Pearl of the Orient: The Unprecedented Challenges
Hong Kong is in danger of losing its light in the dark
The Pearl of the Orient, Hong Kong, is a legendary place. It is a small island with over 7 million people, which is not even shown on a map. Although, appearing mysterious to most westerners, the idea of living and working in Hong Kong appeals to many people, notably students.
Undoubtedly, Hong Kong is the financial hub of Asia. GDP in PPP was $351.119 billion in 2011, while its per capita GDP ranks the 7th in the world (World Bank, 2011).
Despite the strong economic performance and the picturesque neon lights on the harbour sides, Hong Kong is now coping with the toughest and most ambiguous challenges after the financial crisis in 1997.
Deteriorating Wealth Gap
Before 1997, Hong Kong was a harmonious place. People worked hard and the booming economy brought wealth to everyone. Unfortunately, these are bygone days. After the transfer of sovereignty from the United Kingdom to the Chinese government, in addition with the financial crisis, everything went wrong.
The first fatal mistake was the failure of the housing strategy. A decade ago, the government decided to end its supply of public housing in addition to limiting the supply of land. These two decisions triggered off bitter condemnation across the city. Even though the majority of the population opposed such decisions, the government insisted, which planted a time bomb: Soaring property prices.
Recently, the time bomb is about to explode or even has exploded. Due to the limited supply of land, developers only develop high-class residential project for greater return. In addition to the surge of buyers from China, property prices have been pushed to a record high. The median household income is about HKD20, 000 (£1600) a month and by simple calculation, it would be extremely difficult for the average person to afford a flat (which cost about HKD 9000-12,000 per square feet) in Hong Kong.
Source: Demographia International Housing Affordability Survey: 2013
The lack of social mobility and wage stagnation disables new generations to take the lead in society. University graduates’ wages remain almost constant over the past ten years (sometimes even lower), given that the inflation rate is around 2%.
The Hong Kong government has given too much attention to the development of the financial industry whilst neglecting other industries that would diversify the economy. Most high school graduates choose to study a business-related degree in the tertiary institution, which has created a huge surplus of labour in the financial sector. Whilst some of them have talents other than business administration, they are reluctant to enter other industries because there is a job hierarchy and more importantly, there is no room for them.
To revive the economy in Hong Kong, the government has to take prompt action to solve the aforementioned problems before more problems occur. Otherwise, Hong Kong is in danger of losing its light in the dark.