Learnings from Hong Kong

I have recently returned from a study trip to Hong Kong. My main objective was to discover how a small trading nation on the edge of a large continent could survive so effectively. What lessons for Britain on the edge of Europe.

The lessons revolve around low regulation, very high immigration and a strong financial market.

According to Jules Brown in The Rough Guide, during the war, the cities were bombed out, the population had been reduced to 600,000 and there was a severe housing shortage. Within five years the population had risen to two million, the harbour had been cleared and the trading community was back in business. This was, however, achieved at a price, and Hong Kong lost out on the democratic reforms that were sweeping the rest of the world. The population was more interested in getting its business back on its feet.

The territory now ranks eighth in the world league of trading nations, it is the busiest container port in the world, has the largest foreign exchange reserves, and is the fourth largest source of foreign direct investment in the world.

The first boost was in 1949-50 when refugees from Communist China arrived from Shanghai to set up new businesses and provide the manufacturing base from which the colony could expand. At the same time America placed an embargo on Chinese goods sold through Hong Kong so that the territory was forced into manufacturing goods as a means of survival.

As there was nowhere for the immigrants to live and the private sector could not build housing fast enough, the government set up approved squatters' areas throughout the territory. And then in 1962 the Chinese government encouraged another 60,000 people to leave China for Hong Kong.

As China began to open up to the wider world in the early 1970's Hong Kong was able to rebuild its trade, and nowadays more than half of all China's exports pass through Hong Kong. Chinese investment in Hong Kong became substantial, in banks, hotels, businesses and shops. In the 1970's the government launched a programme of new towns, eventually housing more than 2.5 million people in very high rise buildings. These were, for me, much the most interesting parts of Hong Kong and an indication of how we could solve some of the problems of the over-heated south east of England. Forget the 'high rise' flat of the 1960's in Britain. These were ultra high, close together and surrounded by gardens and sports pitches – no graphitti or filth. The Chinese come from a different culture from us and accept very small accommodation. However, there are real lessons here that could be adapted for Britain. Vertical living is quite different. Public transport is effective. Shops and restaurants can be integrated into housing – and there is a new profession of people to attract passers by at ground level and direct them into businesses higher up!

Then came the Vietnam boat people – up to 50,000 a year for a decade – and more camps!

Since negotiations started for the hand-over to China, migration has reversed with a brain drain of educated, professional people and repatriation of many Vietnamese. Tourism collapsed after the hand-over and then came the Asian financial crisis, but so far the Chinese government has kept its promise not to interfere in local affairs.

When we were there the place was booming, visitors were pouring in for international IT and jewellery fairs, and broadband access to the Internet was being heavily promoted.

Hong Kong is very different from Europe and much of what is acceptable there would not be so here – at least not to the same degree. But, it has confronted issues such as immigration and regulation that are facing us here. And it has achieved economic growth of eight per cent for more than a decade, its citizens have enjoyed virtually full employment and gross domestic product per head is now more than in the UK.

Hong Kong offers an interesting test-bed for an alternative way ahead and an antidote to many of the assumptions made by governments and media in Europe.

It is also a warning. Whatever we do in Europe, we shall have to compete with others influenced by the likes of Hong Kong.

Richard Winfield (5/10/2000)