HK Go-West Trip Mixes Bad Economics, Mediocre Politics
May 31, 2001
Dow Jones Newswires
By MARCO WAN
Of Dow Jones Newswires
HONG KONG -- Now that a delegation of Hong Kong tycoons has returned from a much-publicized trip to Western China, and all the hype has died down, the city is starting to see the expedition for what it is - a mixture of bad economics and mediocre politics.
Bad economics, because Western China simply does not have the resources for the rapid development the government envisions. And mediocre politics, because the chief secretary for administration's motives for the trip are painfully clear.
"His efforts were made for political reasons more than anything," said legislator Cyd Ho. "He claims the greatest benefit as the leader of the expedition, and his presence was the most recognized by the Chinese authorities."
Donald Tsang, the city's number two after Chief Executive Tung Chee-hwa, led the 200-strong delegation of prominent local businessmen to the Western part of China in an attempt to raise investment interest in the region.
The delegation, which returned to Hong Kong earlier this week, included such big names as Richard Li from Pacific Century CyberWorks Ltd. (PCW) and Gordon Wu from Hopewell Holdings Ltd. (H.HWL).
Tsang's enthusiasm throughout the expedition has been overwhelming. In fact, so overwhelming that some people question whether he is deliberately trying to please the Chinese government by showing overt support for its policy to develop the region.
Tsang's predecessor, Anson Chan, was known for speaking up for the interest of Hong Kong, even if it meant offending the Chinese government. Some local legislators and academics have voiced concerns over whether Tsang will act in the same way, or whether he will be more willing to follow the decrees of Tung and the Chinese authorities.
Ho isn't the only one who is skeptical. Some economists have questioned Tsang's rosy description of the economic situation in Western China.
"Even if we were to invest now, it would take 30-50 years to realize gains from the investment," said DBS Securities senior economist Chris Leung.
Viewed by some as a reliable government mouthpiece, Tsang has repeatedly promoted the opportunities the region offers to the delegates, going so far as to suggest that cities like Xian and Urumqi could act as alternatives for traditional markets as the U.S. and Japanese economies slow.
"What we are doing here in the Western part of China reflects that desire to make sure that we have found a compensatory market opportunity," said Tsang.
Yet DBS's Leung argues the region is still characterized by unskilled labor and a lack of suitable infrastructure, and it would be hard to see how the Hong Kong business community would benefit from its investments.
Urumqi, the capital of the restive Xinjiang province, lacks the infrastructure that would make it attractive for Hong Kong's companies which provide high-end services.
"The expertise of Hong Kong people lies mainly in banking and property, while places like Urumqi are rich in natural resources," said Leung. "It's really difficult to find the synergy between the two."
Growing Weary Government's HK, US Comparisons
Tsang also claims that if the Western Region became "the California of China," Hong Kong's position as the "New York of China" would be further strengthened.
"I'm so tired of these comparisons," said Ho. "When he says New York, does he include Queens and Brooklyn, or does he just mean Manhattan? Why have these comparisons at all?"
Pointing out that Hong Kong is constantly trying to define its role in terms of other cities' achievements, she said, "It's very sad that we don't have our own identity, we can only see ourselves through the eyes of other people."
"It reflects a kind of inferiority complex."
While few would dispute the political nature of the trip, however, an academic warned that it shouldn't be read as a sign that the Hong Kong government's commitment to preserving the city's autonomy is fading, and that it is bowing to China's authority by blindly promoting the mainland's policies.
"There is definitely a political element there, but I don't think the government has deviated from its non-interventionist policy," said Linda Li, who teaches at the Department of Public and Social Administration at the City University.
"The businessmen still have autonomy in deciding where to invest, and we shouldn't jump to the conclusion that the government is meddling."
Moreover, despite the lack of immediate returns, DBS' Leung notes the commitment to develop the Western region is a positive one in the long run.
"This is the right direction, and the Chinese leadership is doing the right thing in attracting foreign investment to the West," he said.
Yet as far as this trip goes, however, it is hard to dispute that Tsang has successfully raised his profile in the eyes of the mainland authorities, a fact which makes it even harder not to speculate that this was one of his intentions all along.
-By Marco Wan, Dow Jones Newswires; 852-2802-7002; marco.wan@dowjones.com
-0- 31/05/01 10-23G
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