Monday, September 17, 2012 A17

Back-seat drivers Bright future Alice Wu wonders why female lawmakers had to step back in the Legco G. Bin Zhao says the pervasive gloom today over election so their male the Chinese economy is obscuring the positive colleagues could take centre stage longer-term trends that suggest the nation is on track to become a powerhouse in 20 years omen just seem to be taking continuous beatings in this town. Eighteen years ago, Wthen lawmaker Christine Loh Kung-wai he Chinese economy is in ably happen by 2020, or when fought for the inheritance rights of indigenous decline, the stock market Chinese GDP becomes the larg- women of the New Territories and was threatened remains in a downturn, the est in the world. The renminbi will with rape. Today, single women are called “leftover property market faces strict surpass the euro and the yen to be- women”. To add insult to injury, Wong Sing-chi, a macro controls, and the come the second-strongest global lawmaker who just lost his bid for re-election, asked purchasingT managers’ index for August currency within three to five years during his campaign whether single women were has fallen to a new nine-month low, all of after it becomes freely convertible. making a lifestyle choice to be promiscuous. which is causing widespread concern. But there are too many uncertainties Sure, we have come a long way since Loh was Many people at home and abroad have to predict whether it can challenge threatened for speaking out: over the past decade, started to worry about China’s economic the dollar as the international reserve women legislators here have even enjoyed far higher prospects. For example, there is heated currency in the next two decades. popularity ratings than their male counterparts. debate over whether China will suffer a Third, it is said that Hong Kong is But those tracks in politics have been all but wiped “hard” or “soft” landing. likely to exceed New York as a global out in the Legislative Council election. As women, we I would echo the comments of Stephen financial centre within 20 years. As have somehow been trained to be flattered whenever Roach, the former chairman of Morgan China’s economy continues to grow and we hear this: behind every successful man is a Stanley Asia, who wrote recently: “These develop, the realisation of the first two woman. But never had I imagined this to be taken worries are overblown. Yes, China’s econ- predictions will provide a great boost for literally as an election campaign strategy. omy has slowed. But the slowdown has Hong Kong, and it is expected to gradually It really is hard not to notice how women were been contained, and will likely remain so become the dominant global financial relegated to taking a back seat. Two prominent for the foreseeable future.” centre. To prepare for this, Hong Kong examples were the Civic Party’s Tanya Chan and I can’t predict when the economy will needs to deepen its co-operation with Audrey Eu Yuet-mee. The Hong Kong Island rebound, but perhaps it is time for analysts Guangdong, promoting Shenzhen as lawmakers split up in this election to prop up two to look at the longer term. Where will Hong Kong’s “backyard”, and, within five men – Chan Ka-lok in Hong Kong Island and Kwok China stand in 20 years? to 10 years, cancelling the restrictions on Ka-ki in New Territories West – in a risky electoral First, let’s examine the prediction that mainland residents who want to travel to gamble to maximise votes. The women’s influence its gross domestic product will become the Hong Kong, or, if necessary, retain only the was used, to all intents and purposes, to “fluff up” the work permit system. men’s political careers. It also needs to continuously enhance And so, overnight, Hong Kong Island residents the level of financial co-operation with the went from having four women representing them in mainland. For example, renminbi- the legislature to just two. It was huge price to pay to denominated stocks need to be issued in get the professor and the doctor into the legislature. Hong Kong needs to Hong Kong as soon as possible. Chan Ka-lok had better think long and hard about continuously enhance Fourth, some predict that Chinese the cost of getting him elected; as an academic, he enterprises will make up more than half of should be familiar with a 2010 University of Chicago the level of financial the Fortune Global 500 companies in two and Stanford University joint study, “The Jackie (and co-operation with decades, and China will be a global manu- Jill) Robinson effect: Why do congresswomen facturing power. This year, there are 73 outperform congressmen?” The study didn’t find the mainland Chinese companies (79 if Taiwanese com- women to be smarter than men. What it found was panies are included) on the list, a signifi- that since it is more difficult for congresswomen to cant increase from only 11 a decade ago. get elected, only the smartest and most ambitious largest in the world within a decade, and its Unfortunately, many of these Chinese succeed and, hence, they outperform the men. economy will continue to improve over enterprises have only an advantage of The point is, women find it much harder to get the next two decades. The Economist scale and are not real industry leaders; elected. They are the ones who need the boost, not expects Chinese GDP to surpass America’s there are not many world-renowned the men – but yet, in Hong Kong, we see the reverse. by 2018, and even if China’s growth rate brands within this select group. However, Two other women who played a key role were were to drop to 5 per cent, this transition quantitative change can lead to qualitative In 20 years, China will almost certainly cal, metallurgy and other industries. People Power’s Erica Yuen Mi-ming, who was would only be delayed until 2021. There- change; these enterprises can be trans- have made significant progress in science, Although China’s achievements in the instrumental in Raymond Chan Chi-chuen’s fore, there is little need to worry about formed into truly leading multinational technology and education. Research insti- aerospace industry have been impressive successful bid, and Selina Chow Liang Shuk-yee, who current GDP growth falling to 8 per cent. companies within two decades. tutions and universities are the cradle for in recent years, experts say it is still at least stood behind James Tien Pei-chun of the Liberal Other forecasts of when the transition will Fifth, China is expected to make signif- scientific and technological development. 