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Hong Kong: One country, two fortunes

Hong Kong youth face fewer opportunities than mainland Chinese peers.

The contrast between the TV pictures coming from Beijing and Hong Kong on October 1 could not have been more stark.

In the Chinese capital, as the country celebrated 70 years since the founding of the People’s Republic, thousands of troops goose-stepped to upbeat military music and Tiananmen Square bristled with cutting-edge missiles and tanks.

About 2,000 kilometres (1,216 miles) to the south in the semi-autonomous city of Hong Kong, anarchy reigned. Angry groups rampaged through the Asian financial hub, smashing up mainland-Chinese businesses and throwing petrol bombs at police.

The demonstrations began in June after the government proposed a bill that would have allowed suspects to be extradited to the mainland. Even though the government has withdrawn the bill, the protests have become a forum to vent frustration at the government for falling living standards and the perceived erosion of rights. More protests are planned for the coming days.

A growing number of analysts say Hong Kong’s exorbitant housing costs and a widening wealth gap have demolished young people’s chances of progressing and are direct causes for the unrest.

In many ways, the contrasting images on National Day reflected the changing fortunes of the two parts of China. Whereas once young people from the mainland flocked to Hong Kong to find high-paying jobs people in Hong Kong looked down their noses at these economic migrants. But now many fresh graduates on the mainland say they’re better off where they are.

“I am optimistic about the future in the mainland,” Yu Chang, a 30-year-old media professional in Shenzhen – just across the border from Hong Kong – told Al Jazeera.

“Personally, I think there are more choices living here compared to Hong Kong. I can choose to live, eat, and commute for cheaper,” said Yu, who used to work in Hong Kong but eventually moved to Shenzhen due to the high cost of living. “It would be hard to live on a similar budget in Hong Kong.”

More billionaires, more inequality

Hong Kong enjoys social and political freedoms not found on the mainland, a legacy of the “One Country, Two Systems” framework that Beijing agreed to when it took back control of the territory in 1997 from the United Kingdom.

That status has made Hong Kong (HK) an investment magnet and a gateway for capital for and out of China, creating immense wealth and one of the world’s biggest financial centres. According to Forbes magazine, which compiles lists every year of the world’s richest people and places, Hong Kong has the highest number of billionaires of any city in the world, bar New York. But that wealth is concentrated in the hands of only a few.

Many of Yu’s peers in HK are fed-up with having to pay exorbitant rents for tiny apartments while their wages and job prospects stagnate. According to the British charity Oxfam, rents for small apartments grew by 273 percent from 2007 to 2017, far outpacing wage growth over the same period.

Sarah Luo, a 29-year-old professional who moved to HK from the mainland a few years ago, understands why its youth feel glum.

“The gap between the rich and the poor in HK is very large, land is extremely expensive and living conditions are poor. In such an environment, the young generation are really heavily burdened,” Luo told Al Jazeera. “The housing problem is a serious livelihood issue that will affect social stability and progress.”

The Our Hong Kong Foundation, a not-for-profit group, says liveability in the territory is deteriorating. It is one of the most densely packed places in the world, with 27,400 people per square kilometre, against 7,400 in neighbouring Shenzhen. On average, a person in Hong Kong gets 170 square feet (15.7 square meters) to live in, compared with 300 square feet (27.9 sq meters) for someone in Shenzhen, the foundation said in a recent report.

Part of the problem is the close ties between large, powerful property firms and the government, also known as the Legislative Council, says Andrew Sheng, a distinguished fellow of the Asia Global Institute at the University of Hong Kong and a former chairman of the Hong Kong Securities and Futures Commission.

“Unable to push through tough reforms to subdue vested interests, as China’s government is doing on the mainland, the (Legislative) Council is also vulnerable to the influence of real-estate developers eager to block measures that would lower prices, such as the allocation of land for more public housing,” Sheng wrote in a recent opinion piece in the Project Syndicate website.

Another big issue in Hong Kong is inequality. The territory has long been one of the world’s most economically unequal places. The government has tried to alleviate the problem by reducing the tax burden on the lowest income earners; implementing a statutory minimum wage in 2011 which has since been increased further; and improving the social safety net for the elderly and working families.

But the problem has not gone away and appears to be getting worse.

“Levels of inequality in Hong Kong remain high, both by historical standards and by international comparison. Over 10 percent of the population lives in poverty (with the poverty line defined as half of the median income for a given household size) – even after the policy measures – and this ratio has increased since 2014,” the International Monetary Fund said in a report published last December.

Left behind

Another reason for the discontentment is that while living conditions have stalled, incomes and lifestyles in the mainland are rising and improving much faster than in Hong Kong.

Since 1978 – when China’s then-leader Deng Xiaoping embarked on an ambitious reform drive to introduce market forces and open the economy to overseas investment – mainland China’s gross national income (GNI) per person, a measure of the size of the economy, expanded more than 47 times, according to World Bank figures. Official Chinese government statistics show that average wages at state-owned enterprises increased 14 times over roughly the same period.

Meanwhile, Hong Kong’s per capita GNI expanded by about 13 times in that same time.

Four decades ago, when Deng’s reforms started, the differences between Hong Kong and just about every city in mainland China were vast.

By the turn of the century, people in Hong Kong were travelling to work in a world-class transit system, enjoying developed-world incomes, universal healthcare and lucrative career prospects.

At that time, even the largest mainland cities had limited infrastructure with economies based on the manufacturing of low-end goods.

Since then, Hong Kong has not changed much. But mainland cities such as Beijing, Shanghai, Shenzhen, Guangzhou, Chengdu and Qingdao are now virtually unrecognisable and have closed in on Hong Kong.

“There are probably more differences between Shanghai and its neighbouring provinces than there are between Shanghai and Hong Kong,” Simon Cartledge, author of A System Apart, which tracks the economy of Hong Kong after the 1997 handover, told Al Jazeera.

“From being a society where everyone thrived, Hong Kong became a place where the rich got richer, the middle classes found it increasingly hard to cope with rising costs, especially for housing and education, and the lowest paid … found themselves falling behind once again,” wrote Cartledge.

The diverging economic fortunes of Hong Kong and the mainland have given rise to similar feelings about prospects for the future.

A 2017 report by the UK-based non-profit Varkey Foundation found young people across China are the most optimistic in the world, with 93 percent feeling hopeful about the future.

In contrast, a survey by Gallup International last year ranked Hong Kong as the fifth-most pessimistic place on earth with nearly half the respondents feeling they would be worse off in 2019 than 2018. And a 2018 survey by the Hong Kong Playground Association found that one in three youths experienced “mild to extremely severe” levels of depression.

Johnson Yeung, a 27-year-old Hong Kong resident and member of the executive committee of Amnesty International feels that Hong Kong’s outlook isn’t going to improve, especially with Beijing’s tightening grip over the territory.

“The mainland government wants a hyper-capitalistic economy but without losing its tight control and regulation. But for an open economy to thrive, it needs freedom,” Yeung told Al Jazeera. “The success of Hong Kong is based on the common law system and a liberal society. The future doesn’t look promising to many.”

– AlJazeera

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