China's Painful Economic Woes

The chances of finding a job is harder with more people out of work

The New York Times recently reported how the economic slowdown in China is affecting its workers and it's very worrying.

It's not just the factory workers and construction workers who are hurting -- it's also the white-collar ones with university degrees, making them wonder how stable their futures are.

There are fewer jobs available, some companies reporting layoffs of up to 30 percent in firms that employ hundreds of people, while jobs ads across all sectors have dropped by 10 percent. Start-ups have had it the hardest with new positions falling 51 percent in the third quarter of 2018 from a year earlier.

Not just factory workers, but white-collar ones are laid off too

Just after Spring Festival in February, Didi Chuxing, China's largest ride-sharing and taxi-hailing service, told employees that it would cut 2,000 jobs, or 15 percent of its workforce.

Previously the Chinese government would create an economic stimulus by throwing money at infrastructure projects like bridges and airports, and that would generally solve the problem, but not anymore.

Fraser Howie, co-writer of three books on the Chinese financial system says now, "there is no obvious catch up, and therefore it makes it all the more important that China makes important, difficult decisions to move forward."

The government really should be restructuring its state-owned enterprises that have grown into lumbering behemoths but they are the elephants in the room that aren't being addressed. Instead the government is in denial and hoping things shall pass, but perhaps not this time.

The economic slowdown is impacting young professionals like Sherry Xu, a 34-year-old finance professional who did all the right things, studying at a prestigious university and then rising up the ranks of the finance industry.

Infrastructure projects aren't solving China's economic issues

And then recently, right after she had just pitched a group of potential investors Xu was called into a meeting with human resources who told her that her employer, a financial firm was having difficulties and she would be laid off.

Xu then accepted a job as a freelance contractor with the same firm for half her previous salary. "The job marketing isn't looking good. I feel this time, it will be harder than ever for me to find a job."

Not only that but people's budgets have tightened which means less disposable income for shopping, dining and travel.

Maybe it's because of this worrying sentiment that the government just announced on Friday the May Day holiday would be extended to four days instead of one in a desperate bid to stimulate the economy.

But really, who is in the mood to spend when their futures are uncertain?

Even More Chinese Investment in Africa

Xi announces another US$60 billion for African countries

At the start of the Forum on China-Africa Cooperation in Beijing yesterday, Chinese President Xi Jinping pledged another US$60 billion to African countries to build major infrastructure projects, such as roads, railways, ports, pipelines and other links.

It's a whopping large amount adding to Africa's indebtedness to the Middle Kingdom, and Xi doesn't mind -- he's even willing to write off previous debts to get access to the African countries' natural resources.

From 2000 to 2014, China loaned US$86 billion. What's another US$60 billion?

The China-Africa Cooperation forum is on now in Beijing

With governments weak without much capital, this heavy investment from China is a godsend, but at what price politically, economically and socially? The Chinese are flooding African countries with cheap Chinese made goods, bringing in thousands of mainlanders looking to make money, but also giving Beijing much more political clout.

A decade ago the Chinese were proud of being able to "help" Africa, but now critics at home aren't so sure giving away US$60 billion to the continent is the best use of the money.

"You should first raise your own children," one online commenter wrote. "My God, there have been so many natural and man-made casualties recently, can you please take a look at our low-income people?"

Another exclaimed, "US$60 billion is money that we earned! Tell me who is causing the suffering of China's everyday people?"

Sounds like first-world complaints are already sprouting in China.

Infrastructure projects like highways have been built in Africa

State media were quick to defend the investment, saying how the money benefited both China and Africa, that Africa had large amounts of natural resources such as crude oil, manganese and copper. China is also Africa's largest trading partner, surprise surprise.

The People's Daily insisted China's aid did not have any political preconditions, and that many African countries have consistently reciprocated by helping China.

If you were given billions of dollars, the least you could do is give the donor what they wanted... which is why some accuse China of "neo-colonialism", or "cheque-book diplomacy".

In any event, with the on-going trade war with the United States, and the Chinese economy slowing down, Beijing-based economics professor Hu Xingdou thinks the generous loan should have been more carefully considered.

"Trade numbers and industrial revenues are going down, and most Chinese still cannot afford proper medical care or education," he said. "There are many critically ill Chinese who cannot do anything but wait for death, so skepticism online is quite natural... Aid to Africa is necessary but needs to be done within China's capabilities."

