Recession fears can by itself be a self-fulfilling prophecy


 

AS talk of a recession picks up, a veteran fund manager, Ang Kok Heng of Phillip Capital Management Sdn Bhd, correctly points out that the Malaysian stock market has been in “recession” in five of the six years since 2014.

Hence, he does not envisage how it can get worse for the Malaysian stock market if the global economy does go into a recession next year. Fears of a global recession have picked up pace based on the behaviour of the US yield curve.

The yield curve, which charts the spreads of US debt papers of various tenures, has inverted several times in the past few weeks. Most people would not understand what an inverted yield curve means.

Simply put, it means long-dated debt papers of 10 years giving lower returns compared to shorter-term debt papers such as two-year US Treasuries. It causes what is called an inverted yield curve.

It goes against the normal behaviour of US Treasury yields because long-term debt papers should give a higher return than short-term papers.

The consequence of an inverted yield curve is that it will lead to banks reducing their lending activities because their margins are narrow. Eventually, it results in companies reducing their activities and the country going into a slowdown or recession.

An inverted yield curve has been the precursor to all past recessions (see diagram).

However, there are some who are disputing the fears of an impending global recession based on the behaviour of the bond yield curve. Their reason is that the bond yields are not behaving as what they should due to the governments all around the world printing money to keep interest rates artificially low since 2009.

Interest rates have become so low to the extent that European banks are offering no returns on deposits. This means depositors do not get any money for keeping their money in the banks. Borrowers instead get discounts on their installments.

It’s happening in Europe because government bond yields there have turned negative.

For instance, the yield on 10-year Switzerland bonds is negative 0.74%, while German bonds of a similar tenure yield negative 0.52%. From France to Denmark, government debt papers have negative yields.

Only some countries such as Portugal and Spain still have positive yields on their debt papers.

Analysts believe that this has resulted in investors resorting to buying US debt papers that still offer positive yields. Hence, the price of bonds across all tenures in the US has gone up, causing their yields to come down.

The search for yields has also resulted in the narrowing of the difference between what the two-year and 10-year debt papers offer. And there have been several occasions in the last one month when the yield on the 10-year paper was lower than the two-year debt papers.

Apart from the behaviour of the yield curve, the other indicator that is seen as a precursor to a recession is the declining manufacturing sector all around the world caused by the trade war between the US and China. The Purchasing Managers’ Index (PMI), which is a leading indicator to assess the state of the economy, has been declining for all major economies.

For Malaysia, the PMI has been less than the 50-point benchmark for almost a year now. The same trend is seen in China, while the indicator has started to decline in the US in the last few months, which some see as a result of the trade war.

The trade war has caused supply disruptions, impacting the manufacturing sector.

However, there are other indicators that do not indicate a recession is imminent.

Banks are fairly well-capitalised and have pulled the brakes on lending. We do not hear of banks being impacted by major corporate defaults except for some financial institutions in China. Malaysian banks, for instance, have weathered the storm quite well so far, thanks to Bank Negara keeping a tight rein on their lending activities.

There has not been any run-up in asset prices. Property prices in countries such as Malaysia have remained subdued since 2015 after Bank Negara pulled the brakes on lending. Since 2014, Bursa Malaysia has closed lower every year, except for 2017.

The only exception of rising asset prices is Wall Street that has soared to record highs. Stock prices are hitting all-time highs due to improved earnings growth.

Technology companies such as Apple and Amazon are US$1 trillion companies. The other technology companies such as Facebook and Alphabet are enjoying growing valuations because of earnings growth.

No other stock exchange in the world has such a large concentration of technology companies than the exchanges on Wall Street. All technology companies, even from China, want to list on Wall Street.

Even Alibaba is listed on the New York Stock Exchange and not in Hong Kong.

It has been 11 years since the last recession, but the world’s central banks have resumed their printing of cheap money to keep interest rates low. The European Central Bank has resumed quantitative easing, while the US Federal Reserve is reducing interest rates. In essence, central banks are taking these measures to prevent a slowing economy going into recession.

In the meantime, it has caused fear among people and companies. Companies are holding back on spending, and in fact, cutting down on their debt.

