheEconomistAugust 24th 2019 311W
hen britainreturned Hong Kong to
China in 1997, the Communist Party
promised two things to the anxious people
of a territory with political and economic
systems very different from the main-
land’s. The first was political autonomy: in
time Hong Kongers would even be able to
choose their own leaders. The second was
to preserve Hong Kong’s swashbuckling
capitalism and light-touch government.
China has not lived up to the political
promise. Especially since Xi Jinping came
to power in 2012, China has undermined
Hong Kong’s autonomy and strangled po-
litical life. For nearly three months the con-
sequences have played out, with the world
looking on, on Hong Kong’s streets in the
form of anti-government protests that
have sometimes tipped into violence. For
the past week the territory has been rela-
tively calm, with a rare lull in the barrages
of tear-gas. The airport, following a sit-in
and an unprecedented two-day shutdown,
is up and running again. Yet pro-democra-
cy feelings run no less high. Under mon-soon rains on August 18th crowds in signa-
ture black t-shirts called for universal
suffrage in central Hong Kong’s biggest
park. The organisers claimed 1.7m people
attended, over a fifth of the population. An-
other big march is planned for August 31st
and a general strike on September 2nd.
Yet while breaking its political prom-
ises, China has hewed closely to its eco-
nomic ones. That, too, has fed popular re-
sentment. By preserving Hong Kong’s
economic system in aspic, China has
helped to generate extreme inequality, due
largely to the extraordinary expense of
housing. A coterie of tycoons with a lock on
the property market continue to enrich
themselves at the expense of others. Many
young protesters say they have lost hope of
a prosperous future. Being able to afford adecent home appears inconceivable. The
latest “nano” flats are not much bigger than
a large car.
Thanks to light regulation, indepen-
dent courts and a torrent of money from
China, Hong Kong has long been a global fi-
nancial centre. But many of the resulting
jobs are filled by outsiders on high salaries,
who help push up property prices. Main-
landers seeking boltholes do too. And then
there is the contorted market for housing.
The government artificially limits the sup-
ply of land for development, auctioning off
just a little bit each year. Most of it is bought
by wealthy developers, who by now are sit-
ting on land banks of their own. They have
little incentive to flood the market with
new homes, let alone build lots of afford-
able housing. The average Hong Kong sala-
ry is less than HK$17,000 ($2,170) a month,
hardly more than the average rent. The me-
dian annual salary buys just 12 square feet,
an eighth as much as in New York or Tokyo.
The patriarchs of the main business
families—for instance, Peter Woo of Whee-
lock, Lee Shau-kee of Henderson Land and
the Kwok brothers of Sun Hung Kai—were
already at the top when Britain ruled Hong
Kong. In addition to property, such fam-
ilies dominate industries with limited
competition such as ports, utilities and su-
permarkets. Before the handover, China as-
siduously cultivated the oligarchs with a
view to securing their loyalty—not least by
offering them juicy land deals on the main-Hong KongProperty and protest
HONG KONG
The link between the unrest and the unbearable expense of housingChina
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