Hardly Bridging Hong Kong's Priorities

What the Hong Kong-Macau-Zhuhai bridge will look like, when it's done

Following yesterday's blog post about how the Hong Kong government isn't doing enough for its own poverty-stricken residents, it will have to spend another HK$11.8 billion on the Hong Kong-Macau-Zhuhai bridge.

The main section of the project, a 22.9km bridge and 6.7km undersea tunnel is situated in mainland waters. The Hong Kong government has to ask the Legislative Council for more money because a 2008 document says Hong Kong would pay for 50.2 percent of the 31 billion yuan cost of the main bridge, while the mainland would shell out 35.1 percent, and Macau 14.7 percent.

A map detailing where the bridge and tunnel are situated

How it got to those uneven percentages is strange, but there you have it, and Hong Kong has to bear the vast majority of the cost. Will we be using it 50.1 percent of the time too?

Lawmakers have told the government to give a detailed explanation and be prepared for lots of questions.

In February and October the Transport and Housing Bureau told lawmakers that the bridge would cost more than expected due to an "increase in labour and material costs as well as the refinement of the design and construction schemes".

However an exact amount -- HK$11.8 billion -- wasn't disclosed until yesterday.

Frankie Yick Chi-ming, chairman of Legco's transport panel, said there would be "lots of questions" from legislators when the government applies for more funding for the bridge.

Construction of the bridge's border crossing facility

"The key question I have is if 10 billion [yuan] is the final number," he said.

Financial Secretary Paul Chan Mo-po is in Beijing and he admitted he didn't know yet how much of the budget overrun Hong Kong had to bear, but would be calculated according to "an established mechanism" as agreed by all sides when the agreement was signed.

So a huge infrastructure project that gives Hong Kong an opportunity to kowtow to Beijing that is costing billions in extra cost is worth more than trying to help the poor get a leg-up in society.

It's a sad state of affairs really. We need more resources to help our own residents live better lives than splashing out on white elephant infrastructure projects...

Contentious Plan for Country Park Housing

Can you imagine housing blocks near here in Tai Lam Country Park?

The Hong Kong government has announced that the not-for-profit Housing Society will conduct an 18-month study in the feasibility of building public flats and homes for the elderly on two 20-hectare sites on the edges of Tai Lam and Ma On Shan country parks.

It's a controversial move, following the proposal made by Chief Executive Leung Chun-ying in his policy address in January, and now the first steps are being taken two months before he leaves office.

"We are not saying we are going to build flats in country parks now," says Housing Society CEO Wong Kit-loong. "But the study will facilitate public discussion. We hope to also understand why people disagree [with the proposal]."

This is an interesting development -- the government is getting someone else to do the study, so that it doesn't get the blame in case the study concludes building housing on protected country park land is a good idea.

Or how about here at Ma On Shan Country Park?

Some lawmakers and conservationists are opposed to it, saying there is no public consensus on the matter and it may set a bad precedent.

Roy Tam Hoi-pong of activist group Green Sense says "pitting environmental conservation against the public's need for housing" was "deplorable and unfair".

According to the Planning Department, country parks make up 41 percent of Hong Kong's land area, while residential land use was only 7 percent.

Wong seems to hint the housing proposal would be a good idea, saying the total size of designated country park land had increased by 6 percent over the past few years to 43,000 hectares.

How could country park land grow, unless someone donated land back, or some rezoning has taken place?

"Hong Kong is still short of 200 hectares for building public flats, according to [the planning strategy beyond 2030]... The queue for building public flats is getting longer. The problem is immediate," he says.

One of many brownfield sites (front) that can be redeveloped

Thousands of families currently have to wait an average of four years and seven months for a public rental flat, according to the Housing Authority.

Seniors must wait about two years and seven months for housing, as there are 275,900 applications.

But why build housing for the elderly out in the boonies?

Then public infrastructure projects also need to be built to connect them to civilization. Oh wait -- is this a make-work project?

Why not, as we have pointed out time and time again, there are so many brown sites around Hong Kong that could be redeveloped -- and many are near transport links already. Why not work on these areas first?

