ECONOMICS FREEDOM OF HONG KONG: LESSONS AND CHALLENGES KUI-WAI LI CITY UNIVERSITY OF HONG KONG Seminar organizer Richard Charles Lee Canada – Hong Kong Library University of Toronto February 11, 2013 1
Transcript
Slide 1
Slide 2
Seminar organizer Richard Charles Lee Canada Hong Kong Library
University of Toronto February 11, 2013 1
Slide 3
Organizer: Richard Charles Lee Canada Hong Kong Library.
Sponsors: - Hong Kong Economic & Trade Office, Toronto - Hong
Kong Canada Business Association (HKCBA) - Asian Institute, Munk
School of Global Affairs, University of Toronto - In Depth
Conference: student organization. 2
Slide 4
Externally: Absolute picture of the freest economy. As a
reference to emerging/Asian economies. Is there a Hong Kong model?
World opportunities given to HK. Internally: Falling skill to
analyze economic issues in HK. Reiterate the appropriate use of
economics as a solution. HK peoples ingenuity, enterprising,
dynamism. 3
Slide 5
Ten indicators grouped under 3 pillars: System: trade,
financial, investment, and adherence to property right. Policy:
fiscal, monetary, and size of government. Ethics: business, freedom
from corruption, and labor. 4
Slide 6
Laissez faire: supply-driven strategy, pro-growth policies.
Govt: provides needed positive assistance, taking a back seat,
supportive approach. Promote civic freedom between ruler and ruled.
Colonial govt acted as a referee in politics. Economic relativity:
economic activities produce relative outcomes, absolute outcome
activities become personal choices. 5
Slide 7
Figure 2.2 Hong Kongs GDP Growth Rates: 1962-2009 6
Slide 8
GDP volatility is asymmetric: volatility is low when GDP rises.
Investment drives growth. Govt. spending not growth promoting.
Volatility is high in housing and stocks. Financial market more in
line with Tokyo and Singapore. Trade and consumption more in line
with Taiwan. 7
Slide 9
Measureable inputs: capital, labor, land. TFP indicates the sum
of non-measureable input contributions: human capital, technology,
efficiency, economies of scale, etc. Most convenient is to use the
accounting approach. Can be calculated on both the aggregate and
disaggregate basis. Economic freedom: allow openness and
opportunities, should facilitate TFP growth. 8
Slide 10
9
Slide 11
Agri, fishing, mining, quarrying: 5.2 (0.2) Electricity, water
& gas: -1.4 (2.34) Construction: 1.6 (4.96) Manufacturing: 5.1
(13.24) Whole/retail, im/ex, rest/hotel: 2.5(25.75) Fin, insur,
real est, bus services: 1.0 (19.84) Transport, storage & com.:
0.9 (9.52) Comm,social & personal service: 0.5 (15.56) 10
Slide 12
11
Slide 13
Industry: TFP% Total/SMEs/Non-SMEs Manufacturing: 5.1/4.6/5.3.
Retail: 1.5/0.7/1.4 Import/export: 2.4/2.4/1.9 Business services:
2.5/2.4/2.6 All transport: 0.4/0.6/-0.4 12
Slide 14
Figure 6.1 The Mean Years of Schooling in Hong Kong: 1981-2006
13
Total public expenditure/GDP: highest in 2002 with 21.8%.
