old header - feb 2023 in hong kong to discuss how much has changed since dec 2019 death of abed and decade of Bangladesh as number 1 cooperation space- will be updating soon - with singapore friends, we have huge cooperations planned new york march 2023 glasgow june 2023 - mail chris.macrae@yahoo.co.uk if your city in middle of scaling cooperations with UN tech envoy office or 23-24 college year buildinup to UNsummit future DUBAI + 2021 Entrepreneurial Revolutions top 12 countdown 2025report.com
The turmoil that’s gripped Hong Kong for almost half a year didn’t stop Alibaba from moving forward with an enormous share sale this week. The Chinese e-commerce giant raised about $11 billion in Hong Kong’s largest listing since 2010. It could swell Alibaba’s cash pile to $44 billion, about twice as much as fellow Chinese tech titan Tencent has. Some of the places that money could go include investing to grow the company’s business in Southeast Asia or to bolster its efforts in technologies such as Artificial Intelligence.
‘Foothills of a Cold War’
Trade tensions, a shaky outlook for the world economy and the risk of a catastrophic conflict dominated discussions on the first day of the Bloomberg New Economy Forum in Beijing. Former U.S. Secretary of State Henry Kissinger said the U.S. and China were in the “foothills of a Cold War,” and warned that the conflict could be worse than World War I if left to run unconstrained. Microsoft Corp. founder Bill Gates said he was “more passionate about the value of engagement than ever” and worried about those promoting a U.S.-China decoupling. He didn’t see how such bifurcation would be feasible in the technology sphere, where research is published across geographical boundaries. “AI is very hard to put back in the bottle,” Gates said. The New Economy Forum is being organized by Bloomberg Media Group, a division of Bloomberg LP, the parent company of Bloomberg News.
Friday, November 15, 2019
mooc of every innovation from hong kong whose alumni still linkin
Sep 19, 2019 - Vital Belt Road role for HK (11.9.2019). by 政府 ... Hong Kong's legal advantage on the Belt and Road ... The Hong Kong-Zhuhai-Macao Bridge.
Jan 18, 2017 - Uploaded by 政府新聞處 Information Services Department, HKSARG
"The Government set up the Hong Kong Scholarship for 'Belt & Road' Students (Indonesia) this academic ...
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i am certain hong kong will have a brilliant future provided
1 hong kong people need to show they can stop -your language/dialogues vital for faculitraing that
2 collect positive ideas on what youth want to explore , do , connect futures around- if there is one platform where all positive ideas can be shared thats best
(when i say youth by all means others parts of society can form parallel collections but the education change jack ma and yidan prize are talking about must involve youth)
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assume positive ideas are collected, then in part officials can share them with her beijing channels but in part we can get networks like aiib (i met previous ifc world bank chinese man at aiib summit- he's back in hong kong), alibaba and ten cent and all there partners to help at least with those ideas that fit what their futures
(my own view is that belt road mapping needed across every continent and ocean - not just build roads but cultural bridges or sharing solutions networks to community challenge like going green (there david attenborough bbc have said they want to help anywhere interested) or health (there we can make quite a long list) hong kong one of few spaces everyone can map and feel culturally uncluded as long as we get back to safe hing kong
there is a small group of dc based people who love china whom i already discuss parallel challenge with as it applies to all china cities -
tell me if you would like me to introduce you to these 3 people now - meanwhile i will try and talk to some ten cent people kin hing kong
i dont understand partisan politicians anywhere - however i do decode global brand messages - thats my profession- trump has deliberately used hate to divide and conquer places across asia - so all of above will be different if he goes and much harder if he stays but hong kong and singapore are places where the whole world needs positive tech, youth identity and community building to be celebrated with culturally diverse joy
i leave for hong kong tuesday 26 oct and will be there 5 full days : thursday through monday inclusive - originally my main reason to celebrate www.yidanprize.org as hong kong is the world epicentre of edutech laureates
best chris macrae
text whats app +1 240 316 8157
there is a lot from bloomberg summit in hong kong which also matches ost of the above- imo both bloomberg and schwarzman scholarships are dynamics hong kong should demand maximum participation in wherever friends of hong can- my fathers work was appreciated by japanese emperor so up to the olympics i am trying also to connect all asians with japan wherever opportunities like http://www.musicforsdgs.com present
COASTAL China's pre-eminent city, Hong Kong, has a great disadvantage. It is more than 1,500km (940 miles) from the capital, Beijing, and its leaders do not belong to the Communist Party's ruling elite. This remoteness from China's political pulse leads to a nagging, nervous question: will Shanghai, 1,200km away and much nearer to Beijing, recover its pre-communist status as China's greatest city, and once again outshine Hong Kong as a business and financial centre? Worse, isn't that what China's leaders, especially President Jiang Zemin and his powerful “Shanghai clique”, secretly want?
As Hong Kong's economy struggles to recover from the battering it suffered in the Asian financial slump of 1997 and the recent global slowdown, the mood is glum. While the former British colony still teeters on the brink of recession, the Chinese mainland's economy grew by 7.3% last year, and Shanghai's by more than 10%. If average growth rates over the past decade continue, Shanghai's GDP will match Hong Kong's in 15 years. In 20 years, its GDP per person will catch up too. China's growth figures are of course exaggerated, and double-digit growth will be very hard for Shanghai to sustain. But that is not much comfort to Hong Kong.
