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Can economics trump politics in struggle to placate Hong Kong protesters? | FT


Protesters in Hong Kong are
demanding political reform but chief executive Carrie
Lam’s strategy to placate them is to focus on economic issues. The argument she and
Beijing have championed is that the unrest is due to a
lack of economic opportunity. And a big part of that
is due to Hong Kong having the least affordable
property market in the world. By one estimate the
median price of a flat is 21 times median salary. In London, it’s less than five. So last week, Lam announced that
Hong Kongers would be allowed to take up mortgages of up to 90
per cent on a flat valued at up to US$1m. That is a complete reversal
of 10 years worth of failed attempts to cool the market by
restricting mortgage lending. She also pledged to seize
700 hectares of land from developers to help
ease the housing shortage. However, the main
beneficiaries of both measures will be the one group of
people in Hong Kong who really don’t need any help
at all – property tycoons. On the face of it, easing
mortgage restrictions should mean people are no
longer priced out of the market. The reality is that Hong
Kong property prices only 5 per cent off their
all-time high. And accessibility isn’t
necessarily affordability. Telling homebuyers
they can leverage up with prices near record
highs and the economy facing recession is a great way to
put people at risk in falling into negative equity. But what about land seizures? Won’t that hurt the developers? Well, probably not. In Hong Kong, just
four developers own farm land, covering
150m potential square feet of floor space – six
times the size of Monaco. What’s more, the
government will have to pay market prices
for the land it seizes. But the kicker is that
the government already controls the amount
of land released for development each year. The way Hong Kong’s political
system is structured is that the tycoons who control
developers have outsize representation on the
1,200-person committee that chooses Hong Kong’s
chief executive. So Lam’s government
is incentivised to respond to their wishes, not
those of ordinary people, when it comes to how much land is
made available for new housing. And that means developers
have little interest in any democratic
reforms that can loosen their grip on Hong Kong’s
lucrative property market.

12 Comments

  1. Ruodan Xu
    Ruodan Xu October 28, 2019

    The downside of Capitalism

  2. S S
    S S October 28, 2019

    HK must have real universal suffrage ASAP to let HKers decide who should be the Chief Executives instead of the handful few corrupted crooks!

  3. Alex Daniel
    Alex Daniel October 28, 2019

    Well said Financial Times!!!!! The problems surrounding Hong Kong or more the hangover of a bad system inherited from the British.

  4. Bazzralic
    Bazzralic October 29, 2019

    The REAL question is:
    Can Trump economize politics to leverage Hong Kong?

  5. Edgar Edgar
    Edgar Edgar October 29, 2019

    Maslow says economics trumps politics. The US-sponsored rioters believe otherwise. We'll see.

  6. Tang Lancelot
    Tang Lancelot October 29, 2019

    There are many HK families gained a lot of fortune from their property investment over the past decade. Now the chaos is too minor to hurt the wealthy middle and professional class of HK residents. FT should worry about UK first. The question the should start and keep asking is whether UK can still be UK in the next decade.

  7. Financial Times
    Financial Times October 29, 2019

    Take our survey and tell us what you think of our YouTube channel: https://bit.ly/33SJ8AI

  8. Ben Ip
    Ben Ip October 29, 2019

    sometimes i just think, it's kind of similar to brexit.

    One of the similarities is people, whether brexiters or remainers, almost certainly believe what the outcome will be, and how many possible scenarios are.

    While in reality, it seems like most of them don't know much of anything , in general.

  9. Phlegethon
    Phlegethon October 29, 2019

    No. Protesters in Hong Kong are filth demanding terrorism and foreign powers "liberate" the city.

  10. Bismark T8
    Bismark T8 October 29, 2019

    Zuckerburg: LET US develop Block Chain now!!!
    US: I dare U, I double dare U!!
    President Xi: Let's develop Block Chain…

  11. Bob Huang
    Bob Huang October 30, 2019

    Very good analysis! Touched the core issue!

  12. Alex Gilpin
    Alex Gilpin October 30, 2019

    Financial Times: "The government thinks the problem isn't suffrage but a housing economy that makes it impossible for the average person's wealth to grow in Hong Kong."
    Mainland Chinese Comments: "Yes! FT has it right! The problem is the rich, not universal suffrage!"
    Financial Times: "The land tycoons staff the 1,200-person committee that chooses Hong Kong's chief executive, so the government responds to their wishes and not those of ordinary people."
    Mainland Chinese Comments: (Literally anything that isn't universal suffrage as a solution)

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