A clear indicator is in the US where companies raised the most amount of corporate debt. Apple and Disney raised US$7bil worth of debt papers to reduce their borrowings.

In Malaysia, corporations have been deleveraging for the past few years in anticipation of a slowdown. Companies are not expanding, as indicated by the declining private-sector gross capital formation.

It is only reasonable for companies and people to save for the upcoming rainy days. Even governments are cautious in spending. For instance, in the upcoming Budget 2020, many are expecting the government to start spending. But there is also a view that the government will adopt a cautious stance as it continues to strengthen its balance sheet and reduce debts.

If nobody spends for fear of a recession, it would be a self-fulfilling prophecy.

Most people are expecting a recession, meaning negative growth. Fear of a recession has translated into a slowdown that the world and Malaysia are experiencing. If this fear continues to perpetuate, a recession would be a self-fulling prophecy.

It is good to be fearful, but being too fearful and conservative will also result in lost opportunity.

As Ang of Phillip Capital puts it, in times when fears of a recession seap in, cash must be held to seize opportunities. Holding cash as an investment is not a wise option.

By M. SHANMUGAM , The views expressed here are solely that of the writer. Source link

 

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Malaysia’s Public Universities Falling Behind


Malaysian public universities’ worst nightmare is beginning, with local private universities rapidly rising and making their presence felt in university rankings.

The respected World University Rankings now places Universiti Tunku Abdul Rahman (UTAR) as the country’s second-best university just behind its oldest public university, University Malaya (UM). QS International University Rankings this year placed the private UCSI University sixth and Taylors University eighth. Other rankings mention Swinburne University of Technology, International Medical University, HELP University, and Sunway University among others as being in Malaysia’s top 10.

Malaysian public universities and the Ministry of Education have been fixated on rankings for many years. Ang small rise in any ranking is extolled by the media. Malaysia even has its own domestic ranking system SETARA, but this is not without criticisms. In 2017, the Malaysian Qualifications Agency (MQA) gave eight universities the highest ranking of six stars and 21 the second highest ranking of five, indicating there is not much room for these universities to improve.

This nonsensical ranking system ignores the wide gulf between Malaysian universities and universities in the rest of the world.

What is hindering Malaysian public universities from achieving their full potential? It seems to be their sense of purpose.

University mission statements are public pronouncements of the institution’s purpose, ambition, and values.The general mission statements of the country’s public universities state the prime purpose as producing graduates who will be skilled and highly sought after employees of industry. This is a mechanistic, utilitarian approach, a discourse that is purely industrial and regimented.

What is absent is the desire to assemble a diverse intellectual community and pursue knowledge and education for the betterment of the individual and society — something more holistic than the narrow education path extolled in these outmoded mission statements.

Many graduate qualifications don’t match the country’s needs. There is a large surplus of graduates with technical degrees that can’t be absorbed into the workforce. Graduate unemployment was 9.6 percent or 204,000 at the end of 2108.

These mismatches and surpluses are the result of the insistence of central control by the Ministry of Education. There is lack of autonomy in public universities about what courses can be taught. The Ministry of Education operates like a ministry would in the Soviet Union during the 1950s.


The Malay Agenda

Malaysia’s public universities are an instrument of the government of the day.

One vice chancellor told Asia Sentinel that an important covert role of public universities is to pursue the “Malay Agenda.” This is reflected in the ethnic mix of academic, administration, security, and maintenance staff, and the high percentage of Malays in university student populations. Public universities prefer to employ foreign Muslim academic staff from India, Bangladesh, Myanmar and Iraq, rather than Malaysian citizens who are of Chinese or Indian origin. Most, if not nearly all office holders at public universities are Malay. Administration staff numbers tend to be bloated and inefficient due to lenient work procedures compared to their private counterparts.

Public universities are Malay bastions. They have become enclaves not demographically representative of the communities they serve. Organization is extremely hierarchical and authoritarian. Expertise is recognised through position and not knowledge. This creates a master-servant, rather than collegiate culture within faculties and administrative departments. In such environments, nepotism over powers meritocracy. Thus, there is little positive within these environments for people with fresh ideas and constructive criticisms. People who question and try to improve things usually don’t last long.

What is holding public universities back is the Malay Agenda, which is not conducive with diversity, critical thinking or intellectualism.