As the biggest outside investors in Shanghai, Hong Kong's business community knows Shanghai's swagger well. Since the early 1990s, the city has built an expansive financial district of towering skyscrapers, with its own international airport, on land that a decade ago was farmland and factories. Pudong, as the area is known, is about to see what Shanghai planners hope will be the world's tallest building. Plans are under way to build a 30km bridge over the sea to a huge, largely artificial, island on which a deep-water container terminal will be built. The world's first commercial magnetically-levitated train service is already under construction in Pudong. It is supposed to be ready for service next year.
Fuelling this growth is a surge of foreign investment. Now that China has joined the World Trade Organisation (WTO), Shanghai is the obvious focus for companies hoping to benefit from the opening of China's markets. Hong Kong, of course, will benefit from that too. But many in the territory worry that Hong Kong's once-unique role as an intermediary in China trade will fast be eroded by Shanghai.
Hong Kong's lack of dynamic, forward-looking leadership does not help. At the end of February, the highly unpopular chief executive, Tung Chee-hwa, was handed another five-year term. This was not because he had done a great job, but because China's leaders wanted him to stay in office. An electoral college packed with Hong Kong business leaders and politicians fearful of opposing China's wishes therefore re-elected him nem con. Replacing Mr Tung would have been tantamount to admitting that he had failed, and no Chinese leader could admit that. This is unfortunate, because maintaining Hong Kong's pre-eminence will require vision and political courage to stand up to vested business interests.
The Taiwan wrinkle
China is not deliberately trying to hold Hong Kong back. Shanghai's recently deposed mayor, Xu Kuangdi, was fond of saying that Hong Kong and Shanghai are “two strikers on the same team”. Chinese leaders would find it hard to suggest otherwise. A Hong Kong relegated to the second division would do little to convince the world, and especially Taiwan, that China's “one country, two systems” formula for reunifying the country has much to commend it. But Hong Kong cannot lean on this political crutch indefinitely.
At present, Hong Kong is the entrepot for much of Taiwan's China trade, and Shanghai's growth as a shipping hub is largely to meet the needs of the Yangtze River delta. But once direct links are established between Taiwan and the mainland, this will change. Shanghai, not Hong Kong, may become Taiwan's first port of call. Already some 300,000 Taiwanese live in and around Shanghai, and Taiwan's bookshops are full of books about how to settle and do business there. Increasingly it will be that city's performance, not Hong Kong's, that determines Taiwan's view of the mainland and its ideas of what its own political future may be.
Already, in the past year or two, Shanghai and its hinterland have become the hot new favourite for Taiwan investors
This change will hurt not only Hong Kong, but the whole Pearl River delta where much of Taiwan's $60 billion investment in China is based. Already, in the past year or two, Shanghai and its hinterland have become the hot new favourite for Taiwan investors, even though Taiwan's current ban on direct trade and transport with the mainland makes getting to Shanghai a time-consuming chore.
Hong Kong officials play down the potential impact of direct cross-strait links between China and Taiwan. They argue that this will boost the economies of both parties and therefore increase the size of the cake for all, including Hong Kong, to share. But there is a danger that Taiwan's investment in high-tech industries will make the Yangtze River delta, with its cheaper land and workforce, the hub of China's IT economy, with Beijing providing much of the R&D. This could leave less room for Hong Kong and its ambitious plans to turn itself into a regional centre of IT development. Hong Kong's Cyberport project, a science park for high-tech ventures due to be completed next year, may find itself in the wrong part of China.
The trials of separateness
Despite his unpopularity, Mr Tung should not be made a scapegoat for all this. The Asian financial slump and the bursting of the IT bubble in 2000 have battered the territory. Property prices have plummeted to less than half their worth at the time of Hong Kong's transfer from Britain to China in 1997. Unemployment has risen to 6.8%, its highest level since the 1980s. Last year the stockmarket plunged 22%. Mr Tung could have done little to prevent this.
The property-market slump is the natural flip-side of soaring property prices in the 1990s caused by tightly restricted land sales. For that, blame China, which insisted that the colonial Hong Kong authorities keep government land sales to a minimum in the run-up to the territory's handover. China feared the squandering of a valuable government asset. It ended up creating a bubble market, which has now burst.
Both the Hong Kong and mainland governments want to prevent the territory from being deluged with mainlanders eager to settle
Hong Kong is also fundamentally weakened by its physical separation from mainland China. Although most of Hong Kong's manufacturing sector has relocated in the past 20 years to its hinterland, the Pearl River delta, it is cordoned off from it by one of the world's most closely guarded borders. Many Chinese complain that it is more difficult now for a mainland Chinese to get a job in the territory than a non-Chinese expatriate. This is because both the Hong Kong and mainland governments want to prevent the territory from being deluged with mainlanders eager to settle.
The trip from central Hong Kong to the Chinese border city of Shenzhen, only 20 miles away, can take longer than 1½ hours, with as much as half of that time spent at immigration and customs. (This may improve next year, when the territory introduces “smart” identity cards that can be checked by machine.) The two border crossings for non-commercial traffic are closed from midnight to 6.30am. “We have a very strong fortress mentality,” complains Shiu Sin-por, director of a Hong Kong think-tank with links to the Chinese government. “Shanghai doesn't have this problem of relating to its hinterland. They don't have this wrestling with political reservations. They are moving ahead with leaps and bounds.”
Hong Kong's immigration restrictions make it difficult for the territory to attract an educated elite from mainland China. Such people are needed, however, if the territory is to become, as it hopes, a fund-raising and R&D centre for China's high-tech industries. The government is loosening restrictions for some mainland workers, but Shanghai will long remain a far easier place for well-qualified job-seekers in China to launch their careers. Shanghai also has the advantage of being culturally more familiar to mainland Chinese.
