Hong Kong’s Cash Cows and White Elephants

Irrationally exuberant
planners seek to cobble Hong Kong and Shenzhen together into a
big-budget metropolis.

Lowu-Shenzhen Border  (Photo by Derrick Chang)

lowu-shenzhenHong Kong’s urban
planners may be on their way to a new adventure, signaled by an
August 9 report by a government-linked think tank proposing that Hong
Kong and Shenzhen join hands to create “China’s
world-class metropolis.” Four days after the release,
Government Secretary Henry Tang, in a speech to the Hong
Kong-Shenzhen Co-operation Forum, proclaimed that “the
long-term objective of our co-operation is to jointly develop a
world-class metropolis comparable with New York and London.”

The report’s
authors, from the Bauhinia Foundation Research Center, advocate
creating a “joint-administrative zone” at the border
between the two cities, a high-speed rail line linking the two
cities’ airports, and increased legal “flexibility”–among
other ideas – for Hong Kong and Shenzhen.

But the broad-brush
effects of the report and its intricacies are wholly representative
of the way endemic mismanagement, poor planning and cowering before
powerful interest groups is pulling Hong Kong further from the “one
country, two systems” principle under which the territory is
supposedly governed.

An opinion piece by the
Bauhinia report’s authors in the South China Morning Post calls
for integration in order to “break out of the straitjacket
imposed by ‘one country, two systems.”’ Yet for all
the concrete it wants to pour, the report’s proposals have a
poor foundation.

The airport link (whose
cost, not included in the report, would doubtless be in the tens of
billions), they say, is needed in the event of a “natural
disaster” befalling the complex of bridges that link mainland
Kowloon to the Hong Kong airport on Lantau Island. A 1-sq km “Hetao
Development Management Authority” is also called for as an
initial “model area for a Hong Kong-Shenzhen Metropolis,”
that would operate under joint management but with Hong Kong laws and
“special convenience measures for business people.”

The stitched together
metropolis, the planners say, would be the world’s
third-ranking city economy by net GDP – they fail to mention
the more balanced per-capita effects of such a merger (the per capita
difference between the two cities is US$29,000). These forecasts and
rankings are themselves based upon econometrically questionable use
of the same average growth rate figure over the past five years, to
cumulatively determine those rates for the next 15.

Neither of the big
construction suggestions seems economically viable. There are
already four vehicular and two rail crossings over the border, as
well as a US$3.7 billion bridge in the works that will join Hong Kong
to Macau and Zhuhai. The bridge, which would itself link Hong Kong
to the airports of the two cities in question, is the 20-year
brainchild of local tycoon Gordon Wu, many of whose business
interests lie in Zhuhai.

The Hetao (or Lok Ma
Chau Loop) area is currently filled with toxic mud that would cost
billions just to clean up, not to mention the expense of building “a
special region within regions,” or administering an area that
would have far more lax immigration controls than Hong Kong.

That Bauhinia’s
findings might provide the basis for government policy is worrying.
Indeed, a spokeswoman from the Hong Kong Transport and Housing Bureau
has said, ‘We already plan to suggest building the Tuen Mun
western bypass and another link of Tuen Mun and Chek Lap Kok . . . to
shorten the journey between the two airports.’

It isn’t that
Hong Kong doesn’t require greater links with Shenzhen, or that
big-money projects are a waste of time. Hong Kong needs, and would
benefit, from better infrastructure. However, these projects are
often created outside a fair, competitive market and without proper
public representation or strategic foresight of what is actually
needed – the Bauhinia report consulted 100 Shenzhen residents
and none from Hong Kong.

This is out of tune
with the free-market fundamentals on which Hong Kong is supposedly
based – where competition induces innovation, productivity and
growth, and supply should correspond to demand – and risks
turning such projects into white elephants for the government, and
cash cows for developers.

Examples of this
abound. The Lok Ma Chau Spur Line (a new railway link to Shenzhen),
and the Shenzhen Western Corridor road and bridge project are two
recently opened construction giants that have consistently failed to
meet the projected capacity loads that might justify or recoup their
cost – HK$10 billion and HK$2.3 billion dollars respectively.

Poor planning plays a
part. The Western Corridor ends up in west Shenzhen, a disincentive
for freight trucks trying to get to Futian, the commercial heart of
the city. On the other side of the border, Lok Ma Chau villagers
complain about the inadequate planning that has saturated their
crucial bus facilities since the opening of the spur line.

Stonecutters Bridge,
currently a 2.8 billion-dollar construction site earmarked for a 2008
opening, is set to link Cheung Sha Wan in Kowloon (of which
Stonecutters Island is now geographically a part), to Tsing Yi on
Lantau Island. The idea is ostensibly to cater to the increasing
number of people who will live in new developments on the island, as
well as road freight coming from Kwai Chung Port Terminal at the
start of the bridge.

But Hong Kong’s
population growth is low and falling, and immigration laws are
strict. Its status as the region’s supreme logistics hub –
while strong – is unlikely to rapidly accelerate, as the
import-export business increasingly moves to cheaper and more direct
ports on the mainland. Paul Zimmerman, convenor of ‘Designing
Hong Kong Harbour District’ has said of the Highways
Department’s public works industry: “they’re almost
inventing excuses right now to build.”

Meanwhile, Cyberport –
Hong Kong’s “IT flagship”   and Hong Kong
Disneyland have been disappointing. The former has little in the way
of innovation and exists essentially as another property development
rent spinner, not a real IT hub. The latter has not met attendance
projections and the city’s HK$22.5 billion Disney investment is
looking less rosy all the time. Indeed, Ocean Park, the city’s
venerable amusement park and Disney rival is under new management,
has been given a face life and is seeing its attendance growing.

A city that is battling
with pollution, over-urbanization, high car taxes and a woefully high
Gini ratio –a standard measure of income inequality, for which
Hong Kong is ranked far below oligarchic Russia –should put
more of its infrastructural eggs into the average man’s basket,
by expanding fast, clean, cheap and efficient public transport like
the MTR, instead of providing underused roads for expensive cars and
developer’s wallets.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Protected by WP Anti Spam