Insights from Hong Kong

Posts Tagged ‘Public Affairs’

Research Reports: China Financial Regulatory Updates

In China, Public Affairs on 18 September 2013 at 9:51 AM

China Financial Regulatory Updates

August 2013

Kreab Gavin Anderson Research-Asia’s China Financial Regulatory Updates offer snapshots of the latest regulatory developments that impact China’s banking, securities and insurance industries.

Banking

Major regulatory developments in August included the establishment of a PBC-chaired coordinating body on Internet financial services, the start of research into the creation of a new agency to manage China’s foreign exchange reserves, the founding of a PBC-chaired coordinating body on financial regulation, and the expansion of a pilot on bank loan securitization. To read the update, click here.

Insurance

Regulatory developments in August included the start of life insurance premium reforms, the strengthening of regulations for credit-ratings agencies, the announcement of Hong Kong’s plan to cut captive insurance company profit taxes, and the establishment of a new coordinating body for financial regulators. To read the update, click here.

Securities

In August, major regulatory developments in securities included discussion of the development of the new Futures Law, the establishment of a new coordinating body for financial regulators, the expansion of a securitization pilot for bank loans, and the signing of a supplement to the Hong Kong-Mainland Closer Economic Partnership Agreement, with implications for fund development. To read the update, click here.

Europe Ready to Cash China’s Cheque

In China on 10 February 2012 at 12:38 PM

China is prepared to invest as much as €100 billion in the European Financial Stability Vehicle – the Euro bailout fund. This is a small part of China’s US$3 trillion foreign reserves. Yet it is a large signal that China is committed to stabilizing Europe.

According to Yuan Gangming, an economist at the Chinese Academy of Social Sciences, the investment makes sense:

Helping Europe is like “hitting two birds with one stone.”

Source: http://newshopper.sulekha.com/angela-merkel-wen-jiabao_photo_1427885.htm

Did somebody say birds and stones?

In January German Chancellor Angela Merkel traveled to China. Her visit included Beijing and Guangzhou. Accompanying her was China Premier Wen Jiabao. He said helping Europe would be like helping China itself.

Why?

Europe is the largest market for China’s goods. Saving the Euro also stabilises a non-USA Dollar reserve currency. And it gives China a greater say in world affairs – and more influence in Europe. (An excellent overview of the European debt crisis is available in podcast on ‘This American Life’.)

All of this is what world leaders have been asking from China – more active participation in global affairs. It is an evident sign of the nation’s mounting influence on the world stage. And it comes at a very, very helpful time. The more stability for Europe means the more stability for the world.

And if you’re wondering how the funds will be used, I turn to humour and a joke making the rounds on-line:

A German tourist comes into a Greek hotel pays a € 100 bill on the counter and asks for some room keys so he could check if the rooms would appeal to him. The 100 € are a deposit.

The hotel owner gives him all the keys, because he has not a single guest. When the guest is gone to check the rooms the host runs to the butcher and gives him the €100 and says it’s for the outstanding bills.

The butcher goes to the farmer with the €100  and says, for the pig last week, which I still have to pay.

The farmer goes to the only prostitute in the village and gives her the €100, because he has yet to pay his last two visits with her.
The prostitute runs to the hotel and gives the owner the €100 she still owes him for the rent of two rooms, with customers.

At that moment the German comes down the stairs and says that none of the rooms would please him. He gives the hotelier the room key, takes his €100 and leaves the property.

Now the result:  All debts are paid and no one has money! This is how the EU’s rescue package works.

In Michigan, Going for Votes Using “China Scare”

In China on 6 February 2012 at 2:48 PM

The USA Super Bowl was played a few hours back (Congratulations Giants fans).  It was also a record day for Twitter. During Madonna’s half-time performance Twitter averaged 8,000 Tweets per second – and a high of 10,245 during one second of her performance. The close of the game saw a new world record of 12,233 Tweets per second. That’s a 300% increase on the game last year when an earlier record was set of 4,064 Tweets per second.

And those not keen on the sport still watched their televisions. Super Bowl is the time when major brands unveil groundbreaking advertisements. Smart Company offered a “first glimpse” into the big dollar ads.