30 years behind the US. Party. None of these women were elected. happen include 2016 (the International icant progress in the field of science, tech- Hence, the international stature of This is changing, and along with the It gets worse: in the traditional functional Monetary Fund) and 2020 (the Chinese nology and education, and the University Chinese universities should rise: The updating and upgrading of related indus- constituencies, we went from four women to 100 per Academy of Social Sciences). However, of Hong Kong is likely to be ranked among University of Hong Kong can surely rank tries, as well as continuous national invest- cent testosterone. even if China’s total economy exceeds that the top 10 in the world within two decades. among the top 10 in the world, while ment, China will become a space power I ask not for men to give up their seats for women, of the US, it will not mean China is stronger According to a study by the science and Beijing’s Peking and Tsinghua universities second only to the US in 20 years. China but only for us – whatever our political leanings – to economically – it is harder to predict when technology think tank Battelle, China are likely to be among the top 20. may not be able to surpass the US, but it be more gender conscious and not stand by when China’s comprehensive national strength currently accounts for about 15 per cent of Finally, China can narrow the gap with will surely be getting closer. women are forced to take a back seat. will surpass that of the US. the total share of global research and the US in the aerospace industry within Thus, there is every reason to be opti- Politics is a tough world for both men and women. Second, the renminbi is forecast to development spending, and it will surpass two decades. mistic about China’s economic prospects It’s just a lot tougher for women. Take Loh again: become freely convertible within 10 years the US spending within a decade. In Without strong scientific, technologi- over the next two decades. named a Time magazine “hero of the environment” and possibly will be competing with the addition, according to figures from the cal and industrial strength, progress in this in 2007, she can only be an undersecretary. US dollar in two decades. In recent discus- State Intellectual Property Office of China, industry will not be possible. It also needs G. Bin Zhao is executive editor at China’s sions, it was thought this first step could be total patent applications were more than strong support from communications, Economy & Policy. Dr Huang Tongliang Alice Wu is a political consultant and a former associate realised in five years. I believe it will prob- those of Japan and the US in 2011. electronics, equipment, materials, chemi- provided inspiration for this article director of the Asia Pacific Media Network at UCLA

In a global economy of low interest After the election, it’s time to rates, why do saving patterns differ? crunch the numbers for reform

Keyu Jin says the difficulty of credit access in China may explain the choices of its army of savers Mike Rowse says 47 legislators must now agree on democratisation plan

ver since the integration of profligacy merely reflect Coeurdacier and Stéphane percentage-point increase in ormer US president Bill broke ranks from their fellow 16, plus any other members out emerging markets into the asymmetric demands for credit: Guibaud, we show that aggregate household savings (as Clinton said in his speech pan-democrats, acted like to cause trouble, could also put Eglobal economy began in Asians are intrinsically more economic data supports this a share of GDP) in China from Fto the Democratic statesmen, and reached a the 47 threshold at risk. the early 1990s, three striking reluctant to borrow. In that case, view. Borrowers and savers are 1992 to 2009, the middle-aged convention nominating Barack mature compromise agreement. One way to soften the blow trends have emerged: a however, the vast differences in naturally grouped by age. The cohort accounted for more than Obama for re-election that he It was the right thing to do, might be to give them one more divergence in private savings household debt – ranging from young normally face low, 60 per cent. In the US, which always gave a one-word answer but as so often in life, doing the ride on the gravy train: only rates between the industrialised 25 per cent of gross domestic current wage income, but faster experienced a 1.8-percentage- when people asked how he had right thing carried a price tag. significant reform of the core and the emerging periphery product in emerging Asia growth in future income, and point decline in aggregate managed to balance the budget Support for the Democratic functional constituencies in (the former experiencing a (Southeast Asia, mainland would ideally borrow against savings as a share of GDP, the during his own second term: Party declined in this election, 2016, with outright abolition steady decline, and the latter a China, India, Hong Kong and future income to augment savings-to-GDP ratio among the arithmetic. against the relative rise of the deferred until 2020. sharp rise); large global South Korea) to more than consumption today and to young declined by 1.25 I think we can give a similar nihilists in the People Power/ In case any of the imbalances between the two 90 per cent in the US and other invest in education. The middle- percentage points, whereas the response in answer to the League of Social Democrats stakeholders are contemplating regions; and a drop in interest Anglo-Saxon economies aged, preparing for retirement, figure for middle-aged savers question why the biggest loser fringe. a scenario without any progress rates worldwide. (including Australia, Canada, are likely to be the economy’s actually increased by about 1.5 from the recent Legislative Where, then, is the incentive at all in 2016, I can only entreat But, while global imbalances Ireland, New Zealand and savers. If asymmetric credit percentage points. Council election was none of the for any of the moderate them to think through the have preoccupied many Britain) – would reflect only a constraints are indeed Apart from accounting for political parties or individuals democrats to come to the table consequences. For the observers, few have sought to dissimilarity in taste. important, young borrowers and the global