Carrie Announces More Relief Measures

Carrie Lam announced more relief measures for businesses to stay afloat

So many things to write about today, but perhaps most importantly a belated response from the government for more bailout measures to keep Hong Kong's economy going.

It is spending HK$137.5 billion (US$18 billion) on a raft of measures, including helping employers pay their employees HK$9,000 (US$1,160) of their monthly wages for six months. Only those companies that contribute to the Mandatory Provident Fund are eligible and they must promise not to lay off any workers.

There were questions from the media about possible loopholes, but Chief Executive Carrie Lam Cheng Yuet-ngor said if the list of employers was made public then employees could expect that money. This means 1.5 million workers would benefit from this scheme.

1.5 million workers could get HK$9,000 from the government

She stressed this was the third time the government was making an effort to buoy the economy, though it will cause the budget deficit to surge to HK$276.6 billion, equivalent to 9.6 percent of  gross domestic product.

"We have to try our best to prevent the closure of businesses or large-scale job cuts," Lam said as the number of confirmed coronavirus cases reached 960.

"In these unprecedented circumstances, the government must have some unprecedented responses -- to help businesses to survive, safeguard employment, and minimize the burden on businesses and citizens."

And about that controversial pay raise? Lam announced she and her senior ministers would take a 10 percent paycut for a year, which means she will be making HK$390,000 per month, or HK$4.68 million a year.

It took her long enough to decide to do that, but perhaps better late than never?

Almost 450 police officers quit last year, up 38.5 percent

Another interesting piece of news was reported that is protest related: Almost 450 officer quit during the eight months of unrest, while new hires fell short of targets.

The police force claimed it was not surprised by the large number, and added it still received some 10,000 applications.

In his budget announced in February, the financial secretary approved a 7 percent budget increase in police manpower for the next financial year, including an extra 2,543 posts created.

The Security Bureau defended the proposed budget increase, explaining that 446 officers not expected to leave the service had quit between June and February this year, an increase of 38.5 percent from the same period last year.

"For these officers, their reasons for leaving include resignation during training, early retirement, family and personal reasons," the bureau said in reply.

Were some of those "personal reasons" related to the protests?

And finally, today the lockdown on Wuhan was lifted, and as expected, some 55,000 people left the city by train, and on 100 commercial flights. People were definitely fleeing Wuhan after being shut at home since January 23.

Lots of people fled Wuhan today with the lockdown lifted

However... where are they going? There are a lot of fears many of them to show up in Hong Kong and the media pressed health officials about why they let passengers from Wuhan go home with a plastic bottle to collect the saliva sample and not have them stay at AsiaWorld-Expo to conduct the saliva test and wait for the results.

But health officials insisted that the risk assessment was low.

"Among the first batch of returnees from Wuhan earlier, only one person tested positive among some 400," Dr Chui Tak-yi, Undersecretary for Food and Health said.

However reporters in the press conference were not impressed, as anyone from anywhere could have the virus; perhaps health officials will change their mind tomorrow?

Who's Middle Class in China?

What is the definition of middle income? Many feel they are scraping by

The Chinese government wants its citizens to think their lowly salaries are a sign of increasing social status, but many beg to differ.

Last Friday the National Bureau of Statistics issued a report on how different income groups spend their time in China. It said people who earned under 2,000 yuan (US$295) a month were in the "low income" category; those on salaries of 2,000 to 5,000 yuan (US$295-US$740) a month were "middle income", while a "relatively high" monthly income was 5,000 to 10,000 yuan (US$740-US$1,480).

Anyone earning more than 10,000 yuan per month was in the "high income" group.

How many families in China are enjoying life like this one?

But many people online were in disbelief by this definition, because even though they were described as "middle income", they were barely scraping by.

The response forced the statistics bureau to clarify that the middle-income definition applied only to the report. "The term 'middle-income group' mentioned in the survey has nothing to do with the income brackets in the general sense," the statement said.