In an election year, politicians used local advertising time on offer to insert their own ads. And one from Michigan is already causing a backlash.

Republican Pete Hoekstra is running for US Senate against incumbent Democrat Debbie Stabenow. To showcase his conservative credentials, he purports to show a girl in rural China thanking his rival for her big dollar ways. Why it’s the American politicians who have made China rich! It’s politicians like Stabenow who sent jobs overseas. He even tags her Debbie “Spend It Now.”

But when you look at the ad you will understand the mounting controversy. Even the You Tube summary isn’t flattering:

Apparently, A democrat representative and a Chinese lady who speaks stereotypical broken “Engrish” are to blame for America’s money problems.

Local Detroit television reporter Rod Meloni says:

This ad…is completely out of character for Hoekstra.

Twitter users agree – this ad is called racist and stereotypical and insulting (see a sampling of the conversation below, or search Twitter for #Hoekstra). His own campaign has defended the ad saying it was meant to be “tongue in cheek.”

As an American who has traveled throughout China, I am not surprised by this turn of events. Xenophobia stirs passions. And the fear of “Red China” is alive and well in Middle America. What I can’t understand is this:

Where did Hoekstra find an untouched rice field and a young girl still willing to ride a bicycle in China?

Comments on Twitter about #Hoekstra

He’s a locust! She’s a locust! Wouldn’t you like to be a locust too?

In China, Hong Kong on 3 February 2012 at 5:00 PM

Earlier I shared insights into the recent negative advertisement by a group of disenfranchised Hong Kong people. Mainland Chinese were called “locusts” for their overwhelming presence in this city. Originally published in “Apple Daily” the ad drew criticism and praise.

Today the newspaper reports the ad was copied and re-printed with new wording in a number of cities across China. They slam Hong Kong – right? That was my knee-jerk reaction too.

But no! Instead these ads repeat the theme – and call whole new groups of people Locusts!

Hover over each image to see what the people object to. The first is from Beijing and is against migrants to the city from other provinces.

The next was sponsored by Chinese-Americans asking for China to regulate the number of migrants to the USA.

The third ad was paid for by Guangzhou residents and lists increased water bills and infrastructure costs as the culprit.

And the last – my personal favourite – is from Chong Qing. Here the Locust refers to unscrupulous deep fry cooks, These scoundrels don’t change their cooking oil often enough. Imagine!

With all these  locust ads I am reminded of an old television commercial for soft drink Dr Pepper. In 1979 popular singer David Naughton drank soda and danced (easier said than done). He points from person to person saying, “He’s a Pepper! She’s a Pepper! Wouldn’t you like to be a Pepper too?”

With all these locusts across China, I’m forced to think. Wouldn’t you like to be a locust too?

Hong Kong at Tipping Point: Locusts, Luxury Retailer, Mainland Mums

In China, Hong Kong on 3 February 2012 at 1:20 AM

Hong Kong is at a tipping point. Relations between locals and Mainlanders are at a new low, with as inflammatory ad in popular Chinese tabloid “Apple Daily” this week portraying the visitors as locusts.

From "Apple Daily" on 1 February 2012

As reported in AFP:
The full-page advert demanded action to stop mainland Chinese “infiltration” of the territory, showing a huge locust overlooking Hong Kong’s skyline with the words “Hong Kongers have had enough!” and “This city is dying, you know?”

The ad was paid for by private donations. Reactions have been mixed – and extreme.

On one side commentators decry this portrayal as bigoted and narrow-minded. On the other proponents say the influx of Mainland Chinese is threatening local culture.

The flash points have been diverse and, well, odd.

First there was the mass protests at Dolce & Gabbana. Here a security guard waved away a Hong Kong local who was trying to photograph the storefront. He said only Mainlanders could take photos. (Rumours suggest he was protecting a Mainland government official who was buying out the store and didn’t want to be sighted.)