The Islamic Agenda

The appointment of Maszlee Malik as the Minister of Education has exacerbated the furtherance of an Islamic agenda in public universities. This is not in the Malaysia Education Blueprint 2015-2025 (Higher Education) or an edict approved by Federal Cabinet. It’s not part of the Pakatan Harapan election manifesto. Malaysian universities are being reformed in Maszlee’s vision rather than the national policy. The minister’s infusion into public universities of his Islamic vision is not the moderate, tolerant and accommodating Islam that Malays have practiced for hundreds of years but a Salafi-Wahabism slant that demands conformity and strict adherence.

This form of environment within public universities runs against the principle of diversity, free expression, critical thinking and creativity. The resulting organizational culture is an authoritarian environment that frowns upon freedom of expression of different ideas and diversity.

Malaysia is now witnessing the opening of a fissure into two completely different philosophies of higher education. On one side are the public universities with a structure and culture purporting to produce industrial fodder, and on the other side a private higher education sector made up of domestic private universities and Malaysian campuses of foreign universities which are beginning to emerge and being recognized in international rankings. One side carries the “Malay-Islamic” agenda of exclusion and the other, the pursuit of meritocracy.


Pursuing Change

The flaws within the public university system need to be firstly publicly acknowledged, then corrected. To date, the government has never conceded that it is pursuing the “Malay Agenda” in public universities. This is the subliminal agenda that is preventing any meaningful change and turning universities inward into their own introspection. Public universities can’t be changed without changing the intentions of the top echelon of government.

The first question is whether public universities should be pursuing Malay-Islamic agenda, or pursuing excellence in education and learning? This is where the reform process must begin.

The second question is whether public universities should follow the mechanistic development agenda or regenerate into something else? This question requires much informed discussion with various stakeholders.

This demands honest discussion. If the government wants to maintain the Malay-Islamic agenda in public universities, just say so and don’t waste time preparing policy blueprints which state otherwise. No change here and the rest is a waste of time.

If the first two questions are resolved, then a third question needs consideration. How can Malaysia’s public universities be fixed?

This has to start at the top. Before any reforms can be made, the culture within universities requires change. There are a number of prerequisites to achieving a positive culture change.

1.Public universities must be truly independent, autonomous, and transparent. A supreme body governing the university, a university council made up of the vice chancellor, deputies, deans, representatives from academic staff, administration staff, students, industry, community, and education should replace university board of directors. This means getting rid of all the deadweight and political crony appointees and replacing them with a committed governance group representing all stakeholders.

2.The university councils should appoint vice chancellors without any interference from the minister. This process should take place without fear or favour, purely on merit. The office holders shouldn’t be restricted to Malaysian citizens. The world should be scoured for the best people with experience in excellent universities to steer Malaysian universities into a new era.

3.Academic and administration staff need to reflect the population demographics of the country. Faculties need diversity, knowledge, experience, and know how. The apartheid approach needs to be ended at universities. The private universities are a  good example of what happens when diversity exists within academic staff. Rankings are quickly reflecting this.

4.The organizational culture of universities and faculties within them needs to be changed to eliminate feudal-like hierarchies, cronyism, and nepotism. These traits have to be replaced with a culture supporting meritocracy. This requires a leadership who shows by example. Deans with experience in reform and building teams will be required to reset these institutions.

5.There needs to be a set of standards that are fair for all to meet for university entry. This doesn’t mean there can’t be special entry programs for the disadvantaged. Many students now attending public universities would have been better off in the vocational system. Stricter entry standards will mean less students attending public universities and more in the vocational system that would better suit many students’ needs. This will help ease pressure on undergraduate teaching and raise standards very quickly.

Maszlee Malik doesn’t appear to have the interest or passion to lead the drive for excellence in public universities. He has been counterproductive through his appointments of vice chancellors. Religious credentials shouldn’t be a factor in selection.

If change can be made at the top, then the new broom can focus on granting full autonomy to public universities and change the Universities & Colleges Act so that university councils can be set up. The minister must denounce covert agendas and start a national dialogue about what Malaysian public universities should become. Finally, the apartheid nature of these insular institutions needs to be dismantled.