The government is working towards 24-hour border-crossing arrangements, but these may not come for as long as five years. Hong Kongers worry that a more open border will make it easier for the territory's young people to get cheap (and often impure) mainland drugs. It might also encourage the practice, already common among Hong Kong's men, of having mistresses on the other side. More than anything, however, people worry about the effect easier crossings might have on Hong Kong property prices. If Shenzhen were to become an attractive place from which to commute into Hong Kong, property prices in the territory could fall yet further.
The courage to integrate
Such worries are overblown. For one thing, property prices in Hong Kong are not too low. If anything, they are still too high—higher than in Singapore and much higher than in Shanghai. For another, Hong Kong's increasing population will ensure sustained demand for residential property, and many cities elsewhere in the world boast property prices much higher than those of their hinterlands.
To stay competitive, the territory needs to let property prices find a more natural equilibrium with those of the mainland. That will take political courage on the part of Mr Tung. Since the government draws 30% of its revenue from land sales, shifting from that source of money would oblige it to look hard elsewhere. Raising taxes would be the obvious answer, and Hong Kong may have to give up the luxury of exempting nearly half of the population from income tax. But in his budget speech this month Hong Kong's financial secretary, Antony Leung, avoided committing himself to tax reform.
Hong Kong at least knows it has to change and integrate itself further with the economy of the Pearl River delta
Hong Kong at least knows it has to change and integrate itself further with the economy of the Pearl River delta. A big psychological barrier was removed in January last year when the territory's chief secretary, Anson Chan, resigned, citing the less-than-convincing reason that she wanted to spend more time with her family. (The real reason: she did not get on with Mr Tung.) Mrs Chan was an ardent promoter of the idea that, as she put it, “our strength lies in the separation which is fundamental to the success of ‘one country, two systems'.”
Mrs Chan's successor, Donald Tsang, says that since taking up his job he has tried to develop much closer ties, and as quickly as possible, between the city and the Pearl River delta. Hong Kong officials now say they want to establish a “strategic relationship” with other cities there. “Member cities should not think of themselves in isolation. In the old days we did stop our planning at the boundary,” says Kitty Choi, who heads an office responsible for cross-border co-ordination set up by Mr Tsang. The old mindset, at least, is beginning to change.
Cross-border co-operation is crucial, because Hong Kong does not have to look as far as Shanghai to find competition. Shenzhen's ports are developing fast and are far cheaper to use (though less efficient) than Hong Kong's. Shenzhen talks of complementing Hong Kong's facilities, but cooperation is patchy. The volume of cargo handled by Shenzhen ports now amounts to about a quarter of that passing through Hong Kong. Five years ago, it was only 4%. Hong Kong officials admit this is a challenge, even as they proceed with massive port-expansion plans.
The shadows over Shanghai
But for all Hong Kong's floundering, Shanghai is by no means certain to emerge the clear favourite for companies in search of a regional or China headquarters—even in ten or 20 years' time. Shanghai's great disadvantage is the mirror-image of Hong Kong's: it is an integral part of China, but steeped in its political traditions and way of life. Its property markets are ill-regulated and chaotic. It lacks the sound financial structure that keeps Hong Kong afloat. Its legal system is arbitrary. A senior western diplomat in Shanghai laments that some foreigners “are seduced by the skyline, and tend to switch off important bits of their brain when making business decisions.”
The unexpected departure of Mayor Xu Kuangdai last December was a sobering reminder of the city's murky politics. Mr Xu was ousted peremptorily and in secret, presumably at the instigation of the city's shadowy Communist Party secretary, Huang Ju, who is the real power in Shanghai and who did not get on with him. “That explains the difference between Hong Kong and Shanghai—the system and the freedom of speech and all that,” says a senior Hong Kong official, reacting to the news. “Don't be dazzled by the light.”
“Freedom of speech and all that” does indeed remain Hong Kong's strong suit. Under the mini-constitution, or Basic Law, by which Hong Kong has been administered since 1997, the territory has its own legal system (based on Britain's) that provides far better protection and a fairer environment for business than that of mainland China. In general, despite some wobbly moments, Hong Kong's courts have remained impressively independent.
Even if Shanghai were to fulfil its ambitions, Hong Kong would not necessarily suffer as a result. China's external trade will produce enough business for several ports. And until China's currency, the yuan, becomes fully convertible, which may take as long as one or two decades, China will need Hong Kong to tap international finance.
Hong Kong is beginning to take the right steps. On January 1st, it lifted restrictions on the number of mainland tourists allowed to visit the territory. Though fear of a tidal wave of illegal immigrants is still pervasive, this decision could help to break down mental barriers. It is certainly good news for Hong Kong's suffering retail and leisure sectors. More dubious are Hong Kong's plans to attract mainland tourists with a Disney theme park. This is due to open in 2005, despite the failure of many theme parks in China.
After much urging from businessmen, Hong Kong also favours the establishment of a free-trade area embracing itself, the nearby former Portuguese territory of Macao and the mainland. This might give Hong Kong companies (which are currently given the same treatment as foreign businesses) a head-start in the rush to exploit the markets being opened up by China's entry into the WTO, especially in services. China has responded to the idea with polite curiosity, but may not bite.
Hong Kong's quality of life—boosted by good education and health services, while China's public services crumble—will help to ensure that it remains China's first entrepot for several years to come. But the pace of change in Shanghai, and the excitement the city generates among foreign investors, could quickly narrow the gap. If Hong Kong is to remain superior to both Shanghai and Shenzhen, it will have to reinforce both its strengths: its legal independence, and its economic interdependence.
