HK Election Epilogue

September 5, 2016

It’s exciting times here in Hong Kong as the results from yesterday’s election trickled in over the course of the day.  When all was said in done, over 2.2 million people or 60% of the 3.7 million eligible voters turned out to cast ballots, which was a record high and surpassed the turnout in 2004 that came on the heels of the 2003 street protests where over 500,000 Hong Kongers marched to protest to possible passage a new security law that at the time could have severely curtailed freedoms here.  I was not able to vote because I am not a permanent resident, which only happens after you’ve lived here for over seven years.  But back to the main issue at hand, the results.  Of the 70 seats, six went to candidates from new parties advocating for either greater self-determination or outright independence from China after 2047, the year “one country, two systems” is set to expire under the Basic Law, Hong Kong’s mini-constitution.  The success of these new parties is a big deal for Hong Kong’s future because the six pro-democracy candidates are all under 40 and represent a break from the traditional pan-democrats who stood in opposition to the pro-Beijing lawmakers because rather than work under the premise that Hong Kong is a part of China and gently nudge Beijing to introduce more democracy in the city, this new guard wants Hong Kong to take matters into its own hands and push from the ground up for a greater right to self-determination.  The New York Times does an good job of summarizing the results and hints at what it possibly means going forward. Suffice it to say that the pan-democrats plus the localist / radical contingent took 30 seats in the 70-seat body with enough seats to veto those measures that require a super-majority to pass.  On a grander scale and as someone who considers Hong Kong to be a second home with the city being the first place I had ever been to outside of the U.S. save for Canada and where I lived for two years after college, the election results represent a break with the way things had been done in this city in the nearly 20 years since the handover.  It had been a tug-of-war between the pro-Beijing and pan-democrat lawmakers with what has been a pretty consistent string of Chief Executives.  Now with the introduction of this new element, which I prefer to call the self-determination or localist group instead of radicals, is seeking to create a space for Hong Kong to figure out its own destiny and prepare for life after 2047.  The big variable is how Beijing handles this outcome and what happens going forward.  The central government is completely focused on the G-20 meetings in Hangzhou, so the response has been muted and I would not blame the government for ignoring it with so many heads of state from liberal democracies in town.  The electoral outcome is an embarrassment and worse, an indictment of Beijing’s approach towards Hong Kong since the handover, especially in recent years with the half-assed approach to granting universal suffrage for the election of the Chief Executive and the alleged abduction of the five booksellers, which was a clear violation of “one country, two systems” since they were taken into custody outside of China.  The people of Hong Kong seem to be waking up and realize that China is not the benevolent overlord they wanted Hong Kongers to believe they were, though they have done little of late to reassure the city given the slow and steady erosion of freedoms here. I leave with this final thought, which I will unpack in another post.  Much has been made about how Hong Kong could not go it alone and I don’t know the ins and outs of whether independence is completely doable, but one thing to consider with independence or even greater self-determination would be the ability to revamp the Hong Kong government and create a prime minster or president-type position that would legitimately be tied to the legislature to ensure that both branches of government are working together versus the current system with legislative and executive branches that are completely disassociated from each other.  Such a revamped government with proper accountability to the people of Hong Kong and not Beijing might actually be able to do something to prepare Hong Kong for its next act and effectively tackle the challenges this city faces.  It’s just a thought.

Advertisements

I’m giving some solidarity with my snowbound friends and family on the East Coast of the US right now as they get hit with their first major snowstorm of the year.  While there isn’t any snow here in Shenzhen, it’s damn cold.  We’re experiencing a polar vortex of our own with temperatures hitting record lows.  It’s 45 degrees in Shenzhen and it feels even colder because most homes don’t have heat and even with heat, they are built without any real insulation since it’s normally warm and humid.  Add the humidity factor into it and it feels even colder because it’s that raw, wet cold that gets into your bones.  I am sitting here at . . . where else?  . . . Starbucks in the mall in my winter parka and wool beanie because someone had the bright idea to leave the front doors of the mall open even though it’s freezing outside.

IMG_0150 2

Freezing at the mall

Trying my best to type without gloves, but it’s not easy.

I’ve been meaning to write for the past couple of days, but the combination of work and Internet problems from being behind the Great Firewall have made it hard to sit down and do so.

You’ve probably noticed that the stock markets have had a wild week with most of the turbulence being traced back to the much-discussed slowdown of the Chinese economy.  The government reported it’s growth for 2015 of 6.9%, which while the envy of most other countries, was the slowest rate in 25 years.  It’s hard though to tie the gyrations of the market to just the slowdown of the Chinese economy.  That would completely leave out human nature and the irrational impulses of investors or perhaps the all the rational follow-the-herd mentality that often pervades markets.  A sell-off in one market is usually going to lead to a sell-off around the world, especially in this day and age when everything is so interconnected.  But I did not set out to turn this post into a lesson about markets, investing, or even the global macroeconomy.