While the World Bank ranks China as an "upper middle income" country with a GDP per capita of US$8,827 in 2017, ranked 73rd in the world, Beijing has never given an official definition of middle income.

"A typical family of three, for example, might have an annual income of 100,000 to 500,000 yuan. There are 400 million people, or 140 million households -- [in that income bracket] who has the means to buy a car, a flat, or go traveling," said statistics bureau chief Ning Jizhe on Monday.

But many say that despite fitting into that income bracket range, they are still struggling to make ends meet.

Guess this family doesn't worry about making ends meet

Wang Xiaoyi, a researcher at the Chinese Academy of Social Sciences wrote an article about it in the Beijing Youth Daily earlier this month.

"The middle-income group, especially those who are young, don't see themselves as such even though their income has reached a certain level. People who are not on low incomes also feel the pressure of living costs -- they're not enjoying the good life. It's as important to boost their sense of achievement as it is to lift people out of poverty."

Welcome to the rat race...

Numbers and Reality Don't Match Up

Hong Kong's GDP for the first quarter beat analysts' forecasts

Breaking news, folks -- Hong Kong's economy is doing really well -- according to the numbers on paper.

On Friday official figures released showed the city's economy grew at the fastest pace in six years in the first quarter, as the gross domestic product rose 4.3 percent.

This was due to the buoyant stock market, increased trade, the hot property sector, robust employment and an encouraging global economic outlook, said government and experts.

Unemployment is low, but most people need a job to survive

The GDP was well above the 3.7 percent average forecast by analysts, and now that they are readjusting their forecasts, these analysts believe Hong Kong's economy will remain strong in the second quarter.

However, as a lay person, I see a different picture of the city's economy.

There are lots of shop spaces that have been empty for months, or over a year, other shops and restaurants closing because they can't pay the rising rents demanded of greedy landlords, and because of that people are losing their jobs or finding it hard to sustain their business because their clients' budgets have been slashed or don't renew contracts.

Does the GDP take this into consideration as well?

There are many vacant shops around town

The heated property market is thanks to uber wealthy people snapping up multiple flats as if they were several articles of clothing, or bags of candy, thinking nothing of dropping over a hundred million dollars, and mainland developers overbidding for plots of land.

There is low unemployment because the vast majority of us need to have a job -- it's expensive to live here!

We don't know how these financial experts come up with these numbers, but if it psychologically boosts Hong Kong, then we can't complain too much. But the reality on the ground is very different from what's on paper.

Just see for yourself.

Meddling in Markets Worse for Stocks

An investor watches the stock market drop which is important in free markets

This week has seen a rocky ride on the stock exchange with China worrying investors with its circuit breaker mechanism.

It was implemented on Tuesday, shutting down all trades after shares dropped more than 7 percent, and then yesterday -- where trading was only 13 minutes long before the circuit breaker cooled off trades.

The Chinese thought they could control the markets, but the past few days have shown China's drop in the value of stocks may possibly be due to production numbers being even lower than expected, or the state of China's economy is worse off than previously believed.

The aim of having the circuit breaker may have been to protect mainland stock investors, but it shows how volatile the stock market is in China and it is these fears that crossed the Atlantic and then the Pacific, adversely affecting investors in Europe and North America respectively

Last night it was decided by the China Securities Regulatory Commission to do away with the circuit breaker mechanism that was only implemented on Monday.

"The negative impact now has exceeded the positive side [of the mechanism]," said Deng Ge, a spokesman for the CSRC.

The left chart shows China, the one on the right, Hong Kong

Today the Chinese market ended slightly higher at 2 percent, while Hong Kong's Hang Seng Index was down 6.52 percent. It was the worst weekly decline since September 23, 2011.

That's a bit of consolation after such a crazy ride this week.

Part of the problem is that the vast majority of mainland stock investors have very little knowledge about stocks, many only hearing how they can earn money from trading them.