BANK OF AMERICA (BofA) has signed a memorandum of understanding to take a strategic stake in China Construction Bank (CCB), one of China's big four state lenders, The Economist has learned. America's second-biggest bank (by market capitalisation) is negotiating the purchase of around 5% for $1.5 billion-2 billion. Sources say that Temasek, the Singapore government's investment agency, is also in advanced discussions with CCB over a similar stake. The Chinese bank is still talking to other banks and private-equity firms.
These hotly awaited deals would make CCB the first of the big four to attract a foreign strategic investor. CCB and Bank of China (BoC), another of the group, have been vying to attract partners ahead of international stockmarket listings planned for this year. The world's banks are attracted by China's huge potential, but have been reluctant to invest much, given the local banks' weighty non-performing loans (NPLs), poor corporate governance and opaque accounts. BofA and Temasek are unlikely to secure more than one or two board seats in return for their investment. “How much influence can they really have when they don't control the board?” asks a senior Chinese banker.
Although the talks between CCB and its investors could still fall apart, their success would represent a big vote of confidence in the bank, making an initial public offering in 2005 much more likely. In total, foreign investors are not allowed to own more than 25% of a Chinese bank, with a single investor limited to 20%. CCB's flotation, planned to take place in Hong Kong and Shanghai and expected to raise $4 billion-5 billion, would involve close to 15% of its shares, valuing the group at around $30 billion, say people close to the talks. Although that valuation is below initial expectations of $40 billion set last year, it is consistent with the sharp subsequent decline in China's domestic stockmarket. A string of banking scandals has not helped. CCB's chairman, Zhang Enzhao, resigned in March amid allegations that he had accepted bribes.
BoC has been talking to several banks, including Royal Bank of Scotland (RBS), UBS, J.P. Morgan and Deutsche Bank. Liu Mingkang, head of the China Banking Regulatory Commission (CBRC), the chief banking watchdog, said on May 18th that BoC was close to signing a memorandum of its own. A source close to the bank suggests RBS is the leading candidate. However, BoC appears to be falling behind CCB and its listing may be delayed until 2006.
Kenneth Lewis, BofA's chief executive, has said that he is interested in investing $1 billion-2 billion in a Chinese bank as part of a broader, strategic partnership that could include, say, a credit-card joint-venture on the mainland. Citigroup, which is advising CCB, was thought to have agreed to invest in return for the IPO mandate, but now appears to be backtracking.
Temasek has long seen financial services in Asia as a prime means of expansion. The agency controls DBS, one of Singapore's biggest banks, and has invested in banks in Indonesia, South Korea and India. Temasek has also been in talks to buy a stake in Minsheng Bank, one of China's smaller, private lenders.
Both CCB and BoC are undergoing a thorough restructuring. Between them they received $45 billion from the government last year to clean up their accounts. Guo Shuqing, CCB's new chairman, said this week that his bank's capital-adequacy ratio had reached 12%, while its NPLs were less than 4% of its assets.
Mr Guo said he was confident that CCB could complete its flotation this year. But two smaller banks are likely to beat him to market. The Bank of Communications, the fifth-biggest lender, in which HSBC has a 19.9% holding, and Minsheng Bank are on track to become the first Chinese banks to list their shares overseas this summer.
CHINA made it clear this week that any move to introduce greater democracy in Hong Kong will need prior clearance from the central government in Beijing. So what else is new? Few had ever expected that political reform in the territory would get off the ground if China's Communist leaders were against it. But Hong Kong's frustrated democrats see the ruling as an unusually direct assault on the idea of “one country, two systems” under which the former colony is supposed to enjoy extensive autonomy, except in foreign affairs and defence. If China wants to ease the political tensions that have roiled the territory in recent months, it may have chosen the wrong tactic.
The new constraint on Hong Kong's political freedom was declared on April 6th by the 173-member standing committee of China's National People's Congress (NPC) at the end of five days of discussion in Beijing. The NPC is China's legislature, and acts only on the bidding of the Communist Party. Only one of its standing-committee members is from Hong Kong: Tsang Hin-chi, a businessman, who has no time for Hong Kong's democrats.
It is the way in which the ruling was delivered, as much as, if not more than, what it said that angered the pro-democracy camp. The NPC's agenda was announced a mere ten days before it was convened. Even if he knew about it beforehand, Hong Kong's chief executive, Tung Chee-hwa, gave no hint of China's imminent intervention in the territory's acrimonious debate about political reform. Many observers believe that Mr Tung was sidelined by China in its rush to dampen demands for far-reaching political change in Hong Kong. Opinion polls suggest strong public support in Hong Kong for the territory's chief executive and legislature to be returned by universal suffrage.
The NPC's brief pronouncement did not exclude the possibility of political reform in 2007, when Hong Kong is due to select a new chief executive (Mr Tung will have served his maximum two terms by then), and in 2008 when a new legislative council (Legco) will be chosen. Hong Kong's Basic Law, the territory's post-colonial constitution drawn up by China, does not specify procedures for elections beyond these dates. At present the chief executive is chosen by an electoral college consisting largely of Chinese-appointed luminaries who support the Communist Party's policies in Hong Kong. Of Legco's 60 seats, only 24 are directly elected. According to the Basic Law, this will increase to 30 in elections to be held in September.
The Basic Law makes it clear that China's approval is needed for any change to the method of choosing a chief executive. But it states that Hong Kong has greater leeway when it comes to Legco. Ten years ago, a Chinese foreign-ministry spokesman said that the possibility of filling all the legislature's seats through direct elections was “a question to be decided by [Hong Kong] itself and it needs no guarantee by the Chinese government.” Now the NPC has decided otherwise. Any move to change any electoral method will need China's prior approval before Legco can even consider it.
