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With the economic policy of positive non-interventionism pronounced dead by the Hong Kong government, some prominent economists and politicians are questioning whether it ever existed. They have put forward the argument that positive non-interventionism was nothing but an ideological myth that owed its prominence more to its numinous label than to its tangible consequence. This, perhaps, should be an issue of greater concern to economic theologians than to the business community and the general public. Known for their pragmatism, Hong Kong people have never shown much interest in ideology. However, they understand well that the bedrock of Hong Kong's prosperity consists of the rule of law, a low and simple tax regime, an efficient and clean government bureaucracy and strong support from the mainland. These elements, working together, have created a predictable environment in which private enterprises, both domestic and foreign, can thrive. Despite the policy name change, there is no indication that the Hong Kong government is going to tinker much with the economic and social fundamentals that have been widely credited for Hong Kong's growth from a trading outpost to an international financial centre. In the process, Hong Kong has contributed to, and benefited from, the dramatic economic development on the mainland in general, and in the Pearl River Delta (PRD) region in particular. As the economy in the PRD region progresses into a new phase of development, Hong Kong government planners and business leaders are calling for a reassessment of Hong Kong's role. The new Guangdong plan emphasizes the development of the services sector and the development of the PRD's western region, which is less well connected to Hong Kong. Moreover, the growth of the PRD's services sector could pose stiff competition to many traditional services that have been provided by Hong Kong. What's more, the competitive edge Hong Kong enjoys over the PRD cities in such areas as logistics and other trade services is also seen to be eroding rapidly. To many economists and commentators, the threat of marginalization seems real enough. Hong Kong's government has apparently seen the need to take a more active and direct role in setting the direction for the future development of the economy, while keeping the underlying social and economic system intact. The government long ago identified financial services as a major pillar of the Hong Kong economy and was seen to have intervened directly in various occasions to ensure the property development of the banking sector and the capital markets. The legislated merger of the four stock exchanges in the 1970s was a case in point. Acting to head off a potential banking crisis, the government has, on a number of past occasions, employed public funds to bail out failing financial institutions, despite warnings against the possible perpetuation of moral hazard among banks. In more recent years, the government has sought to strengthen and widen the supervisory power of the Securities and Exchange Commission and tighten the securities law to minimize abuse by unscrupulous listed company executives and market intermediaries. Meanwhile, the Monetary Authority of Hong Kong, the de facto central bank, is taking the initiative to discuss with its counterpart on the mainland in exploring new business opportunities that could enhance Hong Kong's role in the development of the mainland's financial sector. Adhering to its stated policy of remaining "small," the Hong Kong government will never have too great an influence on the economy. But past experience has shown that a little positive intervention may not turn out to be such a bad thing, as long as the fundamentals remain unfettered. (China Daily October 10, 2006) |
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