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I lived in Hong Kong for 16 years until 2007. In 1998 and 1999 I wrote a series of political and social commentaries for a quirky institutional newsletter - quirky in that it was intended to be as much contentious, offbeat and humorous as it was informative. I was working as an editor, and I wrote the articles under the pseudonym Red Inque. I post them here for anyone interested in a look at life in Asia at the time, and in Hong Kong just after its return to Chinese sovereignty.

If economists could manage to get themselves thought of as humble, competent people, on a level with dentists, that would be splendid! -- John Maynard Keynes

A bureacrat and his money

If someone could explain the economic principles behind Malaysian government spending at the moment, please call me.

According to axioms expounded at the London School of Economics, a pub next to which I frequented for many years, the way out of a recession is to spend money. Governments need to lead the way by allocating more funding for highways, technology parks and public toilet blocks.

So far so good, because that in fact is just what the Malaysian government has done, ladelling sacks-full of capital into the coffers of all government departments and telling them to throw it about quick smart.

Which is exactly what they are not doing.

Official figures show that the government spent just 5.3% of its development expenditure allocation in 1Q99. Put another way, all levels of government have been given RM16bn to play with in 1999. In the first three months, they spent just RM900m of it.

Some may point to the first quarter traditionally being a slow one for spending, but 1Q99 spending was 25.6% less than 1Q98 spending. Meanwhile, the economy contracted 1.3% in the quarter.

This is not new news, of course. We first wrote about it in these columns in mid-May. In case you missed it, Prime Minister Mahathir was reportedly ‘upset’ with the bureaucrats. He even called them tight-fisted. As far as an excuse for the crazy situation, he blamed ‘red tape’.
He didn’t mention that much of the government spending that did actually occur in the first quarter was ‘emoluments’ – a series of one-off cash payments to public servants and other groups which of course have nothing to do with the forthcoming national election.
We expect GNP growth of 2.7% in 2Q99, followed by 6.1% and 5.8% in the third and fourth quarters, giving 3.3% for the full year. It’s a rosy scenario far removed from the gloom of 12 months ago. And it will be achieved despite, rather than because of, goverment spending.

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Posted By: Chris Champion - Category: Asia, Malaysia, History, Asia 1998-99, Politics

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Chinese embassy bombing

May 18th 1999 09:54

Major cities in China have seen their biggest and angriest demonstrations for years in response to the destruction by Nato bombs of the Chinese embassy in Belgrade with the loss of four lives. Hundreds of students chanting anti-American and anti-Nato slogans marched in Shanghai, Chengdu and Guanghzou. In Beijing about 100,000 people invaded the embassy district, massing on streets littered with rocks and broken bottles from earlier protests. -- British Broadcasting Corporation, May 9, 1999

After two days of varied official accounts, the least credible explanation for Friday night's NATO bombing of the Chinese embassy in Belgrade is that it was a pure accident. On Sunday, a US official in Washington told news agencies that the CIA had simply supplied inaccurate information, wrongly identifying the embassy as a Yugoslav weapons warehouse. It was the fourth version of events produced within several hours. -- www.wsws.org, May 10, 1999

Chinese protests Belgrade embassy bombing

A personal message for President Clinton in 1999 after the NATO bombing of the Chinese embassy in Belgrade resulted in four dead

Picture: BBC

A few sage words for President Pickle

US President Bill Clinton called a top secret meeting in the White House steam room late last week where he told the assembled interns that he was gravely concerned at the recent lack of commentary from Red Inque.

Sorry about that, Bill. We’ve been very busy crying over the rise and rise of the stock market, which we missed, but we will now turn our attention to international affairs.

The leader of the world’s most powerful nation has got himself into a pickle. Again. Although it is not clear at this stage whether public opinion rates a mention in Oval Office dialogue, we would point out that just about nobody any longer has a good word to say about American cartography.

We’re sorry to have to break this to you, Bill, but the people here in China are pretty upset with you. Some of them weren’t quite convinced by your explanation, and pictures of you writing a letter of apology didn’t really compete with pictures of the Chinese embassy dead arriving back home.

Meanwhile, you‘ve thrown the worms amongst Pandora’s pigeons when it comes to China’s entry to the WTO. It’s almost funny really – there are powerful factions within China lobbying both for and against WTO membership, and America’s double-bogey bombing has given both of them ammunition, so to speak. The conservatives in Beijing have become increasingly strident in their claims that China is selling its interests short in pushing for early WTO entry. Their outbursts are more often than not directed at Moftec, the senior government trade organisation which has overall responsibility for WTO negotiations. It was perhaps therefore not surprising that Moftec was amongst the first to get stuck into Nato, scoring some patriotic brownie points and thereby easing the pressure of criticism.

We see you nodding. They might be burning your picture, Bill, but as a fellow professional we’re sure you respect a nifty bit of political dualism.