This is the first time since Hong Kong's handover to China in 1997 that the NPC has unilaterally taken it upon itself to issue an “interpretation” of the Basic Law. Only once before—in 1999—has it pronounced on the law (on the question of who has residency rights in Hong Kong), and then it was at the request of the Hong Kong government. Pro-democracy politicians fear that the latest action might set a precedent for China to issue “interpretations” of the Basic Law whenever it feels the need to prevent challenges to its political grip.
China's confidence in Mr Tung's leadership ability has ebbed considerably in recent months. The NPC's ruling is a sign that the central leadership wants to take up the reins. Martin Lee, a pro-democracy legislator, puts it this way. “Beijing is really saying [to Mr Tung], we don't believe you can do anything for us any more. So we're going to take over ourselves.”
SHARES in China Life, China's biggest life insurer, made their debut on the New York Stock Exchange on December 17th. Their price ended the day 27% up. By any standard the initial public offering, the world's biggest this year, was a success. The company raised $3 billion. The retail part of the offering was 170 times oversubscribed. Sensibly, China Life had prepared 2.2m application forms for retail investors and 400,000 for local stockbrokers—one for every three people in Hong Kong, where the shares made a start on December 18th—as well as printing 250,000 copies of its 1,078-page prospectus.
The frenzy over China Life is reminiscent of that over internet stocks a few years ago. Last week in Hong Kong, hundreds of prospective China Life investors were lining up outside their local HSBC branches at 7am. The bank had to call on local police as well as its own security staff to keep order.
Hong Kong's hyperactive investors may have become a little more sophisticated since the flotation in 2000 of tom.com, the much-hyped online portal of Li Ka-shing, the territory's richest tycoon. Then, says an executive director of the Securities and Futures Commission, Hong Kong's stockmarket regulator, “people bought into tom.com just because they had heard the name Li Ka-shing.” Today, he thinks, they are buying China Life because they know China has 1.3 billion people and that life insurance is growing fast.
And yet Hong Kong investors are not that much more sophisticated. Last week Great Wall Automobile, China's 11th-biggest carmaker, saw the retail portion of its offering 683 times oversubscribed, about as much as tom.com's. One woman at the HSBC branch in the suburb of Mongkok told the local media last week that she had picked up a China Life form because “I walked past and saw people queuing, so I decided to queue too.”
Whatever investors' motives, they have an appetite for Chinese equities. Shares in companies based in mainland China but listed in Hong Kong, known as H-shares, have doubled in price this year. The Bank of New York's China index, a composite of the shares of 25 Chinese companies traded in New York as American Depository Receipts (as China Life's now are), has gained 59% in 2003. A month ago shares in PICC Property and Casualty, the first of China's three big insurers to be listed, rose by more than half on their first day of trading. China Life is the second. Ping An is expected to become the third in the second half of next year.
Often bitten, still not shy
Still, memories are regrettably short. Few of Asia's internet hopefuls exist today. All, including tom.com, have failed to fulfil their early promise. Hong Kong's red chips, local companies with exposure to mainland China that were investors' favourites in the mid-1990s, have been largely forgotten. Domestic stockmarkets in Shanghai and Shenzhen have been languishing for more than two years. The quality of companies listed on those exchanges can be rock bottom. The price of shares in one, Shaanxi Baoguang Vacuum Electronic Apparatus, has fallen by two-thirds since announcing last year, a few months after listing, that its profits would be 40% less than it had forecast when it floated.
Will China Life be different? The Chinese insurance market has great potential. According to Clarence Wong of Swiss Re, a reinsurer, life-insurance premiums in the first seven months of this year were 39% higher than in the same period in 2002. Business is expected to grow at a cracking pace (see chart). The Chinese are big savers, putting aside 40% of their income. They are getting richer. And the 1997 pension reform has given them an incentive to save more by shifting some of the burden of provision from the state to individuals.
When economic reforms began 20-odd years ago, China had no insurance industry to speak of. In 1948 there had been 241 insurers, of which 63 were foreign. After the revolution domestic insurers were merged into the People's Insurance Company of China (PICC's forerunner), which became a monopoly, and foreign insurers were expelled. In 1958, China abolished all insurance, except cover for cargo and aviation: anything more was deemed unnecessary. The People's Insurance Company became a department of the central bank.
Once reform started, the People's Insurance Company was separated from the central bank. Its monopoly ended in 1988 when Ping An was set up. American International Group became the first foreign insurer to be allowed to do business in China: it owns 10% of PICC. Others are now being let in, but must still set up joint ventures with domestic partners whose main business is not insurance. Under the terms of China's entry to the World Trade Organisation, all foreign insurers will be licensed to operate nationally by 2005.
Today PICC is China's leading property and casualty insurer. China Life is the dominant life insurer with a 45% share of a market where premiums still total only $27 billion a year. Most analysts consider China Life the country's most attractive life company because it has a wider distribution network and stronger brand recognition than its competitors. Ping An, the second-biggest life firm, has a 28% share.
Even so, China Life is no money machine. Its investment returns are low because it is required to park its money mainly in Chinese banks and government bonds. Mainland regulation, supposed to prevent money going offshore, bars insurers from investing in overseas equities, from putting more than 15% into Chinese equities and from investing in corporate bonds with low investment grades. And worries over corruption dog all mainland companies. On December 10th, Wang Xuebing, the former head of Bank of China in Hong Kong (the listed arm of one of the mainland's big four state-owned banks) was jailed for 12 years for graft.
Hong Kong's investors are likely to fare better with boring insurance than with flighty internet stocks. Even so, that the flotation went with a bang should not make them too confident. Even the best fireworks are short-lived.