Or is it because the government wants to distract us from New Territories so-called "indigenous villagers" who have occupied government land and refuse to give it back so the government would rather encroach on virgin land than try to reclaim what is essentially taxpayer land?

In these times we need to be more sustainable and practical. Developing the edge of what is supposed to be protected land with the blessing of the government is so bizarre and hypocritical.

Whatever happened to Hong Kong finding creative solutions? This is not one of them.

Mickey Mouse Gets the Last Laugh

Disneyland has the upper hand in negotiations with Hong Kong

Hong Kong taxpayers are left holding the bag yet again thanks to Disneyland managing to bully us into shelling out HK$5.45 billion for an extension to the amusement park.

That's because the Hong Kong government is the biggest shareholder and was somehow unable to negotiate a fairer deal when Disneyland had a "take-it-or-leave-it" ultimatum.

Even lawmakers of all stripes felt the government should have gotten a better deal. They must be terrible negotiators.

The lawmakers said if the government was going to finance half of Disneyland's six-year renovation, it should be subject to better shareholding, financing and management arrangements with the entertainment corporation. But on Tuesday the Legislative Council's finance committee approved the funding by 30 to 24 votes.

Commerce minister Greg So says we did the best we could...

Pan-democrats had tried to filibuster, but after five months of bickering and lobbying, the government's funding application was passed.

"I am delighted that the finance committee approved the expansion plan," said Commerce Secretary Greg So Kam-leung. "We have gone through a lot of analysis. We have also pushed very hard in the negotiation. We believe that this package is really the best package that we can achieve."

Does anyone believe him?

Meanwhile Disneyland released a statement saying it was "grateful" to secure Legco support.

The HK$10.9 billion expansion project, with the other half financially covered by Disneyland, will start next year, and will have themed zones based on the animation hit Frozen, and Marvel superhero films, as well as a revamp of the Sleeping Beauty Castle.

Many believe the partnership between the Hong Kong government and Disneyland is unequal, because the latter receives millions of dollars in royalties and management fees even though the park continues to lose money.

How about spending $5.45 billion on social housing instead?

Before the final vote, pro-establishment lawmakers rejected more than 40 motions by the pan-democrats, including requests to disclose more of the theme park's financial figures, give more discounts to Hong Kong people, as well as review further economic benefits to Hong Kong.

"We are very disappointed. I am sure it won't be the last time that Disneyland asks for money from Legco," says Democratic Party chairman Wu Chi-wai, accusing those who approved the funding of ignoring public concerns.

Why is the government spending so much money on a money-losing proposition? One financial columnist even boldly suggested the Disneyland site should be bulldozed and made way for social housing. The infrastructure is already there!

The HK$5.45 billion could be better used in so many other ways, like revamping the education system and helping underprivileged children get the extra resources they need to have a decent education so that they can have a leg up in life.

That money could also be used for social housing, to build or convert brown sites into affordable housing for people so they don't have to live in subdivided flats.

But this isn't the foresight of the government, whose priority seems to be solely focused on tourists and not on the livelihoods of its own people.

Disneyland may like to describe itself to be the happiest place on earth, but not for Hong Kong taxpayers.

John Tsang Reveals Small Details

John Tsang reveals why he quit his job as Finance Secretary under CY Leung

Now we know why John Tsang Chun-wah quit his job as Financial Secretary to run for the next Chief Executive of Hong Kong.

He finally revealed that he quit in December after he had a row with Leung Chun-ying over the government budget. Tsang said Leung wanted to multiply the amount of new money earmarked for the next few years which would result in a deficit.

Tsang had told Sing Tao Daily on Thursday that he quit because he was unhappy but did not elaborate, and that he only thought of running for CE after he quit the job.

Today he was asked again by the media why he quit, and Tsang replied: It's not about one single incident. It's accumulated over time."

Since Paul Chan Mo-po has taken over the finance post, his first budget reveals there will be a deficit thanks to many infrastructure projects. Chan also decided not to put money into the Future Fund that Tsang had set up in 2015 for rainy days, instead spending it on welfare and sports.

Interesting that Tsang gives this curious bit of information that reveals more about himself and his ex-boss. While Tsang is right to be as fiscally prudent as possible, he was quite extreme about this -- Hong Kong is much wealthier than many cities, let alone countries!

So we can expect Tsang to be fiscally conservative if he wins as the next Chief Executive?