Bank of China: Hong Kong and Macau will be "hit hard" by global crisis
Beijing (AsiaNews/Agencies) - The global financial crisis will have a significant impact on the economies of Hong Kong and Macau, and could cause political crises there. This is the warning from Zhou Xiaochuan, governor of the central bank of China (BOC), who yesterday in Shenzhen participated in a meeting for representatives of the two areas, in preparation for the national people's assembly and for the people's consultative political conference, which will be held in March.
Zhou recalled that the economies in these two special areas are very vulnerable. This is shown by the local repercussions of the problems of the Bank of East Asia and the heavy losses suffered by the underwriters of bonds for the failed company Lehman Brothers. He concluded that "in a recession and with citizens' confidence fragile, the political stability of Hong Kong and Macau may be threatened."
The danger is that the crisis will impact the real economy, reducing exports and domestic consumption, increasing unemployment and difficulties for small and medium-sized businesses. All of these factors "will lead to storms if not properly handled."
For this reason, the BOC is studying new forms of financing for businesses in Hong Kong, in order to provide liquidity.
James Sung Lap-kung, a university political scientist, tells the South China Morning Post that it is rare for the head of the central bank to use such harsh tones. "It shows that the central government is very worried about the impact of the financial instability on Hong Kong society."
But the concerns regard all of Chinese society. Yesterday, Han Zheng, the mayor of Shanghai, told 1,700 delegates present for the annual local congress of the communist party that in 2009 the economy of the city is not expected to grow by more than 9%, compared to 13.3% in 2007, and the lowest rate since 1991. He said that the priority is the creation of new jobs.
Xu Zongheng, the mayor of Shenzhen, is also pessimistic. Also yesterday, during the annual plenary assembly of the local communist party, he said that economic growth in the city is not expected to exceed 10%, compared to 12.1% in 2008 and 14.6% in 2007. He said that social assistance will be provided for the unemployed, and there will be initiatives to "ensure the economic crisis doesn't rattle our social stability." From 1980 to 2006, average growth has been above 27% a year.
Li Qiang, director of China Labor Watch, observes that "the crisis in the West is purely economic. But in China it's a huge political problem" because it brings to the surface problems that have long been hidden by the economic boom, like the great disparity between the rich cities and the many poor rural towns, and the need to protect the rights of workers.
According to the official figures, there are 18 million unemployed urban residents, equal to 9% of the labor force, the highest level since the communist revolution in 1949. This figure overlooks the more than 110 million migrant workers, who often work clandestinely, and does not consider the approximately one million new graduates looking for work. In order to prevent social protests, the government must keep employment high, but according to experts this will be possible only if economic growth remains above 8%.