Ministers, bureaucrats, vice chancellors and deans don’t have to fly off to see Harvard or Oxford on the pretext to learn and emulate what is being done there.

Fortunately, within the public system there are some success stories. There are the examples within public universities that can learnt from where the elements of success can be transposed to other faculties within the public system. If this is not enough, vice chancellors only need to drive across town and look at some of the vibrant private universities as examples.

By:Murray Hunter,is a development expert based in Southeast Asia and a frequent contributor to Asia Sentinel.
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Best universities in Malaysia

World University Rankings

Explore the best universities in Malaysia, based on data collected by Times Higher Education
March 13 2019
Best universities in Malaysia

Malaysia is a country in South East Asia known for its stunning natural beauty and diverse population.

Made up of two main land masses, the Malaysian Peninsula and Malaysian Borneo, the country is known equally for its cosmopolitan capital and its wildlife-rich rainforests. The jungles of Borneo are home to over 1,000 species of animals, many of which are endangered. These include orangutans, clouded leopards and pygmy elephants.

By contrast, Kuala Lumpur – the nation’s capital – is a bustling metropolis, often used as a stepping stone to many other major South Asian destinations. Featuring the iconic Petronas Towers, the city’s impressive skyline is just one of KL’s many attractions. ​

Others include a canopy walkway 100ft in the air in the heart of the city, as well as the Batu Cave Temple, the stunning National Mosque and a host of museums.

Street food is incredibly popular and you can expect a varied cuisine with Indian,  Chinese and Malay influences.

Among all of this are some outstanding universities, which we have listed below, based on data collected for the THE World University Rankings 2019.

University of Malaya​

The University of Malaya, a public research university in Kuala Lumpur, is Malaysia’s oldest university, founded in 1905.

Initially established to cover the shortage of doctors in the country, the university has maintained its position as a leading medical
school.

It also offers bachelors degrees right through to doctoral qualifications across a range of other disciplines including economics, law, engineering, accountancy, linguistics and education.

The university also partners with several institutions across the globe, with links to Australia, France, Japan and the UK.

Universiti Tunku Abdul Rahman (UTAR)​

Situated across two campuses in Kuala Lumpur, Universiti Tunku Abdul Rahman (UTAR) is Malaysia’s second best university.

Established as a not-for-profit university in 2002, the initial intake was just 411. This has now risen to 2,500 students, who can choose from over 110 academic programmes of study. When the university first started there were just eight degree programmes.

UTAR is made up of nine faculties, three academic institutes, three academic centres and 32 research centres. ​

There are 56 registered student societies at the university including the yoga society, the international friendship society, the robotics society, the board games club, the  taekwondo club and the first aid society among others.


Best universities in ShanghaiBest universities in TokyoBest universities in Singapore Best universities in Hong KongBest universities in TaiwanBest universities in South KoreaBest universities in China


Universiti Kebangsaan Malaysia​

Universiti Kebangsaan Malaysia, or The National University of Malaysia as it is sometimes known, was initially founded to uphold the Malay language.

​Today, the university’s focus has switched to energy, with an emphasis on biotechnology and earth science.

UKM’s Tun Seri Lanang Library is one of the biggest university libraries in Malaysia, housing a collecting of over two million
resources.

The university has three campuses: in Bangi, Cheras and Kuala Lumpur.

And the rest…

You can also choose from a range of other universities in Malaysia.

Other institutions with a focus on energy include Universiti Sains Malaysia and Universiti Tenaga Nasional (UNITEN).

Away from Kuala Lumpur, Universiti Malaysia Sarawak (UNIMAS) is located on the northwest coast of stunning Borneo.

The Universiti Teknologi MARA (UITM) is the best of both worlds, with campuses in each part of Malaysia. ​


The top universities in Malaysia 2019

Click on each institution to see its full World University Rankings 2019 results

Malaysia Rank 2019 World University Rank 2019 University City/Area
1  301–350 University of Malaya Kuala Lumpur
2  501–600 Universiti Tunku Abdul Rahman (UTAR) Petaling Jaya
=3  601–800 Universiti Kebangsaan Malaysia Selangor
=3  601–800 Universiti Sains Malaysia Pulau Pinang
=3  601–800 Universiti Teknologi Malaysia Johor
=3  601–800 Universiti Teknologi Petronas Seri Iskandar
=7  801–1000 Universiti Putra Malaysia Selangor
=7  801–1000 Universiti Tenaga Nasional (UNITEN) Selangor
=7  801–1000 Universiti Utara Malaysia Kedah Darul Aman
=10  1001+ Universiti Teknologi MARA Selangor
=10  1001+ Universiti Malaysia Sarawak (UNIMAS) Sarawak

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Some English and European languages are Chinese dialects


Chinese scholars from the World Civilization Research Association claim that some European languages, including English, are dialects derived from Mandarin.

