When the world economic structure is shuffled, what is the role of Hong Kong moving forward?

(23 Apr) Wuhan virus exploded in the US as confirmed cases and deaths skyrocketed, netizens in China were once thrilled and celebrated the decline of the national power of the U.S. Finally, the time has come for China to become the world power.

However, as New York and California confirmed cases continue to rise, and Missouri leading the lawsuit against China and seeking for compensation, there lies a subtle conspiracy theory: could someone in the U.S. have exaggerated the total number of deaths of Wuhan virus? Are some places counting people who died from other diseases, or including those who died from other pneumonia in the nursing homes, making it much easier for American lawyers to ask for compensation from China? Is US President Trump taking advantage of the situation and exaggerating the figures, trying to accelerate the process of moving the production line back to the U.S.?

After all, Trump once said, if deaths in the U.S. is between 100,000 and 200,000, it would be a victory already. If death toll is under 100,000, then Trump beats the target ahead of time and can name himself the champion in leading the world to combat the coronavirus outbreak.

On the other hand, if death tolls is only around 70-80 thousand, in addition to the 800 thousand of confirmed cases, each state government can sue China separately and demand compensation subsequently, saving the White House and federal government a tremendous amount of work.This strategic plot, coupled with the memory of the “Attack on Pearl Harbor”, China might have realized that allowing its netizens to “cheer on” when the aggravating coronavirus crisis continues in US can cause itself more harm than good. 

Although China resumed work in February, many local governments were violating the law and delaying the process. To apply for resumption of work, multiple departments must issue documents, and the procedures are complicated. China's local provinces and cities are also responsible for meeting their own GDP, just like all the states in the U.S. However, the "Central Government" in China has ordered that it will never allow a second wave of outbreaks in all these provinces and cities. Besides, consumption power in Europe and the United States are in decline, orders have shrunk drastically, and orders in various industries have slipped sharply. Even with a resumption rate close to 100%, the employees are only going to work to chill in the factory because the production line is stopped. But the employers of these private enterprise still have to pay their workers regardless. How does one do business in such a politicized environment? Now that is a real conundrum. 

The toy and textile industries are hit the hardest. In April, orders fell by 20% in toy industry. Most factories in China immediately switched to manufacturing medical-grade masks, goggles, and protective clothing. However, most of the products do not meet the international standards because of the lack of quality control and experience in the field, and they were returned from many countries. Therefore, even if Chinese factories were to undergo rapid transformation, mask production can only be a temporary solution, it is by no means a long-term alternative to export products. 

Europe, US and Japan are encouraging the manufacturing industry to withdraw from China.The United States is pressing for a cold war against China, knowing that if all medical materials including masks are in China ’s hands, it can lead to the defeat of the United States. Therefore, even if Chinese private factories are temporarily transformed into mask factories, they will not be able to fill the decline of GDP in the long run. 

Hong Kong and Taiwan manufacturers have already diversified their investments long ago, and have built factories in Southeast Asia. Among them, Myanmar will benefit the most, likely to become the new Mexico in Asia.

As for the state-owned and private enterprises in mainland China, if they are looking to take advantage of the chaotic situation, they will either infiltrate Hong Kong or Taiwanese companies which are pro-KMT, or they will claim their products as manufactured in Vietnam and Cambodia, then blend in with other original products and secretly export them to the US. But the U.S. government will keep these companies under close scrutiny and implement strict measures on violation. After all, there are already a huge amount of low-quality Chinese counterfeits of Taiwan masks embossed “Made in Taiwan” on the market.

Years ago, I witnessed a group of Chinese overseas who boarded a train without tickets and when they were caught by the train conductor, they lied and said they were Japanese, placing the bad reputation of illegal behavior on them.This kind of activity has been far too common in the last two decades, it won’t be as easy for China to fool the world from now on. 

However, when the world economic structure is shuffled, what is the role of Hong Kong moving forward? The answer to that is: when both the United States and the United Kingdom are trying to restore their own factory workforce, in theory, Hong Kong businessmen in the mainland can also withdraw their factories and relocate to Hong Kong. Since Hong Kong is facing a soaring unemployment rate, catering and retail industry can no longer maintain the high volume of sales that they benefited from China’s bubble economy before.  Hong Kong must also follow the trend of industrial transformation. With the large number of industrial buildings left in Hong Kong, the first target should be transforming the manufacturing industry.  

Currently, there are half a million homeless people in the United States, and an additional 16 million people are unemployed in the recent months. Although the United States has the advanced technology, once it is decoupled from the Chinese market, a large number of household products will need to be manufactured back in the US. This will be a struggle similar to the era from 1930s-1960s when factories needed to save themselves from the declining economy. 

The cold war between the United States and China has resumed. While the American middle-class market required textiles, toys, and transistor radios to be made in Hong Kong in the last Cold War era, it is no longer the same as Hong Kong’s position and image deteriorates in the eyes of the U.S. 

Facing with the same challenge, if America today still acknowledges Hong Kong’s status of separate customs territory and recognize the benefits of “Hong Kong People ruling Hong Kong, a high degree of autonomy”, then it is not essential for Hong Kong to develop advanced technology, because Hong Kong could be subject to sanctions by the U.S. on high technology exports. 

What is left for Hong Kong is to restore the “factories era” in the 1960s, but products must be labeled "Made in Hong Kong" in order to avoid the issue of the decoupling of the US from the Chinese market. Hong Kong can join other countries in Southeast Asia. Some low-end products can even be directly exported to the United States and Europe. But the most important premise is that Hong Kong must be regarded as "different from China" by the United States and the West, which is precisely what the Secretary for Commerce and Economic Development Bureau, Edward Yau, tried to convey to the US Consulate General in Hong Kong last year, that “Hong Kong is not China”. 

But it is too late now. Hong Kong is becoming more “China-like”, its status has become very awkward. Even Google excluded Hong Kong from a U.S.-Asia undersea telecommunications cable. Manufacturers in Hong Kong are very practical. They will not build a factory unless they are certain that their products are well accepted in the U.S. market. Even if a large number of young people in Hong Kong are willing to return to working in factories, as in the case in the U.S., the opportunity is lost.

Source: Chip Tsao’s Facebook 

https://www.facebook.com/272574169481780/posts/3702288089843687/