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delegates to the Commonwealth Conference on Development and Human Ecology in Hong Kong went on a tour of the resettlement estates and were reported "in- credulous and shocked by the government slums". "Hong Kong" the report noted, "has a reputation abroad for being a pioneer in providing low-cost housing on massive scale, but the delegates were appalled to see the human cost of such a crash building programme." Another sign of government dereliction in this area has been its consistent refusal to intervene to keep down the price of land and of rents a relatively simple matter, since the Crown owns all the land (except in the New Territories) and the government is the biggest proprietor of housing in the Colony."
The housing situation is a major factor in Hong Kong; intolerable living conditions foster despair, crime and narcotics addiction. That the Government should attempt to pass off its abysmal housing record as some kind of achievement is a cruel decep- tion. What the administration has done, in effect, is to construct the minimal dormi- tory accommodation for a super-exploited proletariat. This is no more than a ration- al capitalist calculation. It is not a social service.
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The Government may point to the resettlement blocks and claim it is concerned with the well-being of the population. But how is it possible to believe this claim when in the late 1960s, at a time when there was a regular annual surplus in the budget expenditure on social welfare (both directly and via subventions to voluntary organisations) accounted for a mere 1 per cent of total Government expenditure, less than annual public expenditure on stores?71
No reference to social
Hong Kong and Britain
jg marume.
In an age of general decolonisation, one must post the question; why has Britain not terminated its colonial rule over Hong Kong?
Hong Kong has brought several advantages to Britain. The most important of these in the post-war period has been its contribution to London's reserves and thus to the pound. In fiscal 1969-70, while the London-appointed colonial administration was spending HK$19,204,686 on its Social Welfare Department, the Colony's bud- get showed a surplus of HK$618,670,000. The bulk of this was sent to London to bolster the UK's reserves and support the pound. By 1972 one American source cal- culated that Hong Kong was providing as much as half all the backing for the pound." The Financial Times estimated Hong Kong's contribution to be in the re- gion of £900m. This sum was made up of both official Government contributions and reserves of private banks in the Colony which were channelled back to the met- ropolis. This arrangement depended directly on not spending the surplus on the welfare of the Colony's inhabitants. In fact it represents an almost unprecedentedly "pure" example of a direct transfer of such a kind from a colony to the metropolis. Hong Kong lost out further on the transfer through successive devaluations of sterling. But it is clear that this is the price it had to pay London for "protection”. For some time Hong Kong was obliged to keep 99% of its reserves in London.
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This figure was subsequently lowered to 89%. In the early 1970s pressure began to build up from two directions: from the ruling group in Hong Kong, who were dis- pleased at seeing the Colony's reserves dwindling in London; and, as Britain entered the EEC, from London's Common Market partners, especially France, who wanted e the end of the post-sterling area. EEC pressure allowed the Hong Kong ruling groups to exercise unprecedented leverage and withdraw probably over half their holdings from London, so that by mid-1974 the sum detained in London was gene- rally reckoned at about £350-400m.73
The second advantage of the Colony for British capitalism has been as an escape route in time of crisis. The 1967 devaluation of the pound which led directly to the fall of the Labour Government was caused by a number of factors, but the flight of money from the City to Hong Kong was undoubtedly one of the most important if not the most important factor.
20%?
Thirdly, financial and industrial operations in Hong Kong itself, and from Hong Kong as a base, have been consistently highly attractive. In effect Hong Kong has functioned like an offshore island of the UK, where taxation is less than half what it is in the metropolis, tax evasion is simple, wages are rock bottom, growth double, treble and even quadruple what the motherland can show and there are no such problems as exchange controls and suchlike. In addition, the Colony was in the centre of what was the fastest-growing economic area in the world for the best part of a decade, Southeast Asia. The control which Britain could exercise over the Government, too, was not something to be despised. As well as the direct control over the money supply, insurance rates, etc., detailed above, the London-Hong Kong group could also exercise a controlling influence over the Colony's stock market. As noted above, in 1973 this hit a point where it was turning over the third largest sum of any stock market in the world; the Hang Seng Index quadrupled in a matter of months, and then fell down below its starting point just as rapidly. With.the average quoted worth of every company on the exchange at £405m at the top of the market, it is not hard to realise that hefty fortunes were won and lost — in an atmosphere and conditions which could no longer be reproduced in the metropolis, or indeed in any leading capitalist nation. Those in command of this operation made the best of it, and London adopted a conspicuously hands-off approach until Jardine Matheson utilized their suddenly vastly increased paper wealth to swoop and take over a London property company, Reunion, in a £50m deal. This set alarm bells ringing in the City and signals from London that powerful interests in the Colony would not be able to manipulate future deals of this kind seem to have been an element in bringing the Hang Seng Index crashing down shortly afterwards.74
The value of Hong Kong to London and British imperial interests can also be clearly seen through the remarkable case of a mammoth banking-shipping-oil combine, which also illuminates the staying power of a now submerged, but still potent, old Empire network. After the Second World War and the victory of the Chinese Revolution, the Hongkong & Shanghai Bank was the first British bank in the Colony to go into financing industry and shipping in a big way. Through backing a then penniless Shanghai émigré fleeing the Revolution, Y.K. Pao, the Bank owns 40% of World-Wide (Shipping) Ltd, the group headed by
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