{"id":9611,"date":"2015-03-01T22:10:23","date_gmt":"2015-02-28T12:32:49","guid":{"rendered":"http:\/\/chinaworker.info\/?p=9611"},"modified":"2015-03-01T19:00:06","modified_gmt":"2015-03-01T11:00:06","slug":"hong-kong-another-pro-rich-budget","status":"publish","type":"post","link":"https:\/\/chinaworker.info\/en\/2015\/03\/01\/9611\/","title":{"rendered":"Hong Kong: Another pro-rich budget"},"content":{"rendered":"

The Hong Kong government is hoarding cash for an eventual\u00a0bailout of bankers and speculators as financial storms gather\u00a0in mainland China<\/strong><\/p>\n

Dikang, Socialist Action (CWI in Hong Kong)<\/p>\n

There was a strong sense of d\u00e9j\u00e0 vu about the budget presented by Financial Secretary John Tsang Chun-wah on 25 February. Two years ago, Socialist magazine wrote that the 2013 budget, \u201cresembles all the others \u2013 stingy beyond belief.\u201d This one is almost identical, containing a few \u2018sweeteners\u2019 that cost the government almost nothing from its huge cash hoard. These are used to decorate a budget that is designed to create super profits for the tycoon elite.<\/p>\n

In his budget address, Tsang tried to blame last year\u2019s Umbrella protests for the slowdown in the economy. A\u00a0year ago the government predicted GDP growth of 3 percent, but actual growth was just 2.3 percent. In reality, the economy is skirting close to recession and for the coming year the Financial Secretary predicts growth between 1 and 3 percent. In the background is what looks more and more like an economic hard landing in China, which can unleash a tsunami effect over Hong Kong \u2013 dragging down the financial and property markets.<\/p>\n

China \u201csub prime\u201d lending<\/strong><\/p>\n

This is made more likely by the rampant \u2018financialisation\u2019 of Hong Kong\u2019s economy, which imitates all the high-risk banking tricks that led to the implosion of Wall Street seven years ago. When Hong Kong\u2019s economy last suffered recession (shrinking growth), in 2008, total loans in the city\u2019s banking system were worth HK$7 trillion (US$900 billion). But today they are worth HK$26 trillion (US$3.4 trillion) \u2013 more than three\u00a0times as much! Within this overall explosion of lending, loans to mainland companies and banks now account for 40 percent compared to 10 percent in 2008, according to the New York Times.<\/p>\n

These loans to China are a new form of the reckless \u201csub prime\u201d lending which led to the US financial crash,\u00a0something that\u00a0can blowback on the wider Hong Kong economy. This\u00a0high degree of exposure makes Hong Kong\u2019s banks extremely vulnerable to the property bust and bad loans that loom in China. The fear of such a scenario is\u00a0the real reason why the Hong Kong government is hoarding financial reserves \u2013 soon worth HK$856 billion, equal to 23 months\u2019 worth of government expenditure. It is a reserve \u201cwar chest\u201d to bailout the billionaires and speculators. At the same time we are told that despite these bloated financial reserves there is no money for a universal pension scheme other than through\u00a0\u201cbig tax increases\u201d.<\/p>\n

Tsang admitted in his budget speech that the economy faces a \u201cchallenging\u201d year ahead, pointing to Europe and Japan where deflation (falling prices) threatens to further depress economic growth. He acknowledged \u201cconcern about much more radical social conflict\u201d in Hong Kong. This budget however contains nothing to solve the housing crisis or close the wealth gap, measures that might reduce the risks of conflict.<\/p>\n

\"Partitioned<\/a>
Partitioned apartments \u2013 all that the poor can afford to rent.<\/figcaption><\/figure>\n

Four-fifths to the better off<\/strong><\/p>\n

Some news media are saying Tsang made a U-turn, having said last year that sweeteners and one-off relief measures would \u201csoon become history\u201d. The Standard even speculated that \u201cthe shadow of someone else\u201d i.e. Chief Executive Leung Chun-ying may have crafted this budget, perhaps with the 2017 elections in view.<\/p>\n

But we can only scratch our heads at the talk from some quarters describing this as a \u201cgenerous\u201d and \u201cpopulist\u201d budget \u2013 and even an attempt to \u201cwin over\u201d last year\u2019s youthful protesters. There were HK$34 billion of so-called sweeteners in the budget, a two-thirds increase from last year, but four-fifths of this money will be spent on middle and upper-income groups, with low-income groups only getting 20 percent.<\/p>\n

The issue of welfare has been seized upon by right-wing populists. In fact, CSSA (Comprehensive Social Security Assistance) outlays have been squeezed over the last seven years with the total amount of CSSA payments falling by HK$2.1 billion. CSSA recipients are mostly the poorest sections of the elderly, people with disabilities, single parents and others in extreme hardship. The share of new immigrants from mainland China receiving CSSA make up only around 5 percent of the total, and most of them are children under 18 years of age. Yet a xenophobic chorus of complaints can be heard from both \u201canti-government\u201d nativist factions and the right-wing establishment Liberal Party blaming new immigrants (i.e. mainland Chinese) for “grabbing welfare” and burdening resources. This shows how\u00a0the nativist right acts as accomplices to\u00a0the neo-liberal establishment.<\/p>\n