The group is formed by scholars from a number of Chinese academic institutions.

The claim, which is said to be backed by over 20 years of research, was presented at the first China International Frontier Education Summit in Beijing, China last July, as reported by Sina Online on Aug. 26 via Vice yesterday, Sept 9.

Zhai Guiyun, vice president and secretary-general of the group, told Sina Online via Taiwan News last Aug. 31, that some English words derive from Mandarin.

He pointed out that “yellow” resembled “yeluo, ” the Mandarin word for “leaf falling, ” while “heart” resembled “hede, ” the Mandarin word for “core.”

“Of course, the pronunciation will be a little different, which is caused by the variations in pronunciation over hundreds or even thousands of years in different regions, ” Zhai told Sina Online via Vice. “Think about how significant the differences are in our regional dialects… so it can be said that English is like a ‘dialect’ in our country.”

Zhai concluded that the examples he presented “proved” English is a Mandarin dialect.

Along with this claim, he also stated that other European-based languages such as French, German and Russian also went through a similar process of sinicization, where non-Chinese societies come under the influence of Chinese culture.

Another member of the association, Zhu Xuanshi added that Europe had no history before the 15th century.

This lack of history supposedly led the Europeans to feel “ashamed, ” and in turn, had “fabricated” stories of the ancient Egyptian, Greek and Roman civilizations. According to the report by Taiwan News, he stated that the said civilizations were all based on Chinese history.

In an attempt to “restore the truth of world history, ” the association has set up branches in Canada, Madagascar, South Korea, Thailand, United States and United Kingdom. The group’s founder, Du Gangjian said, “Do not let fake, Western-centered history hinder the great Sino-Renaissance.”

However, the claims did not convince many Chinese citizens. Users of the social media platform Weibo called the members of the association “Wolf Warrior Scholars, ” a reference to a patriotic Chinese movie.

“Thanks, ” one user was quoted as saying. “We can no longer laugh at the Koreans who claimed Confucius and Genghis Khan are Korean.” – Philippine Daily Inquirer/Asia News Network

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Behind Hong Kong’s chaos lie deep-seated social ills



Chief Executive of China’s Hong Kong Special Administrative Region (HKSAR) Carrie Lam speaks during a media session in Hong Kong, south China, Sept 5, 2019. [Photo/Xinhua]

Economist: Island needs closer ties with China to improve

“Seclusion brings no development opportunity for Hong Kong,” said economist Lau Pui-King. “Some youngsters don’t understand that Hong Kong would be even worse if it is secluded from the Chinese mainland.”

“To come out of the current economic difficulty, Hong Kong needs to be linked with the Chinese mainland much closer and more effectively,” she said.

HONG KONG – Kwong loves the pure adrenaline rush he gets when he takes his motorcycle out on the weekends to light up his lackluster life.

The 35-year-old lives with his parents in an old and cramped apartment in the New Territories of Hong Kong. He has a girlfriend but is hesitant to get married and start a family.

“The rent is so high, and there is no way I can afford an apartment,” said Kwong, who earns 15,000 HK dollars ($1,950) a month. Renting a 30-square meter one-bedroom apartment would cost him about two-thirds of his salary.

“Future? I don’t think much about it, just passing each day as it is,” he said.

Kwong’s words reflect the grievances among many people in Hong Kong, particularly the young. Many vented their discontent in prolonged streets protests that have rocked Hong Kong since June.

The demonstrations, which started over two planned amendments to Hong Kong’s ordinances concerning fugitive offenders, widened and turned violent over the past months.

