Ten years might not be a
proper time for retrospection, but memories do not fade easily.
Joseph C.K. Yam, chief executive of the Hong Kong Monetary Authority, is one
of the many Hongkongers who have experienced critical periods in the region's
history, and has much to reflect upon.
A trader gives a victory salute after record highs on the
Hong Kong Stock Exchange on Monday. The Hang Seng Index closed up 565.84
points at 21,582.89. [AFP]
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A firm believer in a free market economy, Yam always sang the praises of Hong
Kong's economic system.
But one day in 1998, the free market disciple suddenly found himself cornered
and had to intervene.
A financial crisis swept Southeast Asia in 1998, and Hong Kong, a small, open
economy, could not escape from it.
With negative GDP growth in the first two quarters of 1998, Hong Kong
experienced its first recession since 1986.
Asset deflation, property prices plunging 50 percent, and unemployment at
more than 5 percent, Hong Kong's economy was severely affected.
What made matters worse was that speculative funds attacked the Hong Kong
dollar several times pushing up interest rates. It led to depreciation in
currency, and fixed assets.
The Hong Kong government was forced to intervene in the foreign exchange and
stock markets.
"It was difficult for a firm believer in a free market economy to interfere.
I felt so sad at the time," said Yam in a recent interview with Chinese media.
"But it was no longer a free market because of the manipulation. We decided
it was time to act," Yam said.
The efforts of Yam and his colleagues saved Hong Kong's economic system from
going down the drain.
Donald Tsang, the then financial secretary, admitted that the decision to
intervene in the market, had led him to tears.
Hong Kong's return to the motherland under the "one country, two systems"
model initially raised some political doubts, which preoccupied the minds of the
people who thought less about the economy.
The thought of a long-term economic recession had never occurred to them,
until the Asian economic crisis.
This was followed by the September 11 attack on America in 2001 and the
outbreak of SARS in 2003.
But Hong Kong has managed to withstand it all.
Ten years after its return, the economy still remains the freest in world,
for 13 successive years, according to ratings of several international
organizations.
It has registered an average GDP growth of 7.6 percent for the past three
years.
Last year, it recorded the second largest number of initial public offerings
in the world, second only to London. Also, it remained one of the key banking
centers in the world, registering 138 banks.
Its status as one of the world's busiest air and shipping hubs has also been
enhanced. It handled the most number of containers between 1992 and 2006.
Logistics turnover has also increased, contributing 5.2 percent to Hong Kong's
total economic output in 2006.
Most notably, it has also succeeded in shifting from a light manufacturing
economy to a service-oriented economy. The service industry contributed 90.7
percent of its GDP.
Hong Kong's return to the motherland has in no way affected its vigor. In
fact, it has increased.
Its free economy, sound legal system, and effective market supervision have
been key factors contributing to its success.
The recovering world economy, especially the rocketing economic growth of the
Chinese mainland, has added impetus to Hong Kong's growth.
However, there are few problems.
While its economy fuels a growing population of ultra-rich, the disparity
between the rich and the poor has widened.
In a study by Oxfam and the Chinese University, the number of "working poor",
or those living on less than HK$5,000 ($640) per month, or half of Hong Kong's
median household income, had grown to about 350,000 or 5 percent of the
population in 2006.
Donald Tsang, the chief executive of the Special Administrative Region,
listed the widening income gap as one of the key problems the government has to
tackle in a recent public speech.
Also, after years of evolution and maturity, Hong Kong is facing difficulty
in finding new economic growth sectors.
And what does the future hold for this former fishing village? The answer
lies with the people of Hong Kong and the motherland.