Tuesday, 10 June 2014

Out of Step with Reality

Does Financial Secretary John Tsang know what's going on with the economy?
The third consecutive drop in retail sales in three months has Financial Secretary John Tsang Chun-wah panicking.

He believes Hong Kong's unemployment rate of  -- gasp -- 3.1 percent could increase if retail sales continue to drop.

Last week the Census and Statistics Department announced that retail sales in April dropped 9.8 percent year-on-year to HK$38.8 billion or 9.5 percent in volume.

"If the external environment does not show obvious improvements, and retail sales continue to shrink, there will be huge pressure on the employment market. The currently low unemployment rate of 3.1 percent may rise, affecting low-skilled workers in particular," Tsang wrote on his blog.

His belief of the factors causing the retail plunge? The anti-government protests in Thailand and anti-China protests in Vietnam.

What Hong Kong's retail situation has to do with Thailand and Vietnam make no sense -- and why not the reason that Chinese President Xi Jinping's anti-corruption campaign is making a significant dent in the city's economy?

Surely when the crackdown on lavish consumption began in late 2012 Tsang would have had an inkling of the possible impact on Hong Kong? If not then he's not a good financial secretary.

Don't tell me Tsang just sat at his desk and waited for what we're experiencing now to happen?

Why not use our giant war chest of savings to stimulate the economy in other ways, like building social housing or giving subsidies for young people to start businesses so that the blip we're going through now won't be as tough on the balance sheet in the long run?

Perhaps the friction between Tsang and Chief Executive Leung Chun-ying is so great that the two don't even talk anymore and so no one thought of doing anything to keep the economy humming.

But it also goes back to the argument of why Hong Kong isn't diversifying its economy and depending only on mainland tourists.

It's surprising but also not surprising. This government really has no idea what it means to have foresight and be nimble.

Instead it makes knee-jerk reactions and thinks building more shopping malls is the way to keep Hong Kong's economy going.

Not anymore.

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