Opinion

George Chen

One country, two problems

George Chen
May 23, 2011 04:51 UTC

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

There’s a new problem with the “one country, two systems” policy for Hong Kong and mainland China — the appreciation of the yuan can ease inflation in mainland China but not in Hong Kong.

In Hong Kong, the former British colony that returned to Beijing’s hands in 1997, things unfortunately work the other way round.

Peter Wong, HSBC’s Asia-Pacific top boss (and widely considered the most handsome banker in Hong Kong) said at a forum in Shanghai last week that because the Hong Kong dollar is pegged to the U.S. dollar, whose value is falling almost every day, food prices in Hong Kong are set to increase as Hong Kong needs to pay more to import food products from the mainland.

Former Hong Kong central banker Joseph Yam, now a senior representative of a Beijing-backed financial academy, added that he believed the Chinese government would let the yuan rise further and relax some policy restrictions.

So, a stronger yuan is in no doubt, and food prices in Hong Kong are certain to rise.

The dilemma between pay rise and inflation

George Chen
May 4, 2011 09:20 UTC

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

First, we were worried about inflation in mainland China. Now it seems Hong Kong’s inflation situation in coming months looks no better. I blame the worsening problem partly on the city’s first-ever minimum wage law, effective May 1.

As I study international political economy at the University of Hong Kong, my professor and classmates do know I am a free market fan and don’t believe a minimum wage will help Hong Kong’s economy and boost employment, as some Hong Kong lawmakers assert.

The sad truth is I went to buy my favorite Pearl Milk Tea on May 1 and found it was 2 Hong Kong dollars (about US$0.26) more expensive. Then I went to check out McDonald’s — prices for some of its burgers and drinks have also risen about 2-3 percent. And last night, local media said taxi and tram fares were going to rise in the former British colony too!

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