52 China The EconomistJune 1st 2019
2 ers to surrender the contacts stored on
their mobile phones, so that family and
colleagues can be hassled if payments are
missed. Others have asked female borrow-
ers to submit photos of themselves with no
clothes on, to be released if they default.
Reports abound of suicides by women in
debt who fear being subjected to such hu-
miliation. Some have been forced to pro-
vide sexual favours in return for having
their photos kept under wraps.
The government could do more to re-
duce unnecessary suffering. It is already
trying to educate the public about the risks
of borrowing and to eradicate the most
shady lenders. But a personal bankruptcy
law is also urgently needed. Reformers had
hoped to create one during an overhaul of
China’s corporate insolvency laws, which
was completed in 2006. In the end lawmak-
ers balked, fearing it would encourage the
country’s legions of debt-dodgers. Such
people could easily hide assets from credi-
tors by transferring them to friends and rel-
atives, or by means as simple as burying
their cash.
Since then, however, better property-
registration systems have made it harder to
conceal the ownership of assets. The
spread of non-cash payment services has
enabled people’s spending to be tracked
more readily. The growth of credit-rating
services has given lenders more confi-
dence that those with bad histories can eas-
ily be identified.
Lately the government has introduced
tougher measures to make sure that indi-
viduals and legal representatives of busi-
nesses comply with court orders to repay
debts. It is placing defaulters on blacklists.
Those named are barred from taking flights
or high-speed trains, staying in luxury ho-
tels or sending their children to fee-paying
schools (because, if they have money to
spend on such things, they should be using
it to service their debt). They can also be de-
nied certain kinds of business licences and
some state-sector jobs. In 2017 a county in
the eastern province of Jiangsu introduced
automated messages that would be heard
by people who made phone calls to black-
listed debtors, telling them to “urge the
person to fulfil his legal obligations”.
Many people support the use of these
sweeping and intrusive sanctions. How-
ever, honest-but-unlucky people whose
borrowings are genuinely unmanageable
urgently need help getting out of their pre-
dicament. The supreme court reckons that,
in nearly one-fifth of civil and commercial
lawsuits that are dealt with by courts, de-
fendants are incapable of paying the sums
required of them by judges.
Introducing a personal bankruptcy sys-
tem would help those who need a respite as
well as reduce financial risks, says Li Shu-
guang of the China University of Political
Science and Law. It might also help theeconomybygetting peopleswiftly back
intobusiness.Anopportunitycouldarise
inJune,whenlawmakersinBeijingwill
start discussing yet another round of
changestothecountry’scorporatebank-
ruptcylaw.Legalscholarshopethatregula-
tionsconcerningpersonalbankruptcycan
be bundled with these amendments.
Otherwisea separatelawwillbeneeded,
saysChiWeihong, a lawyerand former
judge.Thatcouldtakeseveralyears.
Thegovernmentseemsunsurewhatthe
scopeshouldbeofanyrulesonpersonal
bankruptcy. Should they apply to over-
spendingconsumersoronlyto unlucky
entrepreneurs? They worry about moral
hazard,andwhetherChina’scourtshave
thecapacitytohandlea flurryofindividual
bankruptcycases.Draftingsuchrulesis
complicated by widely held prejudices
againstpeoplewhofallintodebt,saysHui-
fenYinofShanghaiUniversityofPolitical
ScienceandLaw.Thegovernmentshould
startbyacceptingthatpeoplecanmakein-
nocentmistakes. 7H
ong kongers have less residential
space than the people of any other big
city: 15 square metres each. That is barely
double the size of a standard prison cell in
Hong Kong. The Chinese territory is also
the world’s most expensive property mar-
ket. The average price of a home is $1.2m,
around 40% higher than the nearest com-
petitor, Singapore. To be fair, 45% of Hong
Kongers live in government-subsidised
housing. But the average waiting time for
such flats is five-and-a-half years.
Carrie Lam, Hong Kong’s chief execu-
tive, has taken note. Last year she unveiled
a colossal project, called Lantau Tomorrow
Vision. It involves reclaiming 17 square ki-
lometres of land off the coast of Lantau,
Hong Kong’s largest island. That is about
five times the area of New York’s Central
Park. It is the biggest infrastructure project
ever proposed in the city (see map). Hous-
ing on the artificial islands would accom-
modate up to 1.1m people, about one-sev-
enth of the current population. The new
flats would be bigger than average and 70%
of them would be subsidised. On May 25th
Hong Kong’s quasi-parliament, the Legisla-
tive Council, approved the launch of a fea-
sibility study. Reclamation work is unlike-
ly to start before 2025.
The estimated price tag, including thecost of transport links, is at least hk$624bn
($80bn), officials say. That is equivalent to
more than half of Hong Kong’s fiscal re-
serves. The government, citing a report by a
professional body of surveyors, says land
sales will recoup the full cost of initial out-
lays on reclamation and infrastructure-
building. The idea is to turn part of the new
land into a “core business district” which
will be used by multinationals as their “glo-
bal headquarters”. Officials hope that will
create hundreds of thousands of new jobs
and generate plenty of tax.
Public opinion is divided. Nearly 60%
of about 3,000 respondents to a govern-
ment-commissioned survey supported, in
principle, the construction of artificial is-
lands east of Lantau. But many people wor-
ry about the project’s cost and environ-
mental impact. Shortly after Mrs Lam
announced the idea, thousands of people
took to the streets in protest. Activists say
they are planning more demonstrations.
Chu Hoi-dick, a legislator who opposed
even conducting a feasibility study (which
will cost an estimated hk$550m), agrees
that the government should do more to in-
crease the supply of housing. But he says
there are cheaper ways to do it, such as de-
veloping old industrial sites. Mr Chu is “not
at all” convinced by official financial pro-
jections, which, he says, take for granted
that land prices will continue to rise.
In March seven local conservation
groups called on the government to aban-
don the scheme. Chief among the risks
they cited was the potential threat to en-
dangered marine animals, such as the
city’s iconic pink dolphins. Debbie Chan, a
volunteer for one of the groups, Save Lan-
tau Alliance, says the government often
makes the right noises about protecting
the environment but fails to monitor how
its infrastructure-building affects it.
But these worries are unlikely to stop
Mrs Lam. Wu Chi-wai, another legislator
who voted against the feasibility study,
says he has never come across one com-
missioned by the government that con-
cludeda projectwouldnotwork. 7HONG KONG
Some people grumble about plans to
build massive artificial islandsLand reclamation in Hong KongThe Lantau row
Hong Kong
Lantau Island IslandShenzhenHONG KONGHong Kong
airportNew rail and
roadnetworkPlanned land
reclamationSource: Government of Hong Kong 5 kmCHINA