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I started my journey to Hong Kong in the middle of March, in the eye of the
perfect storm.
Hong Kong had already been weathering years of deflation and unemployment, a
bird flu crisis and now the deadliest threat yet: Severe Acute Respiratory
Syndrome.
At the time, no one had a handle on just how much of an economic impact SARS
would have on an already floundering economy. The focus at the time was on
all things economic. What a difference a few months makes. With SARS, the
focus has shifted to the loss of human life and containing the impact on the
health care system.
In early March, Hong Kong was consumed with the budget. What struck me then
was the concern that Hong Kong, for another year, under the guidance of
Financial Secretary Antony Leung, would have another deficit. The budget
isn't expected to be balanced until 2006-2007.
This, of course, was before SARS. With SARS, all bets are off ?and the
impact is still being digested.
Still, it was astonishing to see the amount of hand wringing over the
budget, which tries to do the delicate ballet of raising taxes, slashing
costs and stimulating the economy all at the same time.
Hong Kong has had so much prosperity that perhaps they've taken it for
granted.
You have to understand where the rest of the world is coming from. One thing
that tends to get overlooked is that Hong Kong has no debt. Fiscal reserves
are $60 billion Canadian. That's $60 billion more in the piggybank than most
countries I can name. Of course, that's dropped from $91 billion in the
heyday of 1997, but nobody's perfect.
Hong Kong has had a very good stretch indeed, especially in the nineties,
before being buffeted by the Asian economic crisis in 1997.
They have saved for a rainy day. And that rainy day has become a storm of
immense proportions.
Hong Kong obviously has its work cut out for it in the days ahead. Over the
years I've seen the prosperity and the pain.
Hong Kong likes to call itself a world city. They didn't have to tell anyone
that. The cultural and economic impact of the territory worldwide far
exceeded its modest dimensions. One thing I've always admired about Hong
Kong is that it has always been pro-active. Despite the fact the territory
is an enormous force and carries with it some of the highest GDP per capita
in the world, it never really rested on its laurels and always seemed
worried about being overshadowed by the next big thing.
It's certainly been my favourite city and a home away from home. I can't
help wondering though, how it will fare in the latest crisis. Seeing the
decline of one of the world's great cities is painful. Still, even with the
doom and gloom, I left the territory wondering whether Hong Kongers know how
fortunate they are to have the kind of fiscal bedrock that underlies the
territory.
Hong Kong’s balance sheet has no “debt servicing" line - their house
is mortgage free. And if you live in a mortgage-free home, you are the
master of your domain. Some may argue this is not the same as being the true
political master - after all, we are talking about bricks and mortar, not
politics. But this is a gift that shouldn't be taken for granted. Hong
Kongers are the masters of their own home. Rainy days will come and go, and
when the SARS crisis subsides, Hong Kong will start with a clean bill of
health, both physically and economically.
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