For more than a week protestors in Hong Kong have been shutting down key roads and preventing some shops and stores from opening. The media has been reporting the protestors’ goal as more democracy. In Hong Kong’s case this means more say in how the next leader is chosen. Democracy is a wonderful concept, but concepts don’t get hundreds of thousands of people to take time off from work and classes, sit in the broiling sun for days on end and occasionally get tear gassed or pepper sprayed. Grievances, however, do get normal people to come out and protest. What grievances are really driving the protestors in Hong Kong?
The protestors are mainly young students. Many times students protest because they feel they are getting a second-rate education or their college facilities are substandard and overcrowded. I visited a number of Hong Kong universities a couple of years ago. They are modern, first-rate institutions that are comparable to schools in North America and Europe suggesting to me this is not the problem.
My visit to Hong Kong clearly showed me two big problems that I think are really the cause of the protests. First, housing prices are astronomically high. My hotel was in “Central” and only a few blocks from the focal point of the current protests. The “suite” I booked was the smallest but most expensive room in which I have ever stayed. To get to the bathroom I needed to turn sideways when walking between the desk and the bed.
While there are no universal cost of housing price indexes, Knight and Frank, the global real estate firm, does track the prices of luxury homes and commercial real estate. Their most recent news release shows that rents in Hong Kong Skyscrapers are the most expensive in the world. Their luxury home and apartment index shows that Hong Kong is the second most expensive place to own a home in the world, after Monaco. If you have a million US dollars to spend on housing, it would buy you just 220 square feet in the best area of Hong Kong, while a million dollars buys you twice that amount of space in New York City. (see the details on page 30 of the most recent report here) Not only are Hong Kong’s real estate prices high, but the Knight and Frank report shows they are rising quickly. Real estate prices in Hong Kong have doubled since 2009. This means students and other young people are facing an increasingly bleak chance of ever buying their own home.
The second problem is that land and buildings are increasingly being shifted from commercial use to high end shopping. As a professor who primarily wears black jeans, old sneakers and a plastic watch, I found the number of high end boutique clothing stores, expensive jewelry, and handbag shops overwhelming. Hong Kong used to be known as a great place to start a business. Today Hong Kong is known as a shopping mecca. This shift from commercial to retail means fewer jobs are available with potentially high wages.
How are these two economic problems related to choosing the leader of Hong Kong? The CIA World Factbook points out that “the number of mainland tourists to the territory has surged from 4.5 million in 2001 to 34.9 million in 2012.” Huge numbers of mainland Chinese are flooding into Hong Kong. They are buying up real estate and shopping, causing dramatic economic changes.
The current leader of Hong Kong, Leung Chun-ying, supports policies favored by mainland China’s Communist party. These policies include allowing mainland China’s population to visit Hong Kong easily and spend money. This is driving the decline of local businesses and the shift to international luxury retailers. In my mind what the protestors really want is to limit real estate purchases by mainland Chinese and to make Hong Kong less of a shopping destination for mainlanders. This would slow the rise of real estate prices and preserve higher-paying jobs for Hong Kong residents.
Democracy is a fine concept and one that plays well to Western media outlets. In my mind the Hong Kong protestors are really less concerned about getting to vote on the next political leader and more worried about their future ability to ever afford shelter and live a good life.