Tuesday, January 7, 2020

Hong Kong riot


Related to the trade war?

Trump told us he had nothing to do with the riots in Hong Kong. It reminds me most thieves never say they have stolen nothing.

It is rumored they were helped by CIA or NED (National Endowment for Democracy) and it is too far-fetched to me. However, CIA does not have a good record. It could be a bargain chip for the trade war. When the rioters sang American songs and waved American flags, you can guess easily who financed the riots. What happens if Americans sing Chinese songs and wave Chinese flags in America? We would call them traitors and most likely they are paid by the Chinese.

It could be assisted by Taiwan to demonstrate that “One Country, Two Systems” does not work.

It could be by the advocates for Hong Kong independence thinking naively that U.S. would send a carrier to help them. That would not happen as U.S. does not want to risk WW3. If the protesters think they have more freedom in the colonial time, think again. Most high officers including the governor had been appointed by United Kingdom. My late father told me he knew some high officials who swept the street in London.

It could be a combination of all three. The protests were obviously well organized and these three have the most motives and benefits. There are more than a thousand of rioters dressed in same custom and color. 

Hong Kong's root problem

After 10 years, a Hong Kong college graduate can double his salary but the cost of an average apartment has been tripled; he can never buy an apartment. Every city in every generation has its problems. The high costs of housing in Silicon Valley and Vancouver (due to Chinese immigrants) are not affordable for most local youths. We have not seen similar riots on this problem.

Hong Kong cancelled the estate taxes and it led to influx of money from foreign countries and most are wealthy Chinese. They invest in real estate but not in research / development that would create good-paid jobs.

About 50 years ago, Hong Kong had only one decent university and now there are about 10. With more college graduates chasing the limited number of jobs, employers do not have to pay them a lot.

The government has not done enough to suppress the abnormal rise of real estate prices, which has widened the wealth gap. It is partly due to the developers and real estate owners do not want to see their investments falling in prices. Now the prices are falling as many would leave Hong Kong.

The major problem of Hong Kong is housing and it spreads to most other sectors. However, Hong Kong still has a lot to go for it such as affordable health care, highest longevity, 15th GDP per capita, free education, first-class airport and world-class public transportation. The advantages of being political stable and good legal control are shaking. I expect that the unemployment rate will be tripled with many small businesses closed due to the riots.

The revision of extradition is just an excuse to me. Many countries have extradition agreements, so the criminals cannot find shelter in foreign land. China does not want to publicize the criminals (many are corrupted officials) in Hong Kong. So far, Hong Kong riots are not outrageous. If it happens in other countries such as U.S. there would be plenty of lootings and the police would have used real bullets especially when their lives have been endangered.

My predictions

Obviously the results are bad for Hong Kong especially for the youths. Tourism will be hurt to start, foreign investments will be withdrawn and more rich HK folks will migrate. The government will contribute less for social services such as housing and the job market will be far worse than today. Without tourists and a stable financial center, I bet Hong Kong will be in an economical depression. The rioters today will suffer economically tomorrow if they cannot immigrate. Does U.S. have enough of these ‘trouble makers’?

As of 8/2019, China has not sent soldiers or police force to suppress the rioters. China tries to avoid the blame of violating human rights from many countries headed by the U.S. Hong Kong is not important to China as it was used to and China wants to avoid the world misguided opinions. China can control Hong Kong easily by turning off the water supply and the electricity supply without firing a single bullet. Recently, China stops pilots who were on strike to fly over China. It could lead Cathy Pacific to face bankruptcy.

A democratic society should let both sides to express their opinions peacefully. Today, the expedition revision is not the reason for the riots. Contrary to many beliefs from Hong Kong, I believe in the police force to maintain the peace of society and the rioters (not the peaceful protesters) should be punished.

Most overseas Chinese agree with me while most folks in Hong Kong especially the youth do not.

This video has not been shown by the Western media for the own purposes.

Update 8/2019. China announced that they will make Shenzhen a financial center and hence replacing Hong Kong. Hong Kong is digging her own grave. To me, a small group (about a thousand) started the riot for their own agenda that will be found out soon, and many have followed without thinking of the consequences of their actions.

Update 9/2019.

The riots became worse. Several subway stations had been damaged. Eventually the citizens of Hong Kong will pay for it with rising fares. Hong Kong is entering a prolong period of recession with layoffs. Tourism is pretty down to the lowest level for a long while and foreign investments have been shaken. Many citizens are planning to migrate to other countries. Hence, the property values will be down. The government will have less money to fund public housing and the problem of affordable housing remains. The major real estate developers and owners will lose a lot and they deserve what they have been trying to maintain the high cost of real estate.


Update 11/2019.
·         U.S. Congress passed a Hong Kong Human Rights and Democracy Act. Should China pass a law on accusing U.S. allowing constant shooting of her citizens against each other?
·         The West’s media are biased. Some rioters are criminals to me. If they do this in U.S., many will be shot for sure. Hong Kong police so far has been very restrained. I can see at least two cases, the police should shoot to protect their lives.
·         Some rioters waved U.S. flags and sang U.S. songs. What happened if it happens in the U.S.? Most likely they would receive rotten eggs and called traitors.
·         Hong Kong has been used as a pawn in the trade war with China to me.
·         China has rescued Hong Kong many times from SARS to economic crisis. China may not do this again this time. Hong Kong used to be 30% of China’s GNP and now it is only 3%. If Hong Kong cannot maintain the number 3 position in global financial centers, it will be in a recession for a long time. Many businesses suffer from the riots have gone bankrupt.
 
Update 12/2019.
·        China does not allow U.S. warships to port in Hong Kong. We have to find another ports for fuel.
·        Hong Kong will be in a long recession without tourists and moving financial centers to Macau and/or Shenzhen. China had saved Hong Kong from many crisis, but not this time.

·         
      Many companies plan not to hire the recent college graduates due to they supported the riots. One smart lady encouraged them to start new businesses with many successful examples. From my estimate, for every 10,000 businesses, only 1 is successful. The successful one will not hire the ‘trouble makers’ and 9,999 of them will have miserable lives selling stuffs in the street and they would be wiped out by the next riot. Another example of law and punishment.


The above article is from my book "Trade War with China".

# Filler: The most powerful word
I was deeply moved by the family members of the church victims forgiving the shooter.  I wrote a brief post: "Forgive" is the most powerful word in every language and in every culture. I forgot it until I received a response from Jim.

"Tony, Without even knowing it, you made the greatest comment I have seen on here--and it had nothing to do with investing. You mentioned somewhere that "Forgive" is the most powerful word in every language. Wow.

I shared that with my children. Financial commentary is easily forgotten, but that will stay with me forever. Thank you for that. Jim"

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