Hong Kong’s free trade priorities should trump China politics. Taxpayer dollars are better spent at home or left with taxpayers. A better option to help China develop, that works for Hong Kong, is joining the TPP – not AIIB.
Hong Kong’s first 150 years saw it create a dynamic economy with a free market ideal for attracting, and developing, global economic players. Currently lacking a focus to drive external engagement, the Administration should choose one: advancing free trade opportunities for Hong Kong.
The creation of the Asian Infrastructure Investment Bank (AIIB) and Hong Kong’s participation drives this debate. Many wondered if Hong Kong, an SAR of China, could join, or if that would be another sign of distasteful nationalist dreams. However, official announcements that Hong Kong will seek to join the AIIB suggest official blessing from Beijing is secure. It may be a brotherly, if expensive, gesture to get on board with Beijing, but Hong Kong could do better by promoting free trade that benefits all instead of joining global financial power struggles.
Development bank = corporate welfare internationalised
The stated aim of the AIIB is to advance worthy infrastructure projects around Asia, However, the political discussion suggests it will be like similar, American and Japanese dominated, global banks. “Members” demand influence based on how much money they put in and expect their national champions will have preferential access to contracts. Governments take taxpayer money and channel it to chosen firms. If merit ruled the day, no country would need to put funds in. Companies would compete solely on price and competence for contracts in projects deemed worthy, and funded, by the private sector.
“Free trade [should be] the prime economic objective of Hong Kong’s external relations
Hong Kong has no need to be playing this game with taxpayer money. Hong Kong companies have been building factories and infrastructure across Asia for decades — no ‘development’ bank required. If the Hong Kong government wants to support local construction firms, it just pours concrete locally, not in Myanmar or Cambodia, and has ring-fenced massive amounts of money to do just that.
Looking outside our city,Hong Kong has special access to China compared to other international players, but only so much can be done until China frees its economy generally. More interesting is what Hong Kong can do abroad.
Trade, not aid
Instead of bankrolling the AIIB to play global and regional politics, Hong Kong should continue to expand its role in bodies like the WTO, the Pacific Basin Economic Council and, more controversially, seek a spot at the Trans-Pacific Partnership.
While Americans discuss sitting out the AIIB, China has been shut out of the world’s largest potential trading bloc since the WTO: the Trans-Pacific Partnership. Negotiations encompassing 12 nations, including G7 nations Canada, Japan and the US, could create the largest, and freest trading block since the last successful WTO round.
Good for Hong Kong, good for China
A Chief Executive standing up for Hong Kong would seek permission to participate in the Trans-Pacific Partnership (TPP), independent of China’s participation. Hong Kong’s open market would make it a worthy participant. It could work for China, as Hong Kong’s openness has always worked as an outlet for China’s closed economy. However, China’s exclusion may suggest Beijing would not necessarily support Hong Kong entering an agreement where China is not welcome.
“A CE that stood up and publicly made free trade the prime economic objective of Hong Kong’s external relations would have a strong case to join the TPP.
While the AIIB may be the flavour of the month, the TPP has been slowly advancing for a decade. When it happens, Hong Kong would certainly be open enough to qualify and gain access to exciting growing economies like Chile and Mexico and regional counterparts like Malaysia and Vietnam. The question is if Hong Kong would be able to join given China’s exclusion. A CE that stood up and publicly made free trade the prime economic objective of Hong Kong’s external relations would have a strong case to join. A CE following Beijing’s lead to play the international corporate welfare game would have no such mandate. Hong Kongers would benefit much more from greater access to dynamic markets around the Pacific than having their tax dollars used to fund politically directed infrastructure abroad.
If this Administration seeks a clear vision for international engagement that supports Hong Kong and her people, it should be promoting a global free trade environment. This would suggest they fight for a role in TPP before funding the AIIB. Our leaders need to put Hong Kong people’s interests before political considerations.