SCMP Thursday, November 15, 2001

Careful approach needed to cooling of hot-headed few
LAU NAI-KEUNG
This year has been an economic nightmare for Hong Kong and it looks likely that the horror is going to last some time. As post-September 11 events unfold, the United States has already announced that the first quarterly negative growth since 1991 was recorded in the third quarter of 2001. The US economy is expected to enter into another quarter of negative growth, leading to an official recession.
On Monday, Chief Executive Tung Chee-hwa warned of a looming recession in Hong Kong as well, with negative growth expected in the next few quarters.
Following the 1997 handover, the political-economic climate in the SAR has been such that there is a lot of tension in the community, manifesting itself in frequent protests.
With the deteriorating economic situation, massive lay-offs, rising unemployment, and the forthcoming Chief Executive election accompanied by calls for Mr Tung not to seek re-election there is mounting fear that the increasing tension might soon lead to some kind of social unrest.
The initial results of the latest census were released recently, indicating the Gini coefficient, which measures the disparity between a society's rich and poor, has reached a new high of 0.525, up from 0.518 five years ago.
Although government officials pointed out the figure was lower than in Britain, others emphasised it was among the four worst in the world. Some scholars have urged the Government to take measures to alleviate present economic hardships and narrow the income gap.
Any impartial observer would agree that inequality among people in Hong Kong is indeed very serious, and has been growing for the past 20 years. This is not a welcome trend, but to a certain extent it is inevitable as Hong Kong transforms itself into a service economy.
Income among industrial workers is comparatively even, but in a service economy the income of a waiter, for example, is a lot lower than that of a banker, even though both are service workers. Currently, 85 per cent of Hong Kong's gross domestic product comes from the service sector. Such a high dependence on the service sector is quite rare anywhere in the world, and significant income inequality is unavoidable.
A crude comparison of the Gini coefficients of different economies is also misleading. Hong Kong boasts a relatively strong safety net: half of the population lives in heavily subsidised government housing; medical services are practically free, as is education. Social-welfare services are adequate. When the worst comes to the worst, there is public assistance to guarantee subsistence. In addition to the earned wage, there is a large, hidden, social wage. In economic terms, a social wage is a transfer payment. The Government taxes the rich to subsidise the poor. The true measure of income disparity is the after-tax, after-transfer distribution of income, which is not reflected in the Gini coefficient.
This can account for the stability of Britain, where the Gini coefficient is even higher than that of Hong Kong, while in a banana republic a Gini coefficient of 0.5 might indicate the country is on the verge of a revolution. We cannot simply draw an alarmist conclusion about Hong Kong based on the Gini coefficient.
Admittedly, there is tremendous frustration and anger among the Hong Kong public. Mr Tung and his top officials have fumbled around and made mistakes, and their overall performance for the past four years can at best be described as average. Therefore, one easy target is the Tung-led SAR Government, and one easy issue is Mr Tung's probable seeking of a second term. Between now and the forthcoming Chief Executive election in March next year, there is bound to be great controversy in Hong Kong, stirring up public sentiment and galvanising people into pro- and anti-Tung camps.
During the long holiday around National Day on October 1, more than 50 passengers who missed the last train for the Lowu border crossing staged an angry protest. This was unusual. There are always some people who miss the last train, but usually nothing happens. It is these kinds of incidents we have to watch out for in the coming months. People have short fuses in the current climate, and their suppressed anger and frustration may suddenly flare up. If not handled properly, things might turn ugly.
The police and the public seem to pay much attention to people, such as April 5th Action Group member Leung Kwok-hung, who mount almost daily protests over anything and everything. Apart from attracting news-hungry reporters and TV cameras, these isolated few can do no harm. The fact that they routinely protest tends to trivialise protesting itself and render it no more than a safety valve. Their seemingly radical action is, in fact, reactionary in its literal sense, because it tends to protect and preserve the status quo rather than destabilise it.
What is remarkable about protests, Hong Kong-style, is that, if left by themselves, they will quickly fizzle out. Aided by the media, Hong Kong people tend to get excited quickly. But as the news value fades, they quickly get distracted by other things and all the enthusiasm dries up. No one follows up the issue and few even remember it it is business as usual. This explains why, with an average of more than two protests per day since the handover, Hong Kong remains stable.
It is foreseeable that there might suddenly be a mass outburst, sparked off by some innocuous minor incident. If authorities handle such incidents with tact, as they did in the border-train incident, there should be little cause for concern.
It is worth pointing out such innocuous minor incidents might include routine protests. They have become a popular cultural icon here which some people strive to preserve. When our immigration officers threw out potential protesters from abroad arriving for the Fortune Global Forum in May to demonstrate against the mainland's treatment of Falun Gong practitioners, hardly anyone raised an eyebrow because many regard them as troublemakers. On the other hand, some people will get upset if police use what they claim to be reasonable and necessary force on local protesters. Maintaining law and order and social stability is of paramount importance in difficult times like these, but it is also tricky. It is incumbent upon the police to exercise restraint, wisdom and creativity.
Lau Nai-keung ( launaikeung@graduate.hku.hk ) is a Chinese People's Political Consultative Conference delegate.