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Some thoughts about
Hong Kong’s recent economic
development
KC Kwok
Honorary Senior Research Fellow
School of Economics & Finance
University of Hong Kong
28 November 2012
Agenda
Major changes around us unprecedented challenges
unprecedented opportunities
The HK economy – structural changes; “深
层次矛盾”
A brief discussion of
some important financial market
developments
some economic concepts and thoughts
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新世纪头十年，是世界政治经济格局大调整、大变革的十
年，是中国工业化、城镇化快速发展的十年，也是我们全
面推进改革开放和现代化建设取得辉煌成就的十年。
这十年，中国经济年均增长10.5%，国内生产总值由世界
第六位上升到第二位，对外贸易总额由第七位上升到第二
位;产业结构优化升级，农业基础不断加强，中西部地区发
展加快，各具特色的区域发展格局初步形成;各项社会事业
蓬勃发展，城乡居民收入大幅提高。中国经济实力、综合
国力、人民生活水平迈上新台阶，国家面貌发生了翻天覆
地的变化。
中国国务院总理温家宝, 2011年9月14日
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Source: Economist
The Global Financial Crisis
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Source: FinancialCrisis.org
资料来源: www.money.cnn.com
“As long as the music is playing, you’ve got to get up and dance …We’re still
dancing.”
Chuck Prince, former Citigroup Chief Executive, July 2007.
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US Property Price Index, 2001-2012 August
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Source : MIT & Standard & Poor’s
… My dad died when I was young. He was a good and
decent man. I still remember a couple of things he would say
that have really stuck with me. ‘Son you are either part of
the problem or part of the solution.’
Regrettably, President Obama has become part of the
problem,...and Mitt Romney is the solution.
The other thing my dad would say is that every generation of
Americans leaves their children better off. That's the
American legacy.
Sadly, for the first time in our history, we are on a path which
will undo that legacy. …
Paul Ryan, 11 Aug, 2012.
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Source: Google
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Source: European Trade Union Confederation website
“OCCUPY WALL STREET”
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Source: Wall Street Journal
Will China escape the middle-income trap?
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Source: “China 2030”
China – Exports and Imports value index
(2008=100)
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Source : CEIC
China – FDI Inflows and Outflows
Source : UNCTAD, “World Investment Report, 2012”
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Number of people with higher education
China
(Junior College & above)
US
(College, Degree or Above)*
1964
2.89
18.43
1982
6.20
44.74
1990
16.12
61.37
2000
45.71
89.29 (101.54)
2010
119.64
111.76 (126.63)
(mn)
*People 25 Years and Over ; ( ) People 18 Years and Over
Source: China Statistical Yearbook 2011 & U.S. Census Bureau
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Source : The Daily Beast
Paul Romer’s New Growth Theory
"Old growth theory says we have to decide how to allocate
scarce resources among alternative uses."
"New growth theory says, 'Bullxxxx!' We're in this world, it's
got some objects, sure, but it's got these ideas, too, and all
that stuff about scarcity and price systems is just wrong.'“
“People are reasonably good at forming estimates based
on addition, but for operations such as compounding that
depend on repeated multiplication, we systematically
underestimate how fast things grow.”
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Size Matters
China is a world on its own; momentum built up in a continental
size economy is not easy to reverse
The rolling stages of development
The resilience to downturns
The speed, non-linearity and complexities of development
The attractions of sizeable markets to investors - the
opportunities for scaling up, agglomeration and economies of
scale; and the opportunities and potentials for innovation and
ideas
China and the Rest of the World have to learn how to live with
each other
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Source: OECD Development Centre
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Source: OECD Development Centre
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GDP per Capita
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Source : CEIC
Impact of Mainland’s development on
HK
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The rapid growth & evolution of the Mainland
dimension in HK’s economy & businesses
The Mainland factor in making HK more global
Growth in Mainland-related demand on HK’s
producer services
 consumer goods & services; healthy, education, social
services
 fixed assets


Rapid structural transformation of the HK economy
winners & losers; income disparity
 competition & cooperation
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Cross boundary issues in public policy
Hong Kong searching for its role
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Supporting China’s economic integration with the world
 financial services; trade; investment; “going out”
Headquarters economy
From helping China’s hardware development to promoting
China’s soft power ?
 social services, rule of law, anti-corruption & open
government, governance, NGOs, etc.
 the overseas Chinese network
 nurturing mutual understanding & cooperation between
China & the rest of the world
HK’s 4 “pillar industries”
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Source: C&SD
Making HK’s financial centre international -Equity funds raised through HKEx
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Source: CEIC & HKEx
Hong Kong : RMB Deposits
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Source: HKMA
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Source: World Economic Forum website
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Source: InvestHK, Regional Headquarters Survey
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Source: InvestHK, Regional Headquarters Survey
Hong Kong dealing with some of its “deeprooted contradictions”
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Inflation & asset price bubbles
Income disparity
Coping with demands from and integration with the
Mainland
Internal restructuring - rising sectors vs declining sectors
Conservation vs development
Values and expectations of the younger generations vs
traditional beliefs
Ageing & population policy
Property Price, Rental and Nominal GDP
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Source: CEIC
Age Profile of HK’s Population
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Source : C&SD
Population Aged 15 and Over by Age Group and
Educational Attainment, 1996
1996
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Source : C&SD
Population Aged 15 and Over by Age Group and
Educational Attainment, 2011
2011
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Source : C&SD
WORLD DEBT GUIDE
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Source: Economist
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Source: Economist
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Source: Economist
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Source: Economist
Yield on US 10-year treasuries
Source: Wall Street Journal website
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Source: Andrew Filardo & James Yetman, BIS
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M2 – EU, USA and China
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Source : CEIC
中国 : 贷款与M2对GDP 比例,
1978 – 2011
资料来源:CEIC及中华人民共和国2011年国民经济和社会发展统计公报
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China & Hong Kong – M2
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Source : CEIC
Some conceptual and theoretical issues
“The Great Moderation”, “Financial Triumphalism”& the
“Minsky moment”
“irrational exuberance” – what should monetary policy
target?
George Soros – theory of reflexivity & “the Super
Bubble”
Reforming financial market regulations and supervision
Rethinking the “Washington Consensus”, capitalism, and
the welfare state?
Debates about “austerity”, tax cuts, and “QE”
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资料来源: YouTube
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资料来源: YouTube
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资料来源: YouTube
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