The BBC interview show HARDtalk recently came to Hong Kong. The Chairman of Hong Kong Exchanges and Clearing Limited, Ronald Arculli, who is a member of the Executive Council, was a guest. You can view a clip from that program here. For a limited time, you can listen to the entire interview here.
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Thanks for the post, before this video I didn’t know that if anybody wants to hold 5% or more of the shares they would have to get the permission of the regulators.
In the video the host accused that if in fact, “the HK government is the biggest single share holder, we know the government clearly holds instruction from Beijing, and there is a problem”.
Can anyone tell me, more or less, what is (or might be) the degree of control the Beijing government have over HKSAR government?
Despite Ronald Arculli’s claim that HK is independent, to what extent does the fact that the HKSAR’s government is the one biggest shareholder of the company reflects Beijing’s control over HKSAR?
Hi Chang, I think you have raised some very educated questions there thinking on your own feet — these are the questions that each and every conscious citizen should be able to ask after they have seen this short clip. Still, it seems that no course in HKU (not even in the Faculty of Business and Economics) nor any news article will manage to answer your questions with concrete details and evidence. And of course the anchor of this BBC talk show is unlikely to demonstrate to his audience “to what extent does the fact that the HKSAR’s government is the one biggest shareholder of the company reflects Beijing’s control over HKSAR.” As long as he arouses some slight suspicion or concern in his viewers over the “Beijing-controls-HK-for-no-good” argument, his job is done and he will get paid.
In response to the journalist’s allegation that Beijing is pulling the levers in Hong Kong, Arculli said he did not see any evidence at all. It seems to me that even he himself could not possibly truly believe in such claim and he merely made that claim to defend Hong Kong’s position. I don’t think any person can reasonably deny that the Central government has offered Hong Kong many policy favours over the years since the handover, notably the Closer Economic Partnership Agreement (CEPA) and the abandonment of the requirement that Mainland tourists could only come to Hong Kong in groups.
The reporter also claimed that there is a conflict of interest for the SAR government to be the biggest shareholder (5.9%) of the Hong Kong stock market, as Hong Kong is taking instructions from Beijing. There seems to be too much conspiracy in such a claim, as there is no evidence that Beijing interferes with the SAR government’s policies in the economic realm at all.
It is a pity that this video is so short. It would have been really interesting to see what the Chairman of the Hong Kong Stock Exchange would say in response to the incisive questions of the journalist.
I doubt to a great extent about Arculli’a rejection of the journalist’s allegation that Beijing is pulling the economic levers in Hong Kong. The fact that he says Hong Kong is still independent is also very doubtful.
The recent approval of the implementation of high-speed rail link between Hong Kong and 16 Mainland cities by the Chief Executive truly reflects that fact that Beijing is pulling the economic levers in Hong Kong. “A Transport and Housing spokesman said that Express Rail Link would reinforce Hong Kong’s status as a transport, financial and commercial hub of China.” The construction of this rail link will foster communication between businessmen in Hong Kong and those in Mainland China or enable tourists to travel more conveniently between cities. “Closer economic ties” with Mainland China is a foreseeable purpose and outcome.
When the Government Press presented its justifications, it focused on other benefits to Hong Kong such as saving to passengers, cost savings to operators and enhancing road safety. However, it is clear that China is using Hong Kong as a gateway for foreigners to invest in Mainland China. Hong Kong, with its established legal system and former British colony, is still a leading international financial centre in the world. I believe there is still a long way to go for Shanghai, hence the Express Rail Link will help foster the development of mainland cities. There could be a danger that more and more investors will move their companies from Hong Kong to Mainland when the link is established. It is also questionable whether more Mainland tourists coming to Hong Kong is beneficial to Hong Kong since some of their manners are not very appropriate and respectful in foreigners’ eyes.
Truly the Chief Executive is in a hard position. On one hand, he has to listen to the voices of the Hong Kong people. On the other hand, he is subjected to the forces of the Central Government. The recent demonstration against the construction of the rail link reveals the discontent of the Hong Kong people. The fact that there is no consultation period on this matter may imply that Hong Kong is forced to construct the railway. It is also important to note that Hong Kong is responsible for the maintenance costs, hence it is hard for us to be persuaded that the benefit of constructing the railway outweighs the cost. Looking at the example in Taiwan, the high-speed train there is considered as very “messy”. Will the same happen in Hong Kong?
Whether Hong Kong is really under control of the Central Government remains unknown. We can never find out the answer to this question. However, evidence does cast doubt on the extent of control of Beijing over Hong Kong. The proposition that “Hong Kong is independent” is skeptical.
i watched the interview. Ronald sounded not much more than a meat tape-recorder.
I also don’t agree with Ronald’s claim that Beijing is not pulling the economic levers in Hong Kong. It is evident that economy of Hong Kong is nowadays largely influenced by that of Mainland. In 2004, among 873 companies listed on the Hong Kong Stock Exchange, about 260 were Mainland firms. Large percentage of the capital flowing into the Hong Kong Stock exchange is the money of investors who wants to take opportunity to invest in the profitable Mainland companies. As the Mainland’s economy becomes important in Hong Kong, inevitably the impact of Mainland government to Hong Kong’s overall economic and social system increases. Thus, Hong Kong can’t be totally independent from Chinese government’s control.
The increasing degree of control the Beijing government has over Hong Kong economy could be a factor that both pulls and pushes away the investors. Hong Kong government thus faces a challenge to decide to what extent Hong Kong should maintain its independency from Beijing.
What is wrong with HK not being independent? Is New York independent? Is London independent? Is Beijing, even, independent?
The anchor is doing something no more than arising something of news value and attracts audience attention.
The real question should be, is this holding structure actually prevents HKEx becoming a good exchange, and the government structure actually prevents HK from being a good business and financial hub.
My answer is no.
HKEx demonstrated that it is a very good exchange. And the government holding has long be silent towards the company’s running (actually the government could only be a silent shareholder in a true market economy, look at how the US government is doing after its nationalization of a lot of big enterprises). And Hong Kong has never gained true independence. The control either come from London or from Beijing, and now it come from not only the two capitals. The city is influenced by the businesses and financial institutions, and money, fundamentally.
Every city is like this now. No longer controlled simply by a government, but the government has to look at the business world and those have money and interest before doing anything.
This somehow reflects an interesting picture of the world today, that actually non-public sectors and big businesses are gaining a lot of say in policy making directly.
So what the anchor should ask is, giving HKEx is a public company, how would the company strive to offer a fair platform for all traders and businesses, and try best to prevent this position from being influenced by the shareholders and other stakeholders?