CHINA's rusting machinery of totalitarian control is being pressed back into service by Beijing's city authorities in a desperate effort to contain the spread of SARS (severe acute respiratory syndrome). Not since the 1980s have so many millions in the capital been subject to such tight controls on their movement and such close surveillance of their private lives. At least it is now in a good cause.
The past few days may have seen some good news in the worldwide effort to contain SARS. The World Heath Organisation (WHO) has rescinded its warning against travel to Toronto and has removed Vietnam from its list of countries with local transmission of the disease (see article). But the news from China remains unremittingly grim. Despite China's sudden decision on April 20th to abandon its efforts to cover up the problem and to sack two senior officials for their handling of the crisis, SARS shows no sign of abating in Beijing. By April 30th, the city had reported 1,440 confirmed SARS cases, 1,408 more suspected cases and 75 deaths from the disease, the worst reported outbreak in the country. The WHO believes that Shanghai may have 30 or so cases, rather than the two officially reported, but that the city is far less affected than the capital.
Since the April 20th volte-face, the Communist Party has launched an anti-SARS campaign that has brought Beijing almost to a halt. Theatres, cinemas and karaoke bars (nightlife for the moneyed classes) have been ordered to close. So too have schools, with parents being urged to keep their children at home. Hotels, office buildings and restaurants are now eerily empty. Even in the rush hour, traffic moves briskly. Not since the days after the suppression of the Tiananmen Square protests in 1989 has Beijing appeared so desolate. The state-run media are subjecting the Chinese, including more than 11,000 who have been quarantined, to a propaganda blitz: endless soldiers singing patriotic songs, tales of heroic party members on the front line of the anti-SARS struggle.
The government's decision to shorten the May Day holiday from seven days to five may achieve its desired effect of deterring people from travelling round the country and spreading the disease. But there are millions in Beijing, mainly university students and migrant labourers, whose homes are outside the capital and who will want to spend the holiday with their families, so the government has decreed that no student may leave. That may not work, though: the old techniques of controlling people with threats and surveillance have become less effective in a country whose robust economic growth has come to depend on a mobile labour force shorn of ties to the state. Many out-of-towners have headed for home anyway. To keep those left behind in check, neighbourhood committees have been spurred into action. These were once an important tool of social control but in recent years have been reduced to near irrelevance.The committees, which are staffed mainly by Communist Party activists and retired busybodies, have been ordered to monitor the temperature of every resident and report any cases of fever to their superiors. Some foreign residents in diplomatic accommodation have been told to post their temperatures on their doors daily.
Officials admit that residents in Beijing are panicky. There have been riots to the north of the city, directed against a building it was feared will be used to quarantine patients. The city's acting mayor, Wang Qishan, who took over after his boss, Meng Xuenong, was dismissed in the April 20th shake-up, said alarm would abate when people felt they would get effective medical treatment or that the spread of the disease had been blocked. Both remain elusive goals. Henk Bekedam, the WHO's representative in Beijing, says the public health system is overstretched.
In a feat of communist-style mobilisation worthy of Mao's day, the authorities have built a 1,000-bed hospital in a rural area north of the capital to handle SARS patients. According to the official media, some 7,000 workers began the job on April 23rd. Its wards, reportedly equipped with television sets and telephones, were declared ready to receive patients a week later. If only the government had thought of taking health care as seriously before the outbreak began.
DURING last month's lunar new year festivities in Beijing, thousands flocked to “automobile temple fairs”, a variant of a centuries-old tradition. The automobile version borrows little from the past. No temples required, just plenty of auspicious red and gold decorations, food stalls, toy stands and of course cars (for sale or just to admire). As last year's 56% increase in sales of saloon cars might suggest, China is beginning to develop an automobile culture.
The car-buying craze began as manufacturers in China cut prices last year, to establish market share. They were concerned about a possible surge in imports (yet to materialise) due to tariff reductions resulting from China's accession to the World Trade Organisation in 2001. Industry experts say sales growth this year may slow, but will still be impressive as the infant business of car loans expands.
China calls this evidence of a third consumer revolution. In the first revolution, more than two decades ago, bicycles and household electrical goods were hot commodities. In the 1990s it was electronic goods. Now a minority is ready to commit the equivalent of many months' salary to personal transport. But industry experts say China's emerging automobile culture is being shaped more by young people's desire for a lifestyle change than by a need to get to work more easily. In big cities taxis are plentiful and, for middle-class people, readily affordable.
Of the 1.12m saloons sold nationwide last year, more than 90,000 were bought by private individuals in Beijing. Lin Lei, president of Sinotrust, a marketing-research firm, says that most buyers are in their 20s or 30s and grew up with little if any first-hand experience of cars. This generation, he says, mainly wants to experience the concept of owning a car and to enjoy the sense of freedom it offers. Toyota, a Japanese carmaker, has tried to appeal to this market with an advertising slogan in Chinese, which translates “Even further, even freer”.
Since sales to private buyers began to pick up in the late 1990s, from virtually zero at the beginning of the decade, signs have begun to emerge of how citizens are using this freedom. In villages around Beijing, many farmers have placed signs on their houses offering meals and accommodation to passing young motorists wanting a taste of rural life. Several big shopping centres with large car parks have been built in the suburbs. A drive-in movie theatre which opened five years ago says its business is growing briskly. Newspaper stands offer numerous glossy car magazines aimed at wealthy young men. All this is good news to a government that has spent tens of billions of dollars on an extensive network of toll highways in the past few years and sees auto manufacturing as a big contributor to future growth.
