The Silk and Steel Newsletter #2 Discontent and Misery of Hong Kong Youth

High Housing cost

Hong Kong contrary to popular conception has lots of land. But HK gov derives much revenue from land sale, so in co-hoots with real estate developers artificially inflates the real estate prices.

In Hong Kong all land is leasehold and ultimately owned by the government.
This goes back to British Colonial days when Empire wants its colony to be self-funded. So HK gov sells land. It helps to keep taxes down but gave HK gov incentive to ration land to keep it in short supply and sell dear.

Hong Kong start to boom post 1949, as result of influx of Shanghai captalists and capital fleeing Communist rule, and refugees from Chinese Civil War and later the Great Famine (1959-1962) providing abundant cheap labor. Industrialists who made their money in trading and manufacturing then started to plow their money into buying land in 1960s. most notably certain Li-Ka-Shing who bought everything in rock bottom prices after 1967 pro-China labor unrest/protest rocked Hong Kong.

These small group of man start to amass great fortune from their landholdings, as they bought up utilities companies as well. That they dominated every walk of Hong Kongers' economic life. working class HKers live in private housing build by Tycoons, use electricity and gas owned by Tycoons, and take transportation buses and Ferries run by companies of Tycoons.

HK gov only release small amount of land to be developed each year, helping to drive up land prices and by extension housing prices. To alleviate the problem it created, during Brit Colonial time, HKG builds 20-30k units of public housing for people starting out. The idea is people then will be motivated to have to work hard to afford private housing build by Tycoons.

After 1997 handover to China, Everything changed

British had agree by 1984 to hand over all of Hong Kong back to China by 1997, the end of 99 year lease on Hong Kong's largest territory New Territory that Britain forcibly leased after Japanese victory in the 1st Sino-Japanese War (1894-95) expose China's persistent weakness. Thatcher had wanted to renew the lease but Deng Xiaoping said no. Thatcher then ask British Military to draft a plan for defending Hong Kong from PRC attack. Brass had to sat her down and tell her that's impossible. For one thing China supplied Hong Kong's water since 1960s. In the end Thatcher had no choice but to agree to Deng's demand all of Hong Kong would be returned including Hong Kong Island which was ceded in perpetuity after 1st Opium War and Kowloon Peninsula seized after 2nd Opium War.

In the 1990s, as Hong Kong approach 1997 handover date. A huge infrastructure project was started to build a new International Airport in Hong Kong by artificially creating man-made island. Britain got HKG to sell more land to fund the Airport project/land reclamation. This coincide with a real estate boom developing into a real estate bubble by late 90s. Easy money combining with real estate bubble saw many HK property companies were heavily geared by 1997. PRC gov refused to allow HKG to borrow to fund airport project fearing it will leave HK full of debt, that's why HKG continue to rely on selling land to raise revenue.

Tung Chee-hwa, 1st Chief Executive of Hong Kong after handover in 1997, proposed building ambitious program to build 85k flats a year. But it was very bad timing.

Just as more land supply made available and more private homes build, and properties company taking on increasing amount of debt, Asian Financial Crisis hit Thailand in 1997. Soon contagion hit Hong Kong as hot money flowing into Asia get spooked. HKG spend USD 15bn to defend the stock market

Asian Financial Crisis popped the Real Estate Bubble in Hong Kong in 1997, with price drop as much as 70%, driving many Middle Class Hong Kong homeowners to bankruptcy. Hong Kong Gov's plan to build additional 85k Public Housing at this juncture was not well received...

Real Estate Tycoon capitalized on public sentiment and got people out on the streets to protest HKG plans to expand public housing. Tung Chee Hwa's plan was scrapped. As HK real estate market continued to tank from 1997 to 2003, HKG only build 2k units of public housing per year compare to 20-30k back in Colonial days...

But as housing prices start to climb after 2003, HKG still only build 2k units of public housing per year

It's important to note that most Hong Kong protesters are very young, most of them grow up AFTER 1997 handover to China. Drastic reduction in available Public Housing and rebound housing market to unaffordable levels since 1997 impacted them directly

Real Estate Tycoons which made up of Hong Kong's richest men dominated Legislature which is abt 35% pro-China, 35% pro-West(pan-democrats) and 30% Biz bloc. Biz bloc can join with pro-West bloc to block any bills in Legco. Legco controls all funding bills of HKG

Last HK Chief Executive, Leung CY proposed 16k public housing units & retake HK's New Territory farm lands for public housing & Legco meetings were frequently halted due to lawmakers not showing up, no quorums. CY was not allowed a 2nd term.

HK New Territory Farmlands is a huge piece of land held by tycoons through 'fraudulent' 'legal' mechanisms. farm land could be retaken if no longer used for farming. HKG couldn't do that by getting Legco to allow or challenge the 'land banks' of tycoons because blocked by the Biz sector veto

HK CE powerless. He/she can't push anything without begging the Biz sector to support him. And Biz against land/extradition bill. Some HK Biz people may have been involved in 'illegal' China asset grab schemes these last decades. land bill, self-explanatory...

HK Legco was created with an effective Biz sector veto & these greedy bastards are all in pockets of tycoons who control >80% of HK assets.

HK Basic Law was created with this defect because drafting started in mid 80s & when 89 Tiananmen happened, HK panic & many left for West. To avoid capital flight, Beijing had to reassure HK Biz community.

Result: Article 23 (sedition/treason) dropped from Basic Law to let HK Legco put in back later. It never happened because Biz sector do not want strong Central Government control, their interest better served with a weak HK government

PRC central gov approach to HK affairs have been fairly hands off. Beijing concern is that HK not be used as a platform to subvert its rule on mainland, otherwisely not interested in how HKG run its affairs.

funny thing about Hong Kong Protest, it does not protest total domination of Real Estate Oligarchs that made protesters' life miserable, instead anger is directly at Chinese government and ordinary Mainland Chinese people...

possible solution for Hong Kong: change its Basic Law, allowed direct election of HK Chief Executive. But put in mechanism that satisfies Beijing that that no one anti-China will be at the helm

This was the rationale for pushing

Article 23 sedition/treason bill

Political Reforms NPCSC 831 resolution which allow for direct CE elections after a vetting committee approved by Beijing

That way Hong Kong people get their Universal Suffrage, and Chinese Central gov can be assured on sovereignty that she/he will not be a pawn for West.

But both were scrapped after huge protest in Hong Kong financed by Media Tycoon Jimmy Lai and shenanigans in LEGCO.

Because intense media campaign to portray both as Beijing imposing its authoritarian mark on HK. It's not hard to convince people as they have been feeling unease about PRC gov and HK's future under PRC. And except handful of old leftist pro-Beijing newspaper, HK media have long been hostile to Beijing ever since Tiananmen Protest Crackdown

End result, a weak HKG executive branch, Legislature dominated by Biz bloc veto. Tycoons have a free reign in HK. While HK youth face problem common to Millennials all across developed world, declining economic prospect, stagnant real wages and housing prices totally out of reach.

Tycoon domination of Hong Kong's economic and political life must end. China should do this while accommodate ordinary Hong Konger's demand of political representation.

But given the way real world works, prbly will see HKG try to muddle thru, more unrest, more ugly anti-mainland Chinese nativism, shit show until 2047, when One Country 2 Systems become 1 country 1 system