Try not to feel too guilty, but another consequence of your crappy mappies is that people around here are suddenly very nervous about China stocks. The biggest concern is the myriad companies which will receive no direct benefits from WTO entry but whose prices have risen recently on generally bullish WTO trading sentiment.

We are telling people, however, that these should not be confused with major players whose current share prices are well justified by their fundamentals, about which we remain positive and which represent good buying value on current weakness. These stocks include COSCO Pacific, China Merchants, Shanghai Industrial, Beijing Enterprises, Zhejiang Expressway and Shenzhen Expressway.

We suggest you target some of these, Bill. You can’t miss.

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Posted By: Chris Champion - Category: Asia, China, History, Asia 1998-99, Politics

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Chill wind from Beijing

February 8th 1999 03:57

They dream in courtship, but in wedlock wake. -- Alexander Pope

One country ...

A few years ago some wit claimed Hong Kong was preparing a reverse takeover for China. That got ‘em laughing where expatriates gathered. It remained a good joke all the way up to the handover. What with Hong Kong’s economy growing at 10% and China in a deep freeze battling inflation, it was so easy to imagine more than a grain of truth in it. Then they took Queen Elizabeth’s portrait off the wall in the General Post Office.

Red Inque had a Welsh flat-mate at the time, all mid-20s rugby-playing muscle and perfect-pitch Taffy baritone. I can recall the disbelief in his voice when he came home one evening about a week after the handover and told me the Queen’s portrait had gone. He looked like a little boy and almost choked on the words. Something at the core of him had finally realised that Hong Kong wasn’t his any more.

If there is one thing that has been consistent since, it is the perception that little has changed in Hong Kong in terms of the freedom of doing business. After initial alarm when popular favourite Anson Chan was passed over as the SAR’s first chief executive for Bejing buddy Tung Chee-hwa, days and weeks turned into months after the handover, and the hand of China, heavy or otherwise, was not to be seen. Even the Chinese garrison here seems invisible. We’ve had protests and marches and Martin Lee taunting the PRC, and the most violent law-enforcement response has been to turn up the volume on Beethoven’s Fifth Symphony. It has been business as usual (recession notwithstanding), which means non-intervention from points political.

Today, we may be seeing a change. Today, more than at any time since Hong Kong was returned to Chinese sovereignty, people are looking north and wondering. Today, as reported in The South China Morning Post’s Page 1 banner heading, we have a potential constitutional crisis on our hands.

The issue to which Beijing has apparently taken exception is a Hong Kong court ruling 10 days ago which widened the interpretation of who qualifies for right of abode in the SAR. The ruling, which caught authorities on both sides of the border by surprise, threatens an inundation from the mainland, which will create undoubted problems. But the ruling was a victory for the little guy, it was a statement of the integrity of the Hong Kong judicial system, and it was a thunderous endorsement of the rule of law and of China’s one country, two systems promise.

The ruling, it has emerged over the weekend, has met with disfavour in Beijing. Mainland ‘legal experts’ have described it as a violation of the Basic Law, as an attempt by the Court of Final Appeal to extend its jurisdiction to Beijing and turn Hong Kong into an independent political entity, and, ominously, as a challenge to the National People’s Congress, the supreme state power, according to China’s constitution.

The reaction in Hong Kong has been heated. ‘If the central government over-rules or becomes angered by it, it will lead to a constitutional crisis,’ said Democratic Party chairman Martin Lee. ‘It will be a disaster if the rule of law turns out to be the rule of man,’ said Hong Kong Bar Association chairman Ronny Tong. ‘Do we throw the Court of Final Appeal’s reputation in the litter bin simply because of one ruling they dislike? If so, the price we have to pay will be extremely high,’ said James To Kun-sun, also of the Democratic Party. ‘They are putting our judicial independence in question. How can people be convinced there will not be political intervention in our judicial system?’ said Society for Community Organisation director Ho Hei-wah.

The action of Beijing so far amounts to no more than an expression of dissatisfaction, and it remains to be seen whether it follows up with stronger words or, indeed, action. Meanwhile, imagine you are a New York or Frankfurt business owner looking to move into Asia in anticipation of economic recovery. Rents are down and you are prepared to wait for the economic barometer to go up. There’s just one decision left, where to base your operation, and last week you were still tossing up between Hong Kong and Singapore. Now?

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Posted By: Chris Champion - Category: Asia, China, Hong Kong, History, Hong Kong 1998-99, Politics

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Indonesia’s lonely battle

November 16th 1998 02:53

Expendable pawns and few mates

I lived in Hong Kong for 16 years until 2007. In 1998 and 1999 I wrote a series of political, investment and social commentaries for a quirky institutional newsletter - quirky in that it was intended to be as much contentious, offbeat and humorous as it was informative. I was working as an editor, and I wrote the articles under the pseudonym Red Inque. I post them here for anyone interested in a look at life in Asia at the time, especially in Hong Kong just after its return to Chinese sovereignty.
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