Optimists see many years ahead of rapid growth in car sales. Mr Lin believes buyers currently think mainly about a car's price (the best sellers currently are midsize and compact cars, mainly produced in co-operation with foreign companies such as Volkswagen, Citroën and Daihatsu). In future, they will think more about brands and the image that goes with them. As the now relatively sluggish second-hand car market begins to develop, people will have more incentive to trade in. And as incomes rise, private car ownership will gradually spread.
But the days of mass car ownership may still be a long way off. Graeme Maxton of Autopolis, an automotive consultancy, estimates that China will sell 4.5m cars annually by 2010, a rapid pace of growth but one which could tail off once the demands of the wealthy minority are satisfied and the majority still struggles to earn enough for a car.
The increasing congestion of urban roads may also act as a brake. Almost as fast as Beijing constructs new urban highways they become clogged with traffic. Qie Xiaogang, an official at Beijing Asian Games Village Automobile Exchange, the city's biggest car market, believes the traffic jams are not yet deterring buyers. He says they want a car now for fear that restrictions might be imposed later.
AFTER five years of Chinese rule over Hong Kong, the territory's chief executive, Tung Chee-hwa, has taken his biggest step yet to reshape the political structure he inherited from Britain. On July 1st, the anniversary of the handover, a team of political appointees will take over the policymaking roles hitherto played by civil servants. The new “ministerial system”, as it is dubbed, may strengthen Mr Tung's power. But it will do little to make his lacklustre administration more popular.
China's President Jiang Zemin will be guest of honour at the anniversary celebrations in the Hong Kong Convention and Exhibition Centre, the same venue where he watched the British flag being lowered in 1997. The ceremonies will include the swearing in of Mr Tung for another five-year term of office, as well as the formal appointment of his 14-member ministerial team. Although Chinese officials say that the end of British rule heralded a new era of democracy in Hong Kong, no one dared to offend China by standing against Mr Tung when nominations for his job were solicited in February (even if they had tried to stand, pro-democracy politicians would have won scant backing in an electoral committee made up largely of China's supporters). Neither the public nor the legislature had any say in Mr Tung's choice of “ministers”.
Officials say the new system will make policymakers more personally accountable for their decisions and protect civil servants from political pressures. But while this may sound like a step towards the kind of system practised in many democratic countries, in reality it will not ensure that Hong Kong's policymakers become any more accountable or the civil service any more neutral than they are today. The legislature will have no power to remove the “ministers”. And many pro-democracy politicians argue that the new system will put even more political pressure on top civil servants, who will no doubt be anxious to please the appointees above them. One reason why Mr Tsang's predecessor, Anson Chan, left her job in April last year was her belief (though never stated publicly) that the proposed ministerial system would lead to the politicisation of the civil service. “The effect of the new ministerial system is that Mr Tung is even more powerful than before. But then even though he is a dictator, he is really a puppet of Beijing,” says Martin Lee, leader of the Democratic Party, the largest in Hong Kong's legislature.
The new system could well make life easier for the central government in Beijing. Constitutionally, it has final say over the appointment of top officials in Hong Kong. After the handover in 1997, it accepted all of the officials who had been appointed under the British—not because it liked all of them, but because it wanted as smooth a transition as possible. But privately, officials in Beijing feel the Hong Kong civil service has been slow to swing round to their way of thinking.
In spite of these changes, few expect any big policy shifts—at least not imminently. But pro-democracy activists, who generally admit that the past five years of Chinese rule have been more benign than many had expected at the time of the handover, do fear that life may get tougher in the years ahead. During his first term, Mr Tung avoided taking action on a requirement in Hong Kong's constitution, drafted by China, that the territory pass laws prohibiting crimes such as secession and subversion, as well as political links with foreign organisations.
The government is clearly worried about the impact such legislation might have on Hong Kong's image abroad. But Donald Tsang, Hong Kong's chief secretary, says the government is likely to promulgate the required laws during Mr Tung's second term. “I do not think we should put this off forever. Sometime we have to face the music,” he says.
Chinese officials will certainly be glad to hear him say so. They do not appear to want a sweeping crackdown against dissent in Hong Kong, but they would like legislation in place that would give them a freer hand. In an interview this week with a Hong Kong television station, China's deputy prime minister, Qian Qichen, suggested that the Falun Gong spiritual movement could be in breach of future anti-subversion legislation if it continued to contact “foreign forces”.
In the next five years, Mr Tung will also have to examine possible political reforms to be introduced in 2007, the earliest date when Hong Kong's constitution allows for a fully directly-elected legislature and chief executive. But here, too, the prospects are bleak. In another interview this week, Mr Qian said he was against rapid moves toward full democracy. “One cannot have Hong Kong emulating the systems of other regions,” he said. Mr Tung and his ministers would surely agree.
EVEN as Li Shaomin flew into Hong Kong from America this week, senior officials in the territory were still agonising over whether they should let him in. Less than a week earlier, Mr Li had been convicted by a court in China of spying for Taiwan and had been deported to the United States, of which he is a citizen. His arrival in Hong Kong, where he lives, was being touted by Hong Kong's media as one of the biggest tests since the end of British rule in 1997 of the “one country, two systems” principle by which the territory is now ruled.
Mr Li was eventually allowed to enter, after being detained for some five hours at the airport. It appeared to have been a close call. Could a man deported for spying return to the territory of the country whose secrets he had allegedly tried to steal? Some of China's supporters in Hong Kong, including newspapers loosely under Beijing's control, argued that Mr Li should not be allowed to return to the territory, where he works as an associate professor. Hong Kong and the mainland may have different legal systems, they said, but the “one country” idea should prevail in matters relating to state security.
