What can you say about innovation and creativity in a city whose last really good idea was the Octopus card, introduced in 1997?
Twenty years later, the iconic smart card may still be going strong, but city officials have yet to figure out how to deal with Uber, Airbnb and other aspects of the sharing economy. Their build-it-and-they-will-come approach to technological advancement has been a boon for already-rich property developers (note Cyberport and Science Park) but has done little to turn Hong Kong into the cutting-edge technology hub that was advertised.
Indeed, the city’s laissez-faire, “positive non-intervention” approach to economic development, first implemented in the early 1970s under then-Financial Secretary Sir John Cowperthwaite, is a musty throwback to British colonial rule that has long outlived its sell-by date.
That Hong Kong continues to be the perennial choice of the conservative Heritage Foundation as the world’s poster-city for Adam Smith’s brand of hands-off capitalism should be a source of embarrassment, not of pride.
In the Hong Kong of 2018, laissez-faire, a French term of uncertain origin, simply translates as “lazy.” That’s the only way to describe a government stuck in the mental mud of colonial atavism. And the problem starts at the very top, with Chief Executive Carrie Lam Cheng Yuet-ngor and her ministers.
Initially, following the 1997 handover from British to Chinese sovereignty, there was a period of enlightenment as the city suffered from ill winds blowing in the wake of the precipitous crash of the Thai currency, the baht, and the widespread Asian financial crisis that followed.
That crisis inspired one of the city’s proudest moments in economic management. In August of 1998, with the Hong Kong-US dollar peg under fierce attack from speculating hedge-fund “crocodiles” led by international financier George Soros, then-finance chief Donald Tsang Yam-kuen, casting aside the outworn doctrine of positive non-intervention, joined forces with Joseph Yam Chi-kwong, head of the Hong Kong Monetary Authority at the time. The tandem teamed up to purchase over US$15 billion in Hong Kong stocks, around 11 per cent of the value of the entire market, making the government the biggest holder of blue-chip equities and successfully fending off Soros and his followers.
That bold move was the high point in Hong Kong’s post-colonial economic history. Since then, in a creepingly insidious form of gradualism, Hong Kong has effectively ceded its economic planning to central authorities in Beijing. We are now just another subordinate part of a succession of five-year plans drawn up by the Chinese leadership.
For example, where and by whom was the decision made that Hong Kong would spend a whopping HK$84.4 billion for the dubious privilege of being part of the mainland’s high-speed rail system while at the same time relinquishing legal authority to mainland immigration officers in their quarter of the West Kowloon terminus?
And what about another piece of exorbitantly priced but unwanted and unnecessary infrastructure, the Hong Kong-Zuhai-Macau bridge? If we took a vote on the Hong Kong end of this massive waste of public money, it would never have happened.
Next up: the Greater Bay Area scheme to integrate Hong Kong into a mega business and economic zone with Macau, Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen and Zhaoqing. Doesn’t that sound exciting!?
There’s no need for reflex opposition to all projects associated with the mainland, but where is Hong Kong’s voice in any of the above initiatives? At this point, it seems to have been completely lost in the nationalistic vision of President Xi Jinping’s grand plan for China’s development into a 21st-century superpower. While Hong Kong officials are keeping their hands off the local economy, Beijing’s fingerprints are all over it.
So it comes as no surprise that a recently released study spearheaded by researchers at the University of Science and Technology (UST) found that Hong Kong is “rapidly losing its competitive edge” and at risk of becoming marginalised in the region.
“Innovate or die,” the researchers warned.
And who and what are to blame for the city’s decline? According to the 114-page study, written by scholars at UST’s Institute of Public Policy in collaboration with the Hong Kong Academy of Engineering Sciences and the Chinese Academy of Engineering, the primary culprit is the Hong Kong government and its archaic economic philosophy of positive non-interventionism.
The study concludes that the government’s long-standing antipathy to any form of interference in the private economy has left the crucial IT sector to flounder without a “coherent policy” to identify needs and demands and connect university research with the city’s sustained technological development.
Government spending in the sector, presently a paltry 0.74 per cent of gross domestic product, also demonstrates a lack of serious commitment to a 21st-century, technology-based economy.
True, the Lam administration has pledged to increase spending on innovation and technology to 1.5 per cent of GDP in the next five years, but that still won’t measure up to government IT investment in other places in the region such as Singapore (2.2 per cent of GDP), Shenzhen (2.85 per cent), Shanghai (3.73 per cent) and South Korea (4.23 per cent).
That’s why some Hong Kong scientists were so jubilant in their reaction to the recent announcement that Xi will drop the central government’s ban on national funding for research done in Hong Kong, but of course the newly opened door comes with the caveat that those selected for funding must be patriots who “love the country and Hong Kong.” Again, in this as in everything else involving mainland officials, national interests will likely trump those of Hong Kong.
As the UST study makes clear, the city is falling further and further behind in innovation and technology. The lack of financing, coordination and commitment to IT, however, only points to the larger problem of anaemic economic planning and management in post-handover Hong Kong, where officials now sit back and wait for the next policy directive to drop down from Beijing rather than create and propose innovative policies themselves.
Call it negative non-interventionism. Or just call it lazy.