divergence in savings vying for office, but rather our again and do another deal with government, it would mean a explain the divergence in world A more plausible explanation middle-aged savers will display rates, tight credit constraints in very own Secretary for the administration? Clearly the failure to follow through on the savings behaviour. is that institutional differences in distinct patterns in constrained China might explain the Constitutional and Mainland Democratic Party, still bruised Beijing promises to Hong Kong In 1988, the household the ability to borrow dictate to versus less-constrained country’s high, and rising, Affairs Raymond Tam Chi-yuen. from the pummelling it took this people of steady progress savings rate in China and the some extent the disparity in economies. savings rate – especially as the Tam needs to bring forward year, is not going to go it alone a towards full democratisation, United States was roughly equal, savings rates across countries. In fact, there was a large rise in national savings is proposals to provide for second time. Its members will with key milestones in 2017 and at about 5 per cent. Yet, by 2007, The argument is simple: all remarkable contrast in savings attributable mostly to household democratic election of the chief want to have the cover of their 2020. China’s household savings rate economies have both borrowers behaviour across age groups in savings. This would mean that executive in 2017, and the fellow democrats in the Civic Moderate democratic forces had risen to a staggering 30 per and savers, and changes in the China and the US in the period China’s much-publicised effort Legislative Council in 2020. Party and the Labour Party. would have shown themselves cent, compared to just 2.5 per cost of borrowing affect them 1992-2009. For young Americans to boost domestic consumption Moreover, to achieve the latter, I can think of only one to be no more effective in the cent in the US. The pattern is not differently. When interest rates (those under 25), the borrowing might in fact call for appropriate he must use the 2016 Legco concession the administration real world than their extremist uncharacteristic of other decline, borrowers are able to rate rose by 10 percentage points credit-market reforms. election as a stepping stone. could offer which might bring all rivals, who would be sure to industrialised countries relative borrow more. Savers, on the more than the borrowing rate of US Federal Reserve Board The relevant provisions of the three parties to the table, and make further gains in future to emerging markets over the other hand, may be compelled young Chinese, while the chairman Ben Bernanke’s Basic Law specify that, in order that is a promise to abolish the elections. Meanwhile, if progress past two decades. to save more in the face of savings rate of the Chinese notion of a “global savings glut” to make the necessary functional constituencies could not be achieved by Savings behaviour reacts to shrinking interest income. working-age population (ages is a commonly cited explanation amendments to the electoral altogether. compromise and common changes in interest rates, which At the macro level, a less 35-54) rose by about 17 for falling world interest rates. laws, the government needs to Such a package would carry sense, there would be a strong have fallen steadily over the past credit-constrained economy percentage points more than the Credit constraints in fast- muster a two-thirds majority of its own risks. The concession temptation for anyone with a 20 years to today’s record-low (with a large mass of effective savings rate of their American growing developing economies all Legco members. Given that needed to secure the extra votes grievance to take their levels. But how can savings borrowers) could then counterparts. may be the reason why the glut we now have 70 legislators, that from the pan-democratic camp supporters onto the streets. patterns be so different – often experience a fall in the savings Another implication of this emerged in the first place. means 47 votes, and Tam hasn’t could result in the loss of some That is not “Hong Kong opposite – in globalised rate as borrowing rose. However, view is that the steep rise in got them. In order to get them, of the pro-establishment votes people ruling Hong Kong”. economies that are integrated in a country with a large mass of savings in China is largely driven Keyu Jin is lecturer in economics he is going to have to do a deal among the existing functional Rather, it would mean Hong into world capital markets? effective savers, the savings rate by a rise in the savings rate of at the London School of Economics. with someone, and that will not seat representatives. Kong was becoming The answer may be that can rise, rather than fall. This middle-aged Chinese (rather Copyright: Project Syndicate be easy. After all, in no fewer than 16 ungovernable. So get out there, credit markets are more asymmetry in savings patterns than a fall in the borrowing rate The 2010 reform package, out of the 30 “not very Mr Tam, and get those 47 votes. developed in advanced might thus reflect the simple fact of the young). Conversely, the which led to the addition of five democratic” functional It’s all a matter of arithmetic. economies than they are in that credit-constrained fall in savings in the US is largely > CONTACT US extra seats in the geographical constituencies, the member emerging countries, particularly economies are less sensitive to due to higher borrowing by the Agree or disagree with the opinions constituencies and the creation concerned was returned Mike Rowse is the search director in terms of the degree to which drops in the cost of borrowing young (rather than a fall in on this page? Write to us at of five new “super” seats in the unopposed this time. Indeed, at of Stanton Chase International households are able to borrow. relative to less constrained middle-aged Americans’ savings [email protected]. functional constituency section, least one constituency has seen and an adjunct professor at the Of course, one might argue that economies. rate). If you have an idea for an opinion could only be passed because no contest, and several others Chinese University of Hong Kong. Asian thrift and American In joint research with Nicolas Indeed, of the 20.2- article, email it to [email protected] the Democratic Party members nearly none, since 1997. Those [email protected]