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from Breakingviews:

Hong Kong dockers’ pay sets tone for future strife

By Peter Thal Larsen

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

Hong Kong’s port strike is over, but the tensions that sparked it remain. Dockers are feeling the squeeze of Hong Kong’s rising living costs, while port operators face challenges from China’s slowing and shifting economy. Labour relations look set to stay tense.

The resolution of the month-long dispute looks like a victory for Hong Kong International Terminals (HIT), operator of the port where the 500 dockers worked. They agreed to return to work on May 6 after accepting a 9.8 percent pay rise - less than half their original demand, and only marginally more than the original offer. The immediate financial effect of the stoppage is minimal. Shares in Hutchison Port Holdings, the Singapore-listed trust that controls HIT, have actually outperformed other operators like China Merchants over the past month.

Nevertheless, the dispute cast a spotlight on Hong Kong’s growing social divisions. The dockers’ decision to target Li Ka-shing, the Hong Kong tycoon whose Hutchison conglomerate is the port’s ultimate owner, gave the strike an added edge. In an echo of the Occupy movement, they camped outside Li’s central Hong Kong headquarters, protested outside his home, and called for a boycott of his other businesses. Hutchison stoked up the rhetoric by comparing the dockers’ tactics to those of China’s Cultural Revolution.

from The Great Debate:

Who will be Rockefellers of BRIC nations?

John D. Rockefeller’s immense wealth made “rich as a Rockefeller” part of the lexicon. But his legacy rests not on what he earned. As the founder of Standard Oil and the richest person in history, Rockefeller donated so much money during his life that he needed a team of philanthropy specialists to distribute it. The result was the Rockefeller Foundation, chartered in 1913 “to promote the well-being of mankind throughout the world.”

Much as the Gilded Age in the United States created titans like Andrew Carnegie, Cornelius Vanderbilt and Rockefeller, the economic success of emerging powers has produced a new class of multimillionaires and multibillionaires. Brazil, Russia, India and China are home to 276 billionaires, according to the most recent Forbes list, almost a quarter of the world’s total. Many have begun to focus on what Carnegie called “the business of benevolence.” This nascent trend is poised to grow. But it requires support if philanthropy is to meet its potential to tackle the developing world’s socioeconomic challenges.

from George Chen:

Two cities, one problem

Shanghai and Hong Kong are often considered twin cities from a historical and economic perspective, and the two cities do face many similar challenges. One of the most burning issues is the ongoing property struggle between the government, investors and developers in the two Asian strongholds of business and investment, and of course home to growing populations. The Shanghai property stock index jumped more than 5 percent on Jan. 4, the first trading day of 2011 and the surge of Shanghai-listed property stocks gave a strong boost to the Hong Kong market. Given the bigger influence and impact of China’s economic development in Hong Kong since it returned to Beijing’s control in 1997, some traders often joke that the Hang Seng Index is like Shanghai’s mistress these days – your happiness depends on your master’s mood. Usually, if the Shanghai market rises, Hong Kong’s benchmark Hang Seng Index will follow suit. When the Shanghai index falls, the HSI can fall further and faster. This week, Chinese property counters, trading at low valuations compared with their historical averages, mostly soared after local media reports indicated that the authorities could delay a new property tax because of disputes between the central, city and provincial governments, and property owners and investors. Apparently, the new property tax issue in mainland China, which some in the market had expected to be implemented as soon as possible to further curb rising prices, is running into the typical bureaucratic holdups. On average, property prices in the four first top-tier Chinese cities – Beijing, Guangzhou, Shanghai and Shenzhen – rose more than 20 percent in 2010, according to local media reports, with Beijing recording the fastest rise of 42 percent on year. It’s understandable for the Chinese government to seek to control property prices via tax, an old-fashioned solution that has prompted some analysts argue that China is becoming more like a command economy, rather than the market-oriented economy it claims to be. More interesting, even Hong Kong, known as one of the world’s leading free markets, has drawn up a special bill to allow the local government to impose an additional stamp duty on short-term property transactions. So, what is a short-term property transaction from the viewpoint of the Hong Kong authorities? Buyers who sell within two years of purchase are considered potentially speculative. The special bill has won the hearts of local residents who are struggling to climb onto the property ladder, even for less than 300 sq ft, but the bill also faces growing criticism and objections from market activists, developers, pro-business lawmakers and of course, property investors. The Donald Tsang administration announced the new property tax last November, but the bill is pending approval from lawmakers of the former British colony before it can be put to work. Some activists and analysts believe the special bill will hurt Hong Kong's image as a market-oriented free economy, which is the core reason Hong Kong remains a top destination for foreign investment. The Real Estate Developers Association of Hong Kong (REDA) issued an open letter to the media including Reuters last night saying the industry group supported the objectives behind the introduction of the new “Special Stamp Duty” targeting short-term speculation but was concerned the new rules would also affect "genuine home buyers”. Last year, when Hong Kong implemented the city's first-ever minimum wage policy, at least HK$28 per hour (US$3.6) for low-income workers, The Economist magazine published an article commenting that the introduction of a minimum wage "marks the further erosion of Hong Kong's free-market ways". Let’s not be emotional. We know how poor Hong Kong people can be. Local friends tell me Hong Kong can be a nightmare for the poor but a paradise for the rich. The city is home to Li Ka-shing, who rose from poverty to become one of the world’s richest men, as well as the very poor who can only afford to live in a cage and eat twice a day. For a very long time, the poor didn’t really resent or complain about the rich, partly because many traditional Chinese are what might be called believers in destiny. With the rise of the younger generation, the atmosphere of dissatisfaction is apparently growing in the city. Technically and from a more academic perspective, moves such as the Special Stamp Duty on short-term property transactions and  the minimum wage policy could much to shake Hong Kong's long-standing position as the world's leading free market. Are we talking about capitalism or socialism for the future of Hong Kong's economy? If Shanghai, one of the richest cities in mainland China must take the route of so-called socialism with Chinese characteristics to develop its economy and markets, it will be interesting to see what Hong Kong does next to please both Beijing and global investors.

DonaldBy George Chen
The opinions expressed are the author’s own.

Shanghai and Hong Kong are often considered twin cities from a historical and economic perspective, and the two cities do face many similar challenges. One of the most burning issues is the ongoing property struggle between the government, investors and developers in the two Asian strongholds of business and investment, and of course home to growing populations.

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