“After more than two months of social unrest, it is obvious to many that discontentment extends far beyond the bill,” said Carrie Lam, chief executive of the Hong Kong Special Administrative Region (HKSAR), referring to the now-withdrawn amendments.

To Lam, the discontent covers political, economic and social issues, including the often-mentioned problems relating to housing and land supply, income distribution, social justice and mobility and opportunities, for the public to be fully engaged in the HKSAR government’s decision-making.

“We can discuss all these issues in our new dialogue platform,” she said.

HKSAR Chief Executive Carrie Lam visits a transitional housing project of the Lok Sin Tong Benevolent Society Kowloon in Hong Kong, south China, Aug 9, 2019. [Photo/Xinhua]


UNAFFORDABLE HOUSES

For nine straight years, housing in Hong Kong has been ranked as the least affordable in the world. Homes in the city got further out of reach for most residents, according to Demographia, an urban planning policy consultancy. The city’s median property price climbed to 7.16 million HK dollars in 2019, or 20.9 times the median household income in 2018, up from 19.4 times from a year earlier.

In the latest case of house transaction, an apartment of 353 square feet (about 33 square meters) at Mong Kok in central Kowloon was sold at 5.2 million HK dollars in September, according to the registered data from Centaline Property Agency Limited.

For those fortunate enough to have bought an apartment, many have to spend a large part of their monthly income on a mortgage. For those who have not bought any property yet, it is common to spend more than 10,000 HK dollars in rent, while saving every penny up for a multi-million HK dollar down payment.

From 2004 to 2018, the property price increased by 4.4 fold, while income stagnated, statistics show. From 2008 to 2017, average real wage growth in Hong Kong was merely 0.1 percent, according to a global wage report by the International Labor Organization. Homeownership dropped from 53 percent to 48.9 percent from 2003 to 2018.

Efforts of the HKSAR government to increase land supply to stem home prices from soaring also went futile amid endless quarrels. Of Hong Kong’s total 1,100 square kilometers of land area, only 24.3 percent has been developed, with land for residential use accounting for a mere 6.9 percent, according to data from the HKSAR government.

Social worker Jack Wong, 29, lives in an apartment bought by his parents. “I’m lucky. Most of my friends still have to share apartments with their parents. My cousin has been married for seven years, but he is still saving for his down payment, so he has to live at his parents’ house,” he said.

“The older generation changed from having nothing to having something. We, the younger generation, thought we had something, but it turns out we have nothing,” he said.


MIDDLE CLASS’ ANXIETY

While young people complain about having few opportunities for upward mobility, Hong Kong’s middle class, which should have long been stalwarts of the society, are under great economic pressure and in fear of falling behind.

It is not easy to be middle class in Hong Kong, one of the world’s most expensive cities. To join the rank, a household needs to earn at least 55,000 HK dollars, or $7,000, a month, according to Paul Yip Siu-fai, a senior lecturer at the University of Hong Kong. About 10 percent of the households in the city are up to the rank.

Earning that much can be counted as rich in many parts of the world. But in Hong Kong, the money is still tight if you have a child to raise and elderly to support.

Housing is the biggest burden for the average middle-class resident. The cost of having a child is another headache in Hong Kong, where pricey extra-curricular activities and private tutoring are considered necessary to win in the fierce competition.

Fears of descending to the low-income group are real for the middle class. Many think they belong to the middle class only in education and cultural identity, but their living conditions are not much better than the impoverished, said Anthony Cheung Bing-leung, former secretary for transport and housing of the HKSAR government.

Civil servants and teachers, who earn much more than the average income, are traditionally considered middle class. But Cheung found out in a survey that many of them could not afford to have their own apartment, with some even living in the narrow rooms of partitioned apartments.

“We don’t belong to the low-income group, but we could just rent an apartment now,” said Lee, a teacher at a secondary school in Hong Kong.

Lee and her husband earned nearly 1.3 million HK dollars a year, but a 50-square meter apartment is the best they could rent now for a five-member family. She preferred not to give her full name as she feels her situation is embarrassing.

“We want to save more money to buy a house near prestigious elementary schools for our kids,” Lee said. “If our kids can’t go to a good school, it’ll be very tough in the future.”

