Following World War II, Konrad Adenauer, then West German Chancellor, was not thrilled with traveling eastward to Berlin. Upon crossing the River Elbe, he is reported to have often said “Now we enter Asia.” I had a sense of his sardonic view during my trip to Hong Kong: “Now I enter the West!” After the barrage of the Beijing winter, arriving in Hong Kong was magnificent. The weather was warm, people waited in line politely, they did not shout “Fuwuyuan/服务员” across a restaurant dining room to summon the waitress, the city had that western sophisticated feel which I had become less sensitive to in Beijing. HK also has doctors that speak English! I won’t go so as to say the food was “better,” yet it was a pleasant change.
Money is well on display in Hong Kong. From urban renovation on a grand scale (eg, government spending) to seeing shopping centers mobbed – simply mobbed – by locals and mainland visitors ardently shopping. Arriving with Beijing as a frame of reference for growth, all I can say is that Hong Kong is “on fire” compared to Beijing. As a “special administrative region,” Hong Kong is indeed part of the Mainland, yet still operates in much the same way as when the UK ran the show. Local news reports pegged the HK economy at growing between 18-20% last year while government stats backed by the mainland are far more modest: a paltry +5% estimate for 2010. Seems like the fun guys in Tiananmen have either some statistics problems (more later) or an unrelenting envy problem.
In any case, Hong Kong real estate remains “robust,” with sales revenues up 13% in January (m/m, not y/y) on 10% higher transaction volume (eg, price appreciation of ~3% in the month of January alone.) Recalling the amusing comments from the Tiananmen that “there is no inflation” (more later), one is left wonder why, then, has the Hong Kong government raised real estate transaction taxes (stamp tax) to 4.25% from 3.75% in order to slow a bubble? Hmm..
I was last in Hong Kong in 2000. At that time Cantonese was the dialect of Chinese commonly spoken. Then, and now, it is incomprehensible to me and hard on the ears. I was delighted, though, that many now also speak Mandarin. Asking shopkeepers and restaurateurs about this change, I learned that it has become a matter of commercial necessity for them. More and more of the visitors are form the mainland and thus Mandarin is a commercial necessity. Interesting tidbit: Families expecting the birth of a baby travel to Hong Kong for the delivery. Why? The baby is gets a Honk Kong residency status (and I believe a passport as well), something the mainland parents see as a definite positive for the youngster. Once able travel, the newly expanded family flies back to the mainland.