Notably, social welfare has gone up from 5.4% in 1986 to 13.2% in
2009. More often with fiscal surplus than deficit, worst in
2001-2004 fiscal years. 20
Slide 22
21
Slide 23
22
Slide 24
23
Slide 25
Table 12.1 Land Use in Hong Kong
19961997199819992000200120022003200420052006200720082009 Total Area
(square
kilometers)1,0951,0961,0971,0981,0991,1001,1031,1081,1071,108
Developed land (% of total
area)15.9916.0516.3216.7520.9321.3621.6621.9523.6823.8423.2923.3823.5623.74
Residential5.305.295.385.466.106.186.176.056.967.046.77 6.86
Commercial0.18 0.27 0.36 Industrial1.00 1.73 1.721.902.26 2.17 2.26
Government, institution, community1.641.731.821.911.82 1.90 2.08
2.17 Transportation2.472.652.833.014.464.454.534.694.794.874.965.14
5.23 Open space1.46 1.55 1.82 1.81 1.901.99 2.082.17 Vacant
land3.933.743.652.46 2.822.992.802.622.351.811.711.531.44 Other
urban & built up areas 1.182.27 2.532.802.983.163.073.163.25
Non-developed land (% of total
area)84.0283.9483.6983.2479.0778.5478.3378.0776.3276.1776.7176.6276.4476.26
Agriculture land7.03 6.846.656.376.186.076.416.59 6.146.056.14
Woodland/shrub
land/grassland67.4967.4367.3767.3067.4267.1867.0066.8866.0365.7066.70
66.5266.34 Wetland0.00 0.55 0.540.900.45 Barren land4.024,014.01
2.18 1.350.81 0.72 Water area2.37 2.55 2.542.532.442.62 Temporary
structures & other uses*3.113.10 2.91 Notes:* = These
classifications are unavailable after 2000. The figure for the
total area in 2004 (1,107) is slightly larger than the figure of
1,104 reported in Hong Kong 2005, Informational Services
Department, Hong Kong, due probably to definitional difference in
different categories. Source: Planning Statistics, Planning
Department, Hong Kong. 24
Slide 26
25
Slide 27
26
Slide 28
China/HK: absolute vs comparative advantage. HK: a reference to
Chinas economic reform. HK: major investor, in early stage of
reform. Visa-free, CEPA, Pan-PRD, 5-Year Plan. Marginalization?
Catching up / overtaking?
HK:market-led(expost);China:state-led(exante) Few discussed on
implication to HK economy. 27
Slide 29
28
Slide 30
29
Slide 31
Short-term investment behavior. Wealth promoting, rise in
income. Inflation, negative interest rate, wage increase
De-industrialization, fall in real economy. Speculations in stocks
and real property. 1998 financial crisis: real economy could not
sustain the collapse of the nominal economy. 30
Slide 32
Young government: leadership challenged. Periodic crises: Asian
financial crisis, health hazards, terrorist attacks and war, oil
crisis, natural disasters, 2008 crisis, etc. Economic recession
(1998-2005): prolonged economic weakness, fiscal deficit, collapse
of property market. Stability and prosperity: challenged? 31
Slide 33
Internal: Demand-driven vs supply-led strategy? Short-term, ad
hoc solutions vs long-term insights? Property dominates: cart in
front of the horse? Fiscal policy: welfare vs growth? Intervention
vs assistance (private cost vs social cost)? 32
Slide 34
External: External-led vs domestic-led economy? Or a dependent
economy? Integration with mainland: win-win vs marginalization?
Count the cost? Political Economy: System-driven vs
personality-driven? Result-led vs public opinion-led? Formalization
vs informal economy? Conflicts in two systems: 2047 comes earlier?
33
Slide 35
Economic diversification & expansion: re- industrialization
through CEPA (over 1,700 export items to mainland tariff free).
Encourage physical investments, target CEPA. High cost: not a
problem when consider the huge mainland market. Challenge: property
price getting out of context, speculation=wealth increase, the most
distorted sector. Stability in question! 34
Slide 36
HKs economic freedom is a built-in, is an infrastructure.
Creation of economic opportunities has to be sustainable. Relative
outcomes preferable to absolute outcomes. Aim for comparative
advantage, avoid absolute disadvantage. 35
Slide 37
Together with a reliable civic and economic system, the path of
economic freedom in Hong Kong is the ability to generate new
economic opportunities to help others to prosper. 36
Slide 38
Wishing You All a Healthy and Prosperous Year of the Snake 2013
Thank you! 37