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Wealth gap in Hong Kong

Wealth gap in Hong Kong. Prof. Stephen Cheung Dean, School of Business Hong Kong Baptist University. Content. Background Socio economics challenges Hatred toward the Rich / Business Government policy Tri-partite relationship. Socio-economic Challenges.

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Wealth gap in Hong Kong

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  1. Wealth gap in Hong Kong Prof. Stephen Cheung Dean, School of Business Hong Kong Baptist University

  2. Content • Background • Socio economics challenges • Hatred toward the Rich / Business • Government policy • Tri-partite relationship

  3. Socio-economic Challenges • High income inequality sustained (Gini coefficient - 0.43 in 2009). UN reports: No. 1 unequal city in Asia (2008) & among developed economies worldwide (2009) (2nd: Singapore; 3rd: USA) • Asset-bubble built up again (property prices restored to pre-97 level in some popular estates) • Inflation: imported (RMB revaluation) + ‘peg’ to depreciating US Dollar • Competition from first and the rapidly growing 2nd-tier cities in the Mainland

  4. UNDP Human Development Report 2009 Income Gap

  5. Income Gap

  6. Income Gap • No. 1: Hong Kong, Top 11 Countries With the Biggest Gaps Between Rich and Poor (UNDP) • Gini score: 43.4 • Share of income or expenditure (%) • Poorest 10%: 2.0Richest 10%: 34.9 • Ratio of income or expenditure, share of top 10% to lowest 10% : about 18 times

  7. Income Gap “Renowned for its high concentration of Rolls-Royces, expensive real estate, and posh shops, the Chinese special administrative region has plenty of rich who enjoy showing off their wealth. However, Hong Kong also has one of the largest publichousing sectors in the world, with about half the population living in government-supported or -subsidized housing estates. The city has no minimum wage - except for domestic helpers from the Philippines, Indonesia, and other countries. ” Business Week, October 16, 2009

  8. Number of Chinese newspaper articles with these key words

  9. Income Gap • Developed economies: high percentage of service-sector, finance & capital market and technology/high value-adding industries. • Wealth accumulation easier IF one has knowledge and/or capital • Recent asset-bubbles amplify the situation (property prices surging; restored to pre-1997 level in some areas)

  10. Income Gap • This also implies: without capital, assets or sophisticated knowledge, wealth creation is very unlikely • Unlike fast-growing period: easier promotion, pay-rise, job-change • Income gap and social inequality widened

  11. Income Gap • Non-professional / low-skilled migrant communities: most obvious • Inter-generation poverty: knowledge and capital gaps between children of the rich and the poor households are increasingly broadened

  12. Number of Chinese newspaper articles with these key words

  13. ‘Hatred toward the Rich / Business’? Yes, rising public skepticism, grievances and even confrontation against a few tycoons, business groups and sectors, particularly developers ‘Hate Rich’ is NOT in HK’s culture and mindset; decades of pro-business and ‘get-rich’ ethics developed Global Giants (e.g. Bill Gates and Warren Buffet) are respected not only for wealth and power, but more for their corporate social responsibilities and personal philanthropy

  14. ‘Hatred toward the Rich / Business’? • Problems: • ‘oligopoly’ by some developers & ‘giant’ groups • Taking huge profits, appears to be an obstacle to improve social justice, e.g. minimum wage, anti-trust, effective privacy protection, anti-discrimination etc.

  15. ‘Hatred toward the Rich / Business’? • Asymmetrical power over consumers and even government: manipulation of market price • Changing HK values: highly developed, HK people (esp. new generations) pursue goals of social justice, fair-play, consumer-rights, market transparency etc. asin other advanced societies

  16. Number of Chinese newspaper articles with these key words

  17. Consequences: Social Tensions • Income inequality + occasional economic setbacks  social tensions and discontents • Problems severed with recent inflation and asset-bubble. Simple livelihood needs for grass-roots, youngsters and even lower-middle class become tougher • Recent asset bubbles and the forthcoming inflation

  18. Policy Implications • Immediate actions needed to resolve social tensions • Re-assert the Government’s primary economic roles as ‘provider’, ‘facilitator’ and ‘regulator' to ensure a fair and open level-playing field exists • Care for the underprivileged groups

  19. Government policy • Intergeneration poverty • Elderly • Unemployed • Working poor

  20. Corporate Social Responsibilities • Business has a role to play in building a harmonious society • These are joint or shared responsibilities of the government & business in any developed societies • Only responsible to the shareholders could be an excuse • Tri-partite relation among NGOs, Govt, and business sector

  21. End • Thank You!

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