China'S VAT Rebate As Business Model
@ Mon 17 November 2008 12:49 PM HKT by Tom LeggNot going to hear any of the local "Free Market Religionists" protesting Zhongnanhai reinstating a lot of the export-based VAT rebates that had been rolled back in the last 11 months. Why? "Free Market Religionists" are not concerned in the least with government regulation that skews the market place and reinforces misallocation of resources AS LONG AS THE REGULATION PUTS THE MONEY IN TO THEIR POCKETS. The minute the government threatens their cash cow models developed through the misallocation of resources (e.g. LegCo[?] investigation of fraudulent business practices by local investment brokers/banks), you'll hear the "moderately conservative" locals squeal like pigs being skewered.
From the link:
While they do not suffer a direct hit by earning euros, even firms that invoice in dollars are finding that their competitiveness has been eroding along with the weaker euro.
A manager named Weng with Yuandong Feather Co Ltd in the eastern manufacturing mecca of Wenzhou, said margins for exports had turned negative; the firm was filling orders only in the hope that customers would stay loyal for when conditions improve.
"Right now, we are trying not to accept any new orders, because once we accept them we are doomed to lose money," said Weng, who declined to give his full name.
The government has already increased export tax rebates for a range of mainly labor-intensive products, hoping to avoid widespread layoffs that could undermine social stability.
How can anyone take seriously the media narrative pushed that Zhongnanhai is boosting domestic consumption, when it's maintaining economic incentives in place that encourage local companies to maintain profitability by shipping abroad rather than losing money by servicing the domestic economy?
Being Thankful For China In Hard Times and Consumer Confidence
@ Mon 17 November 2008 12:07 PM HKT by Tom LeggMany local pundits (i.e. the local elite represented in the media) are saying that Hong Kongers should be thankful that their economy is backed by the mainland. This seems like a plausible position to put forth as "conventional wisdom", especially as it fulfills many of the politically correct pro-CCP[?] media narratives.
Yet, when you look at consumer confidence levels across Asia, which two countries/administrative regions fall dead last?
MasterCard said only Vietnam, China, India and Singapore were optimistic about the first half of next year.
Confidence fell most heavily in Hong Kong -- to 41.8 from 83.1 six months ago -- and in Taiwan, where the Index fell to 32.1 from 71.3.
So what do Taiwan and Hong Kong have in common? That their economic hearts have been ripped out by their local economic elite and transferred to the mainland economy. If anyone in Taiwan is still under the delusion that greater cross-straits ties will bring economic prosperity through mainland investment and tourism in Taiwan, just look at Hong Kong. It's not going to happen. You'll end up with media narratives praising the ties (*cough* CEPA *cough*) as the source of economic growth, yet any real analysis of the data shows that the media narratives being peddled are just more hollow propaganda to justify the maintenance of an economic system that enriches their fellow elite while gleefully sacrificing the livelihoods of the local masses.
Chinese Internet Culture and The Shape of Censorship
@ Fri 14 November 2008 9:33 AM HKT by Tom LeggThere are those CCP[?] shills who will repeatedly tell you that mainlanders don't mind the great internet nanny and that it's merely a cultural preference for anonymous posting on forums instead of blogging and shooting for the fame and glory of being the Chinese Drudge or InstaParrot. That there is no connection between mainland censorship and media control and the dominance of blogging by pre-CCP-certified media personalities, like pop singers and actors/actresses, instead of the thriving political bloggers in the U.S. (p.s. It's a good sign, that you've been away from the US political internet too long when you think Drudge or the InstaParrot are important figures. They are like so 2004. Only ones reading Drudge are reporters too lazy to write their own stories and some media spin artists waiting for the next piece of Rona Barrett jourmanalism.)
But with another dissenting voice taken in on charges of subversion of the state for wanting political accountability of government officials to the public, let's be clear, the reason that mainlanders aren't shooting to be the next Rachel Maddow or Jane Hamsher is that they are more likely to be the next Hu Jia or Guo Quan than become loved by millions.
Viva La Free Market
@ Fri 14 November 2008 9:18 AM HKT by Tom LeggWould you want to invest in a business where an authoritarian government was in charge of whether you could or could not have customers? Especially in a period where the authoritarian government said "no, you cannot have customers"? Me, neither.
But actions have consequences and at least 4 thousand Hong Kong construction workers have just been screwed out of jobs directly through the actions of Zhongnanhai putting up travel restrictions on mainlanders going to Macau.
Officially the news will be that it's just a matter of securing funding, because the last thing you want to do when your future profitability is directly dependent on Zhongnanhai's blessing is to piss off Zhongnanhai. But Sands' Singapore project is going ahead while Macau's isn't. Why? It's not the funding, but the bleak outlook for profitability due to mainland travel restrictions.
And with the Hong Kong government's job #1 being maintaining high land prices to keep local property tycoons flush with cash, you can't expect the private sector to be creating construction jobs in Hong Kong. So the best you can hope for is more Lucky Draw gift bags in the form of government-funded infrastructure projects whose value is at best questionable from decision-makers whose infrastructure decisions over the last 10 years have been abominable.