Instead many have a herd mentality, just following others' advice without much critical thinking and research, and a number of them are left holding the bag, while the savvier ones cash out with princely sums.

It's also interesting to note a business columnist's theory about how stock markets work relative to the economy's performance.

Jake van der Kamp's latest article shows two graphs. The first one is of the Chinese economy and stock market. As one line shows a steady diagonal climb to the right, indicating the mainland's increasing GDP annually, the country's stock market is performing miserably.

However the second graph shows Hong Kong's situation. The city's GDP moves in tandem with economic growth -- which van der Kamp says indicates a healthy economy -- when business is good, stocks are too.

It just shows how the mainland stock market is severely undermined by the authorities' interference, and adding the circuit breaker this week made things even worse.

One wonders whose head(s) will roll since the circuit breaker -- which was meant to help control the stock market -- did the complete opposite!

So while the Communist Party of China and President Xi Jinping may desperately want to control the stock market, trying to meddle not only makes it worse for their fledgling investors, but also gives the authorities less credibility.

China should really step back and let the market determine which publicly-listed companies will sink and who will swim. Only then can the Chinese economy become leaner and stronger.

But with its paranoia for control, a laissez-faire attitude won't be introduced any time soon. So hold on for more rocky rides on the stock market in the coming days and weeks.

Giving Birth to Convincing Evidence

Six women who gave birth to relatively healthy kids during the 2008 Olympics

Ah... the 2008 Beijing Olympic Games were memorable, mostly because of the amazing blue skies we had for most of the time.

That's because factories and construction sites in the surrounding areas were forced to close, imposing an unwanted holiday on those employees, and drivers could only use the roads if their license plate number ended in either an odd or even digit.

Afterward the Summer Games were over, many residents wished the light traffic would continue as well as the blue skies, but it was not to be. And these days pollution is pretty bad.

Some scientists took the Olympics as an opportunity to measure the health of babies born during that period.

The results? Babies born to mothers whose eighth month of pregnancy fell between August 8 and September 24, 2008, were an average 23 grams heavier than those born in the same period in the years before and after.

"Twenty-three grams doesn't seem big... but for a baby with already very low weight it's a big difference," said Duke University Professor Jim Zhang Junfeng, who worked on the report.

The study was published in the journal Environmental Health Perspectives and looked at birth data from 83,672 babies who were born full-term and whose mothers lived in Xicheng, Haidian, Fengtai and Chaoyang districts in Beijing from 2007 to 2009.

About 5,000 of these women had their pregnancies coincide during the Olympics. About the same number of women gave birth during the same period in 2007 and 2009 when there were no pollution reduction measures in place.

Overall babies born in 2008 had an average weight of 3.4kg, and those weighing less than 1.5kg showed inhibited growth and cognitive development, and were more likely to suffer from chronic diseases later on in life.

The last trimester is when the fetus experiences the most rapid period of development.

The researchers strongly believe pollutants interfered with this period of rapid development, and not the mother's age, education, residential district, gestational age, or pregnancy complications.

"In China everyone has a single child. They put whatever resources they have into their children," said Professor Wong Chit-ming, an expert on air pollution at the University of Hong Kong, who was not involved in the study. "This [paper] sends a strong political [message] to tackle pollution."

With the recent release of the documentary Under The Dome and now this scientific study, these only add more ammunition to ordinary mainland Chinese residents to push for the Chinese government to do more to tackle pollution.

It is hindering the health of future Chinese citizens, which is probably partly why Beijing has announced economic growth slowing to 7 percent, even though there is a slow down, partly attributed to global demand dropping for Chinese goods, and President Xi Jinping's crackdown on corruption and lavish spending.

The study is very telling and hopefully it and other properly-conducted studies will prove to the government the health and well being of its people are far more important than GDP numbers...

Voices of Reason

Are the good old days of lineups in front of luxury brand boutiques over?