China never ceases to amaze me in how screwed up and fascinating a place it can be, usually all in the same moment.  The five booksellers from Hong Kong are still missing, though two have kind of turned up.  One who was allegedly abducted from Thailand (and is a Swedish national) went on national television to confess to killing a young girl in a drunk driving incident in 2003 and the other, Lee Bo, who is a British national, is somewhere in Guangdong province, but no one knows exactly where or why.  It’s galling that nearly a month after Lee Bo went missing, we still do not know where he is. Worryingly, the Hong Kong government has asked the central government and Guangdong officials and all they could get out of them nearly three weeks after he went missing is that he is indeed on the mainland.  Chinese officials do not think that the HK government merits a detailed response and so the HK government and its people still remain in the dark about whether mainland law enforcement officials actually came down and abducted Lee Bo, as well as the other four missing men who are connected to this particular publishing house.  What’s more troubling is that the mainland allegedly took these men away because they did not like the content of the books these men were publishing, which tended to be gossipy take-downs of top mainland officials.  All of this adds up to some serious violations of “one country, two systems”, which was the policy that has undergirded the handover of HK from the British to the Chinese.  China has become more and more brazen about violating this policy and the Hong Kong people are truly powerless to stop it.  In the grander scheme of things, it unfortunately dovetails with a number of other moves on the mainland that reflect a central government still attempting to snuff out any sort of dissent.  From President Xi telling government officials that some questions should not be asked to the continued takedown of government officials on charges of corruption to the conducting off war exercises off the coast of Taiwan the other day, nearly a week after the election of Tsai Ing-wen, reflecting a Taiwanese electorate that increasingly sees itself as Taiwanese and not Chinese.  In one bizarre move last week, nearly 45,000 people, mostly from the mainland, criticized Tsai for her pro-independence stance.  It’s known the comments came from the mainland because they were using simplified Chinese characters versus Taiwan, which uses the traditional ones.  It’s bizarre because Facebook is still blocked on the mainland unless you have a VPN, so many suspect it was the work of government-enlisted individuals who were able to evade the Great Firewall to post on her page.  While some Taiwanese supporters pointed out this irony in reply comments, Tsai probably had the best post of all replying, “”The greatness of this country lies in how every single person can exercise their right to be himself or herself.” (“這個國家偉大的地方就在於每一個人都有做自己的權利”)

Tsai FacebookPretty brilliant reply to what was probably a coordinated mainland response seeking to rattle her so soon after being elected.

And that my friends is a bit of what went down this week that leaves me sitting here shaking my head wondering what’s next, but still insanely intrigued and fascinated by the things that happen in this country.  Stay tuned for more.

Divorced from Reality

January 17, 2016

I spent a large chunk of the last week sitting in meetings with our Chinese partner talking about expansion throughout China over the next several years and one thing I was struck by was how all of the conversations were completely divorced from the macroeconomic reality in China.  There was no mention of China’s economic troubles, whether it be the falling stock market, an oversupply of housing, falling economic growth, overcapacity in the manufacturing sector, or any number of statistics that point to a rapid deceleration of the the Chinese economy.  The only thing that came up was the devaluing the the Chinese renminbi and its mention was prompted by the Americans in the room.  Equally absent was any discussion of the current political situation in China, though that is slightly less surprising.  However, on the whole if we were sitting in a roomful of American or European business executives, the economic climate would have certainly been a part of the discussion and even maybe one or two political quips, including some comment about how unfathomable Donald Trump’s candidacy is and the sad state of American politics.  But there was none of that in these meetings.

It’s often something I wonder about when I see people wandering the mall or around me at a restaurant – what do they think about what’s happening in their country?  Do they even know what is happening in their country?  It’s very likely they may not be fully aware of what is going on since they would need a VPN to read foreign news sources and the Chinese media is largely silent as to the country’s economic doldrums.  Plus most people are too busy watching tv shows and movies on their phones to pay attention to the news, whether it’s CCTV or one of the many government publications sitting untouched in the newsstands around the city.  My meetings last week confirmed for me that there is a disconnect between what the reality of what is happening in China and how people are engaging with that reality.

Much has been written about the housing glut in China and no matter what city I travel to, I’m usually greeted with too many cranes to count as I drive into town from the airport. So many cities seem to be all about building new central business districts replete with malls, office buildings, and more apartments.  And yet the question is the same – who is going to move here?  If the government is seeking to continue its drive to urbanize and move the rural population into the cities, I cannot imagine that they are going to be re-settled in these luxury housing developments that continue to rise all over the country.  The malls are a whole other phenomenon.  How many luxury malls does a country need? Apparently there is no limit, but when I was in Chengdu I walked through a few of these new malls and some were eerily empty, both of people and stores.  Apparently the SCMP and I went to some of the same malls.  In Shenzhen the malls seem to be more for strolling than shopping with most people just wandering the mall, taking pictures, eating and drinking, but not really holding shopping bags.

I think at this point there is no disagreement that the Chinese economy is slowing down. The problem is that nobody quite knows how much.  The official statistics are less telling. It’s more about reading between the lines or anecdotal evidence of such a slowdown. It will be interesting to see what number the government announces on Tuesday for 2015 GDP growth.  There is so much gray when it comes to this country and not only on the economic front.

Over two weeks ago, Lee Bo, a publisher of books critical of the Party disappeared in Hong Kong. He was the fifth person to disappear in connection with this particular publisher.  He was last seen at his warehouse in Hong Kong before New Year’s and since then there have been a series of odd occurrences including phone calls to his wife from a Shenzhen number where he is speaking Mandarin rather than the Cantonese he uses at home and a letter to his wife that he is going to be away for awhile taking care something on the mainland.  The Hong Kong government has asked Beijing where he is and over two weeks later they still have not received an answer.  The issue at stake is that because of the whole “one country, two systems” between HK and China, Chinese law enforcement officials are not supposed to be coming into HK and taking away HK residents.  They are supposed to go through proper legal channels if they have reason to want to interrogate someone.  Coming in and secretly ferreting a HK resident across the border is a serious violation of the principle behind “one country, two systems”. It’s more than problematic that Beijing has not given the HK government an answer as to  Lee Bo’s whereabouts and shows a serious lack of regard for HK and its autonomy.

So I digress.  The point of all of this writing was that I still wonder if Chinese people actually know what’s going on with their own country or simply do not care.  I don’t know if I will ever be able to get a straight answer.