Once again the government got it sums wrong. The budget surplus for this financial year is expected to be HK$63.8 billion \u2013 six times greater that Tsang\u2019s previous forecast of HK$9.1 billion! This surplus has been squeezed from the blood and sweat of Hong Kong\u2019s working population, mainly through extortionate property prices which are a massive undeclared tax on workers, small businesses and all consumers. Yet barely one-tenth of this surplus will be returned to society\u2019s poorest layers in the form mostly of temporary relief measures such as a one-month rent rebate and two extra months\u2019 payments for CSSA recipients.<\/p>\n

\"Demographia\"<\/a><\/p>\n

The budget in brief<\/strong><\/h2>\n

Taxation:<\/strong> As the South China Morning Post noted, \u201cMiddle-income families stand to benefit most from the rise in child tax allowance and the rebate on salaries tax announced in the budget \u2013 while low-income families gain nothing at all. The extra help missed out the working poor as those families earning HK$20,000 a month or less fall outside the tax system, according to figures produced by accounting firm KPMG.\u201d<\/p>\n

Housing:<\/strong> No real change and the government admits it won\u2019t meet its own (too low) promise to build 20,000 new homes a year. No action will be taken to bring down property\u00a0prices which on average shot up 15 percent for small apartments, and 13 percent overall, last year. Rent control, something socialists campaign for, is clearly not on the government\u2019s radar despite housing costs being a crushing burden for the poorest sections of society.<\/p>\n

Pensions<\/strong>: While avoiding the issue, indirectly Tsang made clear there will be no a universal retirement protection scheme, which he said would be \u201cunsustainable\u201d. The elderly are the single most impoverished group in Hong Kong with one in three below the poverty line.<\/p>\n

Daycare for elderly and disabled:<\/strong> The government promised funds for 1,200 additional places for various residential care services and rehabilitation services for the disabled. This is wholly inadequate when the waiting period for places is 10 years in some areas.<\/p>\n

Healthcare:<\/strong> Expenditure is raised to HK$70.6 billion, which is an increase of 24 percent on last year\u2019s spending. But most of the increase \u2013 HKS10 billion \u2013 is earmarked for a new system of subsidies that will \u201cencourage\u201d patients in public hospitals to turn to private clinics.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Hong Kong government is hoarding cash for an eventual\u00a0bailout of bankers and speculators as financial storms gather\u00a0in mainland China Dikang, Socialist Action (CWI in Hong Kong) There was a strong sense of d\u00e9j\u00e0 vu about the budget presented by Financial Secretary John Tsang Chun-wah on 25 February. Two years ago, Socialist magazine wrote that […]<\/p>\n","protected":false},"author":33,"featured_media":9615,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"tdm_status":"","tdm_grid_status":"","footnotes":""},"categories":[133,124],"tags":[],"class_list":{"0":"post-9611","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-hong-kong","8":"category-news"},"yoast_head":"\nHong Kong: Another pro-rich budget - China Worker<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/chinaworker.info\/en\/2015\/03\/01\/9611\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Hong Kong: Another pro-rich budget - China Worker\" \/>\n<meta property=\"og:description\" content=\"The Hong Kong government is hoarding cash for an eventual\u00a0bailout of bankers and speculators as financial storms gather\u00a0in mainland China Dikang, Socialist Action (CWI in Hong Kong) There was a strong sense of d\u00e9j\u00e0 vu about the budget presented by Financial Secretary John Tsang Chun-wah on 25 February. Two years ago, Socialist magazine wrote that […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/chinaworker.info\/en\/2015\/03\/01\/9611\/\" \/>\n<meta property=\"og:site_name\" content=\"China Worker\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/SocialistAction\" \/>\n<meta property=\"article:published_time\" content=\"2015-02-28T12:32:49+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2015-03-01T11:00:06+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/media1.chinaworker.info\/2015\/02\/john-tsang.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"653\" \/>\n\t<meta property=\"og:image:height\" content=\"361\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/chinaworker.info\\\/en\\\/2015\\\/03\\\/01\\\/9611\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/chinaworker.info\\\/en\\\/2015\\\/03\\\/01\\\/9611\\\/\"},\"author\":{\"name\":\"\",\"@id\":\"\"},\"headline\":\"Hong Kong: Another pro-rich budget\",\"datePublished\":\"2015-02-28T12:32:49+00:00\",\"dateModified\":\"2015-03-01T11:00:06+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/chinaworker.info\\\/en\\\/2015\\\/03\\\/01\\\/9611\\\/\"},\"wordCount\":1134,\"publisher\":{\"@id\":\"https:\\\/\\\/chinaworker.info\\\/en\\\/#organization\"},\"image\":{\"@id\":\"https:\\\/\\\/chinaworker.info\\\/en\\\/2015\\\/03\\\/01\\\/9611\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/media1.chinaworker.info\\\/2015\\\/02\\\/john-tsang.jpg\",\"articleSection\":[\"Hong Kong\",\"News\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/chinaworker.info\\\/en\\\/2015\\\/03\\\/01\\\/9611\\\/\",\"url\":\"https:\\\/\\\/chinaworker.info\\\/en\\\/2015\\\/03\\\/01\\\/9611\\\/\",\"name\":\"Hong Kong: Another pro-rich budget - 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