It's good that an economist has crunched the numbers to give the conclusion that cutting the number of mainland travellers by 20 percent will hinder Hong Kong's economic growth, but only in the short term.

Locals have had it up to here (above their heads) with mainlanders flooding the city and snapping up all kinds of goods, while retailers and desperate for their business.

Andy Kwan Cheuk-chiu, director of the ACE Centre for Business and Economic Research, projected through simulations that if the government reduced the number of individual mainland tourists coming in by 20 percent, Hong Kong's gross domestic product "will immediately drop drastically" in the worst-case scenario.

However, the economist said the impact would be reduced after two years as "tourism only contributes to a small part of the city's economy".

Tourism accounts for less than 4 percent of the GDP

He says the GDP would drop 1.4 percent to 3.3 percent if there were 20 percent less individual mainland travellers, but eventually the economy would pick up.

So much for the government constantly stressing that tourism is a major industry pillar and that its GDP is 4 percent. How can tourism be considered such a strong economic driver when it's less than 10 percent?

Kwan seems to think the drop would have a minimal impact because the tourism industry is so small. How can that be when we have 40 million mainlanders visit each year and it is projected to reach 100 million by 2020.

What are these people spending on then? Doesn't seem like enough to justify us bending over backwards for them!

Bank of East Asia's chief economist Paul Tang Sai-on agrees with Kwan.

"The total economic value-added of [mainland travellers] was only 1.3 percent in 2012," he said, and cautioned a reduction in the number of mainland tourists would affect those with low skills.

Professor Terence Chong Tai-leung at the department of economics at Chinese University says the drop in the GDP wouldn't be drastic if 20 percent of mainland visitors were cut.

"The unemployment rate was also about 3 percent several years ago when we did not have so many mainland visitors," he says. "So the worst case of cutting the number of mainland tourists would be going back to that situation, which is actually not too bad."

There you have it, folks -- the voices of reason. So ignore groups like the Hong Kong Retail Association trying to scare you into thinking unemployment is going to go through the roof because retail sales have plunged for the third month in a row.

Already retail outlets, including luxury brands are starting to downsize their shop spaces, slowly bringing rents down to some kind of reality though they still could drop further.

Some say the good ol' days are gone and probably for a while. Locals have had enough of the obscene spending by mainlanders and want to reclaim our city back.

And now with the release of the State Council's white paper on Hong Kong, we definitely want the city to be ours!

HK Drops in Fashionable Ratings

Apparently Hong Kong's not so stylish anymore compared to Shanghai...

Say it isn't so! Apparently Shanghai has overstepped Hong Kong in becoming Asia's most fashionable.

Hong Kong had been top dog regionally for the past five years, but now according to a survey by US-based Global Language Monitor, it has dropped eight spots to 20th in teh world, the sharpest fall of the top 20 cities.

Shanghai is now 10th in the world, followed by Tokyo in 11th spot, and Singapore at 18th. New York took the global top spot over London.

GLM measures fashion trends by tracking print, electronic and social media for top words and phrases. It has been doing these rankings annually since 2004.

While the report says Hong Kong was "still a strong global presence", 2011 research from McKinsey says China is expected to account for 20 percent or 180 billion yuan in global luxury sales next year.

Legislator Michael Tien Puk-sun, founder of G2000 clothing chain says there aren't many opportunities for local fashion designers because of exorbitant rents. He added fashion retailers were losing out to shops selling watches and jewellery.

Perhaps the real reason is that mainlanders come to Hong Kong and snap up all the designer luxury brands here to wear back in China because us locals can't afford them!

But what's interesting to note -- a tip from YTSL -- that although Hong Kong had a record 48.6 million visitors in 2012, a 16 percent increase from the year before, tourism only accounts for less than 5 percent of the city's GDP.

Is this why the Leung Chun-ying administration believes Hong Kong has a greater capacity to take in even more tourists?

On the other hand we wonder what makes up 95 percent of Hong Kong's GDP...