Rewriting Stats Pre-election?
@ Sun 9 November 2008 1:05 AM HKT by Tom LeggBuried in the news on US unemployment is the interesting rewrite of history.
Job losses in August and September turned out to be much deeper than initially estimated by the Labor Department.
Employers cut 127,000 positions in August, compared with 73,000 previously reported, while 284,000 jobs were axed in September, compared with the first estimate of 159,000 jobs.
Although President-elect Obama definitely has to look forward with solving US economic problems, after cleaning out unqualified ideological GDumbya-appointed hacks from Treasury, Commerce, and Labour, it would probably be worthwhile to review all of the data from the last 8 years to see how much of it was manipulated purely for political ends.
Because even stretching back to before 9/11 as former Team GDumbya-member John Dilulio pointed out, the US has been run for the last 8 years (and the next 2.5 months) by the Mayberry Machiavellis.
PRC's Demands on Obama
@ Fri 7 November 2008 1:52 PM HKT by Tom LeggSo there is news that Hu Jintao is seeking a meeting with President-elect Barack Obama at the upcoming G20 meeting in Washington, D.C. The news reports suggest the usual Party Line laundry list from living in the CCP[?]'s fantasy world that Taiwan doesn't enjoy de jure independence and doesn't have scads of PRC missiles aimed at them to blow them all to blood and dust to the fantasy story that the PRC's trade imbalance with the US is based upon "free trade". *titter*
What was the CCP's first reaction to news of factories closing in the Pearl River Delta? Pushing through policies to increase domestic consumption of these goods and imports in order to counter act the decline in sales power of Americans? Did they reduce tariffs on imports from Hong Kong, so as to eliminate the need for massive smuggling operations on electronics (like hard drives and upscale mobile phones)? Sadly, no. Zhongnanhai swiftly reversed course and reinstituted higher VAT rebates for exports in order to reinvigorate those businesses predicated on the economic model of government handouts allowing them to undercut foreign competition in the export market. Go Free Trade!
It's time for the PRC and the clueless, fat and lazy cartel tycoons of Hong Kong to recognize that the era of big exports to the US based on pushing the US consumer in to further debt is over. That economic model is Done! Ruined! Fucked! The only way for the US consumer market to return is for US consumers to have jobs and increasing wages. (This model is also one that HK tycoons should try out in their own backyard in place of the crap model thrown down during SARS, where they kept their own waistlines fat and pushed all of the troubles on the poor and middle class. {insert graphic from Bauhinia Foundation on wage levels over time that was tossed out to support the temporary make workers dependent on government infrastructure projects while refusing to take actions that would allow the market to naturally create construction jobs as per Macau.})
So stop the fuckin' whingeing about Obama not favouring "free trade" when your own fuckin' business model is wholly-dependent on the non-existence of free trade in your home market. Help put Americans back to work and put a paycheck in their pockets and they'll be much more likely to return the favour in the future.
Proposal for Hong Kong's Great Firewall
@ Fri 7 November 2008 1:44 PM HKT by Tom LeggBuried deep inside the SCMP[?] today to hide the news from a population already souring on the Donald, there is a story about our local Publication Prudes wanting to force local ISPs to implement filtering of the internet in the name of "protecting the children".
So who didn't see that coming in the rush towards peaceful re-unification with the mainland? Yeah, so they MAY drop the proposal this time due to opposition, but you know that they'll get back to it, because it's much easier to have a dialogue when only one side has access to communications media. Isn't that right, Donald?
What's Too Narrow?
@ Sat 25 October 2008 11:23 AM HKT by Tom LeggWith news reports surfacing once again about the HK SAR government running a budget deficit, the discussion begins once again whether HK's tax base is too narrow. Unsurprisingly none of the business chambers seem to ask the question whether HK's economic base is too narrow, which results in the tax base being too narrow.
After all there is an income tax, but HK's business groups are so active in depressing wages for the majority of Hong Kongers, that large segments of the population never earn enough to pay income tax.
And then there is the high land price system in place to ensure that no new competition enters the market to challenge the status quo land development tycoons. During the time when the friends of the new Speaker of LegCo[?] and his brother the Secretary for Home Affairs were throwing bombs and driving down land prices, Li Ka-shing took the opportunity of low prices to switch from plastic flowers to land speculation. Now he's getting no bid port security contracts from the US government and operates the Panama Canal.
In the mid-to-late 50s, during the squatter resettlement operations, large quantities of land in Kowloon and the Kowloon side of the New Territories were opened to cheap land development deals. Check the histories of a couple of the other tycoon families in Hong Kong and you'll find their rise to fame and fortune came on this wave of cheap property.