This double standard for photographs morphed into a series of protests, including a mass rally where thousands gathered outside the store.  See an earlier blog posting:

D&G Hong Kong: Tempest in Tsim Sha Tsui

Also in the mix are the high numbers of Mainland mothers-to-be crossing the border to give birth in Hong Kong hospitals. They come for access to latest medical care – and to give their children “right of abode.” Anyone born on Hong Kong soil is granted residency under Basic Law.

Locals are concerned that these unscheduled hospital visits cause strains on public health – which are paid for by local taxes. They also foresee a growing local population with Mainland roots. In time this will over-ride local culture.

Other instances are cited – from the increase in property prices as Mainlanders buy apartments, to the rise of signs in simplified Chinese. (See sidebar below for explanation of simplified versus traditional characters.)

When I watched the fireworks over Victoria Harbour on 30 June 1997 – the last night of British rule – I knew there would be changes in 50 years time. The agreement between Britain and China ensured “One Country, Two Systems” for that minimum period.

Yet few could predict the steady chipping away that’s occurred in the last 15 years. Slowly, slowly Hong Kong is becoming more and more a part of China. And that’s what has locals worried.

While advertisements that cast other people as locusts isn’t the sensitive, open-minded way to gain the issue attention, it has worked. Now more than ever Beijing is concerned about Hong Kong’s integration.

Tensions continue…

 

Cantonese versus Mandarin – Traditional versus Simplified

There are two types of spoken Chinese – Mandarin (Mainland) and Cantonese (Hong Kong). There are two types of written Chinese – traditional or complex (Taiwan and Hong Kong) and simplified (Mainland).

In Taiwan they speak Mandarin and write with traditional characters. On the Mainland they speak Mandarin and use simplified characters. In Hong Kong they speak Cantonese and write with traditional characters.

Simplified characters are just that – the same words written with fewer brush strokes. Below are examples where the number of lines is halved making it easier and quicker to write. The word “Men” for door takes 8 brush strokes in traditional characters versus three for the simplified version.

Simplified characters became standard in China in the 1950s as the government sought to boost education levels across a then-poor nation.  One country, two systems I understand – but one country, two written languages? That’s harder to master.

Examples: Traditional Versus Simplified Chinese

Hong Kong Budget: Numbers Any Politician Would Love

In Hong Kong on 2 February 2012 at 6:43 AM

In Hong Kong yesterday financial secretary John Tsang Chun-wah released his latest budget. Hong Kong’s financial year runs from 1 April to 31 March. The overall review of this latest oeuvre is it is conservative and focused on the short term.

John Tsang Chun-wah, Finance Secretary

On the up side any politician today would love to present a budget with a surplus.  Yet for 2012-13 Tsang is forecasting a deficit of HK$3.4 billion. He does have a history of forecasting deficits and turning in surplus. Last year he predicted a deficit of HK$8.5 billion and instead will end with a surplus of HK$67 billion or more. During his years in the role Tsang has under-estimated the year-end surplus by an average of HK$63 billion each year.

These surpluses accumulate and today Hong Kong has HK$662 billion in accumulated fiscal reserves (that’s equivalent to US$85 billion or AU$79 billion).  The US National Debt Clock shows that nation is US$1.5 trillion in debt – with an increase of US$4 billion each day. Per person that means every American owes US$49,211.65 – a staggering amount.

National Debt Clock

In Hong Kong the accumulated reserve equates to HK$93,635 per person – or US$12,074 (based on overall population of 7.07 million).  That’s a good start on the interest bill for the US deficit!

And if that $662 billion number sounds familiar – it’s the amount in US Dollars of the US Defense spending passed by Congress in December 2011.

Back to the budget!

With the strong base of earnings, Hong Kong will be able to lower taxes and provide some relief to families and small businesses.  This is a safe, no-nonsense budget proffered by a man likely to be in his last year in the role.

What’s lacking? Longer term commitments to tax relief, especially for small and medium enterprises. The conservative estimates mean the government is unwilling to spend extra. Then every year a small deficit turns into a large surplus.

In the face of growing economic uncertainty in Europe, Hong Kong has opted with a conservative budget – offering some relief but keeping the powder dry in case worse time are ahead.

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