Hong Kong tycoons laugh off Xi’s inequality push

Henderson Land Development Co

07/10/2021 02:56

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are his own.)
    By Pete Sweeney
    HONG KONG, Oct 7 (Reuters Breakingviews) - China’s President
Xi Jinping is attacking China’s wide wealth gap, but Hong Kong
remains the playpen of tycoons. Property developers are having a
golden year as home prices approach record highs. Retail and
utility cartels remain untouched. 
    Panicked by falling birth rates, the central government has
embarked on a risky campaign to deflate the mainland property
bubble and reduce wide income gaps. Wealthy capitalists are
under fire. But Xi’s “common prosperity” push has not crossed
the border yet.
    Overheated house prices aggravate economic disparities, and
Hong Kong is the world’s worst violator. On Wednesday Chief
Executive Carrie Lam gave the final policy address of her term,
in which she repeated commitments to relieving the housing
supply bottleneck. Her latest idea is a new “Northern Metropolis
https://ourhkfoundation.org.hk/sites/default/files/media/pdf/PPI_Housing_media_briefing_20210903.pdf
” to ultimately house 2.5 million people, supplementing the
man-made islands she is spending half her fiscal reserves on. 
    If those projects stay on schedule, the city could be
swamped in apartments in a few decades. Until then, the party
continues for developers like Henderson Land Development
 0012.HK  and New World Development  0017.HK  – some of the best
performers on Hong Kong’s otherwise battered stock market this
year.
    Lam wants more, and better, public housing, but that’s not
the same as making private real estate affordable. Indeed, at
the height of the pandemic her administration moved to make it
easier for homebuyers to borrow more, protecting developers’
bottom lines. 
    Nor is housing the only factor widening the gap between rich
and poor. Ordinary residents are gouged daily by family
conglomerates and industry oligopolies ranging from groceries to
drug stores to electricity. These have inhibited competition and
innovation, and taxed consumption. At the height of the pandemic
in 2020, a government study reprimanded the city’s supermarket
duopoly Wellcome and ParknShop for cranking up prices far in
excess of inflation https://www.consumer.org.hk/en/press-release/534-annual-supermarket-price-survey,
 in particular for items popular with poorer consumers like
canned goods. Prices kept rising.
    Pro-Beijing politicians argue the draconian national
security law being used to crush democracy advocates will clear
the way to address these economic imbalances. Yet Lam’s approach
to addressing the wealth gap involves stingy upgrades to the
safety net plus more subsidised tenements - not attacking
billionaires’ monopoly rents. That’s bad capitalism and bad
communism, and it’s no way to achieve common prosperity.
    Follow @petesweeneypro https://twitter.com/petesweeneypro on
Twitter
    
    CONTEXT NEWS
    - Hong Kong leader Carrie Lam said on in a speech on Oct. 6
that her priority is to focus on tackling a long-standing
housing shortage in the city. She plans to build a new urban
centre along Hong Kong’s border with the mainland's technology
hub of Shenzhen. It would cover 300 square kilometers with up to
926,000 residential units for some 2.5 million people.

 (Editing by Antony Currie and Katrina Hamlin)
 ((For previous columns by the author, Reuters customers can
click on  SWEENEY/ 
SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS http://bit.ly/BVsubscribe
 | pete.sweeney@thomsonreuters.com; Reuters Messaging:
pete.sweeney.thomsonreuters.com@reuters.net))