With the switch of colonial allegiances in 1997 from London to Beijing, these tycoons fulfilled their sense of entitlement to be not only the top of the Chinese hierarchy in Hong Kong to be the top of all of the hierarchies in Hong Kong. And it is this sense of entitlement, which has steered the government for the last 10 years to ensure that barriers to entry in business is kept high to protect the socio-economic elites from new challengers. It also has led to the economic stagnation where the "growth" comes via simple asset inflation, e.g. Link REIT increasing rents in retail space that was formerly publicly operated and replacing stores owned within a community by non-elites with large chains that suck the money out of the community and in to the hands of the socio-economic elite.
Will the HK SAR government finally implement laws and policies that reduce the barriers to entry to the market (like high land prices and economic cartels) or will they continue to pursue a lucky draw gift bag policy of one-time hand outs hoping to keep their popularity ratings high enough to avoid the hook from Zhongnanhai to drag them off the stage?
Please don't hold your breath waiting for Donald Tsang Yam-kuen to lower those barriers to entry that might challenge his big business supporters and breathe life in to HK's stagnant business environment. You might as well expect the spoiled, petulant child, Darth Bowtie, to engage the League of Social Democrats and Confederation of Trade Unions and the Neighbourhood and Workers' Service Center representatives in a legitimate and open dialogue *staring disappointedly at ATV's Michael Chugani* and for the pro-Zhongnanhai business elite to support abolishing LegCo's Functional Constituencies and liberalising the ballot access requirements for the Chief Executive.
Electioneering Republican Style
@ Wed 22 October 2008 5:34 PM HKT by Tom LeggAfter listening Hong Kong CE Donald Tsang Yam-kuen wax rhapsodic over the British Conservative and Republican parties while talking with ATV's Michael Chugani, I figured I'd do a quick post going around the horn on Republican election shenanigans that won't make it to big news coverage.
First comes the news out of Michigan that when faced with the prospect of legal discovery in the midst of a lawsuit over illegal voter registration practices, the Michigan state Republican Party folded.
The settlement acknowledges the existence of an illegal scheme by the Republicans to use mortgage foreclosure lists to deny foreclosure victims their right to vote.
In the state of West Virginia, newshounds catches a West Virginia Gazette story on electronic touch screen voting machines flipping votes for Obama in to votes for McCain in early voting.
Three Putnam County voters say electronic voting machines changed their votes from Democrats to Republicans when they cast early ballots last week.
This is the second West Virginia county where voters have reported this problem. Last week, three voters in Jackson County told The Charleston Gazette their electronic vote for "Barack Obama" kept flipping to "John McCain"
Meanwhile out west in a sign that the voter registration accusations against ACORN were merely a smokescreen to deflect attention from Republican abuses, the head of Republican voter registration in California was arrested for registration fraud concerning his own voter registration.
Mark Anthony Jacoby, who owns the firm Young Political Majors, is accused of registering himself to vote twice— in 2006 and in 2007— using the address of a childhood home in Los Angeles where he no longer lived.
The Secretary of State's Office said Jacoby used the address to meet a state requirement that signature-gatherers sign a declaration stating that they are either registered to vote in California or are eligible to do so.
And it sounds like Jacoby has a history of dirty tricks when it comes to voter registration and political petitioning. And he isn't the only one with that sort of history that is crawling back out of the woodwork this October. Salon reports on McCain payments to Republican dirty trickster Nathan Sproul, who was last noted four years ago registering voters and then tossing Democratic registrations in to the trash.
And with discovery avoided the full depth and breadth of Republican efforts towards voter disenfranchisement won't be known, possibly ever. In the meantime we can hope that President Obama cleans up the political stench created by Team GDumbya at Justice and the FBI and that justice for American voters will be served before the next Federal election.
Moving Business Back To HK?
@ Tue 21 October 2008 3:09 PM HKT by Tom LeggDuring another of those interminable meetings about how to weather the economic storm washing up on the shores of HK, one of the unexpected items discussed was moving some of the low-skilled operations back to HK from the mainland. Why? Basically because of mainland attitudes about how to make a short-term profit, including rampant intellectual property theft and governmental shakedowns of businesses in the name of taxation and customs.
There may be some "well-respected" *snicker* lawyers who will urge you to keep doing business in China, but it's a pain in the ass when you realise that said folks are expecting you to spend more on the lawyers than on actual research and development. And even then legal action is like playing whack-a-mole and can only stop your ideas rolling off the production lines of those that you can catch to sue, by which point the CDs with your schematics and technical and cosmetic drawings have been passed to others and the knock-off toolings have disappeared in to a black hole. (Even at TDC's HK Electronics Fair, the most blatant of the rip-off manufacturers will send their booth staff out to photograph their competitors' booths to figure out their next "innovations". Caveat emptor means never having to worry about government interfering with your production lines, no matter if you produce knock offs, sub-junk securities, or food to poison the masses and their animals.
So moving some of the operations back to HK would reduce some risks of items being prematurely copied and redistributed on the mainland. And it would reduce a lot of the hassles dealing with the shakedowns by the CCP[?] and their cadres via taxation and customs.