Hong Kong officials insist they were not under any pressure from Beijing. But a senior civil servant who asked to remain anonymous admitted it was “a highly sensitive issue”. Ever indecisive, Hong Kong's chief executive, Tung Chee-hwa, apparently waited until Mr Li was on the ground before making up his mind.
It is possible that despite the concerns of his officials and the protestations of some pro-Beijing figures, Mr Tung sensed that China would not seriously object to the academic's return. Mr Li's conviction and deportation from China, after all, could well have been as much if not more to do with diplomatic manoeuvring between China and the United States as with any perceived threat to national security. No one has publicly suggested that Mr Li had anything more than “internal” publications about Taiwan of a kind commonly circulating among Chinese scholars.
“One country, two systems” has been through some trying times lately
But even if so, “one country, two systems” has been through trying times lately. Ten days before Mr Li's return, a ruling by Hong Kong's Court of Final Appeal in effect granted right of abode in the territory to more than 2,200 children born in Hong Kong to parents from the mainland. China was incensed. A Chinese spokesman said the ruling appeared to go against a judgment on the right of abode made by the National People's Congress in 1999. Both China and the Hong Kong government are fearful that any easing of residency restrictions might unleash a potentially destabilising flood of immigrants into the territory.
Many in Hong Kong and abroad had attacked the 1999 judgment as a breach of Hong Kong's promised “high degree of autonomy” under Chinese rule. This time there were again concerns that the Hong Kong government would invite the NPC to overrule the Court of Final Appeal. But Mr Tung held his ground in the face of Beijing's mutterings. Again, as with the case of Mr Li, he probably calculated that Beijing would in the end understand the need to avoid causing further damage to Hong Kong's image. Hong Kong recently launched a campaign to promote itself as “Asia's world city” to ensure that investment continues flowing into its struggling economy. Image matters to Mr Tung.
One recent tactical error was his government's decision to propose legislation–eventually passed on July 11th after furious debate in the legislature—which included a clause saying that China had the power to sack Hong Kong's chief executive; this had been unclear before. Pro-democracy politicians accused Mr Tung of eroding Hong Kong's autonomy. Hackles were also raised by Mr Tung's harsh description of the Falun Gong spiritual movement as an “evil cult” and his decision to order officials to study anti-cult laws in other countries. But officials privately suggest this is little more than ritualistic denunciation aimed at easing Beijing's paranoia. “We are dealing with the Falun Gong by not dealing with the Falun Gong,” Hong Kong's top civil servant, Donald Tsang, remarked in June.
Even Martin Lee, the leader of Hong Kong's Democratic Party and one of the government's most strident critics, admits that despite the occasional setback Hong Kong enjoys much the same freedoms that it did under the British. He puts this down not to Mr Tung's skills but to what he says is the Chinese leadership's sense of self-confidence. “What if they don't feel confident any more?” he says. “We are at the mercy of Beijing through the chief puppet [Mr Tung]. That is the worrying thing”.
IN the 15th century, China was a big maritime power. It roamed the Pacific with ships six times larger than those of Christopher Columbus. Is China at long last about to regain sea-going pre-eminence? It aims to become the world's leading shipbuilder by 2015, displacing South Korea and Japan. It is already a leading builder of the kind of simple dry-cargo ships which carry iron ore, copper and other raw materials to its own booming factories. And it is starting to build more complex vessels, such as tankers and container ships.
Waigaoqiao, a shipbuilder in Shanghai, has orders for more than 25 heavy bulk carriers, each of 175,000 dead-weight tonnes (ie, the loaded weight of the ship), the most yet for a Chinese-built ship. The first of the ships was delivered on February 9th; later this month Waigaoqiao will begin work on an oil tanker. By the end of the year, Shanghai shipyards expect to have increased production by two-thirds over 2003.
This is only the beginning. In December, China State Shipbuilding Corporation (CSSC) began to construct a shipyard on an island just off Shanghai. When completed in 2015, it will be able to produce 8m dead-weight tonnes of ship per year, making it the largest such yard in the world.
In 2003, Chinese shipyards accounted for one-tenth of world output, but the country's goal is much higher. Meanwhile, booming trade in and out of China is creating a huge global demand for ships. In 2003, Shanghai and Shenzhen (near Hong Kong) became the world's third and fourth busiest ports, trailing only Singapore and Hong Kong itself. There has been a 350% rise in bulk shipping rates in the past two years. According to Howe Robinson, a London shipbroker, the fourth quarter of 2003 saw an unprecedented spike in charter rates for bulk shipping, mostly due to a 17% rise in Chinese industrial production. Similarly dramatic increases are under way in oil-tanker rates and in prices for shipping containers full of Chinese manufactured exports.
But China's shipbuilding business may have to weather some storms in pursuit of its long-term goal of world domination. A recent report by investment bankers Goldman Sachs suggests that container-shipping rates will peak this year, with steep falls likely in Asia-America and Asia-Europe rates in 2005 and 2006. And, beyond that, orders already placed for new, large vessels of the type used to cross the Pacific are equivalent to almost 40% of existing capacity. There could soon be a glut of container ships to serve China and America's west coast. So much for plain sailing.
SIX weeks since the WHO's global alert, health experts still cannot predict how far SARS will spread. Some, though, fear it may be too late to contain the virus. In Hong Kong, China, Canada and probably Singapore, local transmission continues. However, quarantine measures in Hong Kong and Singapore are having an impact, and Vietnam appears to have brought the virus under control. In other parts of the world, countries such as Britain and the United States have been successful in containing cases of SARS that arrive in the country. Despite reports this week that the virus may be mutating, scientists have yet to show that genetic changes in the virus are related to changes in its pathogenicity.
