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The thoughts of an American expat in Hong Kong living on an "underlying island"

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Wikileaks, Donald Tsang and Democracy

A very interesting analysis at China Worker on the Wikileaks cable from October 2005 regarding a conversation with Donald Tsang concerning the proposals for political reform in Hong Kong. As China Worker points out from the left, it's not just the CCP that is blocking universal suffrage in Hong Kong, but the tycoons are neck deep in it as well.

Quoting Donald Tsang Yam-kuen in the cable, "the great fear in Hong Kong is not taxation without representation, but ‘representation without taxation’ in which the non-taxpaying majority would dictate [terms] to the taxpayers.”.

China Worker beautifully points out that the median wage in Hong Kong has stagnated since the handover, while the tycoons and the wealthy have seen their wages increase (and I'll note that this includes during the crisis periods like SARS when the HK economy essentially ground to a halt.)

The ‘non-taxpaying majority’ refers to the vast majority of Hong Kong’s working population. The “extremely narrow tax base” of which Tsang speaks is a deliberate choice by government to restrict welfare spending and encourage the so-called “big market, small government”.

By welfare spending, we mean spending on items like public teachers, public doctors, and the other niceties of a functioning society. And of course the major source of taxation in Hong Kong is the non-hidden taxes on property, but that is the only tax that can be earmarked for special purposes and is off-the-table for any purpose but sweetheart projects for the tycoons and friends.

In Hong Kong’s special form of crony capitalism, with the property market comprising its rotten heart, the mass of ordinary citizens including the 1.2 million who live below the poverty line, are levied a disguised ‘tax’ in the form of excessive property prices.
This ‘hidden taxation’ is a huge burden on small businesses – rents for shops and restaurants have risen by 20-50 percent this year. And even for those in abject poverty, rents of around HK$2,000 (US$256) per month are charged for a ‘cage home’ large enough for only one person!

In most societies the power of taxation is reserved to the government, but that is not the case in Hong Kong, where even the pro-business pro-CCP shoe-shiners recognize high land prices/high rents as a form of supplemental taxation that avoids government coffers and is sent directly to line the pockets of the tycoons. Of course if this money wasn't siphoned off from the economy in to the hands of tycoons, folks who work hard at their private small and medium enterprises might get rich enough to pay taxes and might get large enough to challenge the tycoons' retail and services outlets.

This will not do, because without poor people, how can the rich people feel they are better than others? And is there any reason beyond trying to prove you're better than "them" behind the conspicuous consumption that drives high retail rents at the mega-malls owned by the property tycoons? And what executive office in Hong Kong would be complete without tea ladies and what executive's home in Hong Kong would be complete without an endentured servant from some third world country? And you can't have those "nice things" without poor people desperate to work.

And of course if you're a Vice Chairman of the CCP how can you rub shoulders with some of the richest men on the planet, if policies aren't in place to keep them rich? Especially when the richest men on the planet regularly skim the wealth from Hong Kong and transfer it to the mainland to develop land projects and other white elephants that provide ample opportunities for "gratuities" as well as the essential boost in GDP via expanision of non-productive assets.

But leave it to the folks with Trotsky on their sidebar to sum up Hong Kong's socio-economic situation so nicely.

Tsang’s leaked comments show that capitalism and the Chinese dictatorship represent an alliance resisting democratic change in Hong Kong and China.