Creation: Proletarian Liberation Struggle Association Political Economy Group
Recently, as the New Year approaches, Hong Kong’s economy has once again received bad news. Financial Secretary Chan Mo-po announced at the Legislative Council meeting in early December that the fiscal deficit for this fiscal year is expected to reach 100 billion HKD (Hong Kong dollars), marking three consecutive years of deficits exceeding one hundred billion. When Chan Mo-po read out a new fiscal budget earlier this year, he predicted a deficit of 48.1 billion HKD, but in just over half a year, the government’s estimate doubled. The Hong Kong SAR government has also counted the issuance of new government bonds as revenue; even under these conditions, the fiscal deficit still exceeds 100 billion HKD. Once the “Asian financial center,” which once held over ten trillion HKD in fiscal reserves—enough to cover more than two years of government expenditure. However, in recent years, with the economic crisis brought by the pandemic and the increased control by China, the Hong Kong SAR government has expanded its Keynesian deficit budget policy, leading to a sharp decline in reserves, even insufficient to sustain a year’s expenditure. In this regard, Chan Mo-po has lost confidence, shifting the goal of restoring fiscal balance from within three years to “after several years.” Many bourgeois scholars have expressed concern, warning that if this trend continues, the Hong Kong SAR government may soon go bankrupt.
So, according to Chan Mo-po, how should Hong Kong achieve fiscal balance “after several years”? The answer from the Hong Kong government is twofold: increasing revenue and cutting expenses.
Regarding increasing revenue, the Hong Kong government’s approach is very similar to that of its Beijing overlords: the “three engines” of consumption, investment, and exports. Recently, the Hong Kong SAR government has been trying to expand into Middle Eastern and Southeast Asian markets, and China’s central government has urged major banks to lend to mainland enterprises, encouraging them to list and invest in Hong Kong. In the tourism industry, which has long been expected to be a major source of income, the central government has also implemented policies allowing Shenzhen residents to visit Hong Kong with “one permit, multiple trips.” However, the Hong Kong government also understands that as the working people’s purchasing power continues to decline, these measures are unlikely to be a “long-term solution.”
So, will the Hong Kong government truly “cut expenses” in response to the fiscal deficit? In fact, as a bourgeois government, the Hong Kong SAR government’s fiscal deficit is an inevitable measure, and the so-called “cutting expenses” completely contradicts the interests of Hong Kong’s monopolist bourgeoisie. It is known that in 2001, when facing a fiscal deficit, Hong Kong implemented pay cuts for civil servants to save costs. Recently, the income of Hong Kong civil servants accounts for over 20% of the government’s recurrent expenditure, and some bourgeois economists have suggested that Hong Kong learn from its central government overlords: “kill the dog to eat the meat.” The Hong Kong SAR government has not responded to this suggestion. Some bourgeois scholars have analyzed that even if all civil servants’ salaries are cut by 10%, it would only save the government about 11 billion HKD—insignificant in the face of a large deficit. However, regardless of whether civil servant wages are cut, the salaries of accountable officials in the Hong Kong SAR government (similar to China’s “Discipline Inspection Commission”) have actually increased by 1.8% compared to last year, and the salaries of senior officials have been raised again this July. For example, Chan Mo-po’s monthly income has reached 400,215 HKD, and Hong Kong Chief Executive John Lee’s monthly income is nearly 470,000 HKD—these are just the official figures. The fiscal deficit may surprise Hong Kong’s bourgeoisie, but it is a tool that the Hong Kong bourgeois government cannot abandon in its plunder of the people. In this regard, the Hong Kong SAR government is becoming increasingly similar to the central government in China. Since John Lee took office, the Hong Kong government has accelerated real estate development, seeking large amounts of land to build housing. Former Chief Executive Leung Chun-ying once warned, “Beware of oversupply,” warning that continuous land creation could lead to persistent deficits. However, John Lee’s response was: “Land creation and supply are two different things.” When the government continuously creates land, it assesses overall housing needs based on data, and when needed, releases land to build housing units for citizens to “settle and live,” otherwise it can serve as land reserves. Land creation takes several years; stopping land creation could lead to supply imbalances when land is needed. He emphasized that land supply must be controlled by the government; otherwise, land dominance would fall into the hands of “interest factions,” which is not in Hong Kong’s best interests. In response, Leung Chun-ying retorted, “Should we draw more reclamation zones on the map?” They claim to act for Hong Kong citizens, but in reality, they are just representatives of the bourgeoisie. Their “remote battles”—whether considering “national budgets” or “people’s housing”—are ultimately for the benefit of Hong Kong’s bourgeois government. As an extremely corrupt city, Hong Kong’s construction industry is almost the only industry, and this industry is entirely a tool used by the bourgeoisie to expand investment and plunder the people. Regardless of whether Hong Kong’s land increases, the impoverishment of Hong Kong’s working class will not change. The government’s continuous increase in real estate investment policies, like China’s central government, benefits only a small group of real estate speculators. The ever-growing fiscal deficit can only be borne by Hong Kong’s working people. The laboring people crammed into pigeonhole-like housing will eventually realize that eliminating the fiscal deficit cannot rely on the Hong Kong government; only by thoroughly destroying the bourgeois dictatorship can it be achieved.
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