A woman walks near the Harbour City in Hong Kong, south China, Aug 27, 2019. [Photo/Xinhua]


CHANGING ECONOMIC STRUCTURE

In the 1970s, nearly half of Hong Kong’s labor force were industrial workers when manufacturing thrived in Hong Kong. During the 1980s, Hong Kong’s finance, shipping, trade and logistics and service industries started to boom.

Since then, the economic landscape began to change amid subsequent industrial upgrading.

Due to the hollowing out of the manufacturing industry, the wealth gap in Hong Kong widened and the class division worsened. Despite the prosperity of finance, trade and tourism in recent years, more than 1.37 million people are living below the poverty line in Hong Kong, home to more than 7 million.

Working career options are now limited, leaving little hope for the youngsters to move up the social ranks.

As a result, Hong Kong’s social class has largely been solidified in the 21st century, with the richest people dominated by property developers and their families.

The Gini coefficient, which measures the inequality of income distribution, reached a new high of 0.539 in 2016, far above the warning level of 0.4, according to data by the HKSAR government’s Census and Statistics Department. The greater the number toward one, the more inequal in income distribution.

Though the HKSAR government tried to narrow the wealth gap, many people in Hong Kong said they are not sharing the fruits of economic prosperity, the young and those low-income groups in particular.

STAGNATING POLITICAL BARRIERS

What makes the deep-seated problems in Hong Kong such a hard nut to crack? The reason is complicated, according to observers, partly due to the containment in the current political structure that leads to governance difficulty, partly due to a doctrinaire implementation of the principle of “small government, big market,” or laisser faire, and most importantly due to the opposition’s “say no for none’s sake” that stirs political confrontation and sends Hong Kong into a dilemma of discussions without decisions, or making decisions without execution.

Over the past 22 years, the successive HKSAR governments have tried many times to tackle these problems by rolling out affordable housing programs and narrowing the rich-poor gap.

For example, to make houses more affordable, Tung Chee-hwa, the first HKSAR chief executive, proposed in 1997 to build at least 85,000 flats every year in the public and private sectors, raise the homeownership rate to 70 percent in 10 years and reduce the average waiting time for public rental housing to three years.

Such plans, however, went aborted as home prices plunged in Hong Kong amid the Asian financial crisis in 1998.

“Since Hong Kong’s return, many economic and livelihood issues would not be as politicized as they are now, should the HKSAR government have introduced more policies and better social security arrangements to address those problems,” said Tian Feilong, a law expert of the “one country, two systems” center with the Beijing-based Beihang University.

To carry out major policies or push forward major bills, the HKSAR government needs to garner the support of two-thirds majority at the Legislative Council (LegCo).

The HKSAR government’s previous motions, be it economic policies or fiscal appropriations, were impeded by the opposition time and again at the LegCo, regardless of the interests of the majority of Hong Kong residents and the long-term development of the society.

The HKSAR government sought in 2012 to establish the Innovation and Technology Bureau to ride the global wave of innovative startups, diversify its economic structure and bring more opportunities for young people. Such efforts, however, were obstructed by the opposition at the LegCo in defiance of repeated calls by the public. After three years, the proposal to create the bureau was finally passed by the LegCo.

In another case, a Hong Kong resident, incited by the opposition, appealed in 2010 for a judicial review of the construction plan of the Hong Kong-Zhuhai-Macao Bridge. Though the HKSAR government won the lawsuit after more than a year of court proceedings, 6.5 billion HK dollars of taxpayers’ money had been wasted in the increased construction costs of the bridge’s Hong Kong section due to the delay.

As time passed, problems remained unsolved, so did public discontent.

Repeated political bickering stalled Hong Kong’s social progress amid the sparring, and the opposition created a false target and blamed the Chinese mainland for those deep-seated problems.

Lau Pui-King, an economist in Hong Kong, snubbed the opposition’s resistance of or even antagonism to the Chinese mainland, saying such thinking of secluding Hong Kong from the entire country could end nowhere but push the city down an abyss.

“Seclusion brings no development opportunity for Hong Kong,” Lau said. “Some youngsters don’t understand that Hong Kong would be even worse if it is secluded from the Chinese mainland.”

“To come out of the current economic difficulty, Hong Kong needs to be linked with the Chinese mainland much closer and more effectively,” she said.

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