Hong Kong’s widening wealth gap, with home prices soaring 70 percent since the start of 2009, may prompt an increased turnout in annual protests this week as the territory’s leader suffers his lowest poll ratings yet.
Chief Executive Donald Tsang’s failure to tackle Asia’s biggest rich-poor divide has seen his support drop to a score of 46.5 in a survey of 1,000 residents taken during the week to June 8, the worst since he took office in 2005, the University of Hong Kong’s Public Opinion Programme shows. Respondents were asked to rate him on a scale from 0 to 100.
“People think Donald Tsang favors the interests of big business, and this is the reason behind his apparent refusal to resolve the housing issue or narrow the wealth gap,” said Joseph Cheng, a political science professor at City University of Hong Kong. “Dissatisfaction against the government is certainly rising, and we will probably see more protests,” including at a July 1 rally commemorating the U.K. handover of Hong Kong to China, he said.
Tsang’s unpopularity parallels trends across Asia, where economic development, inflation and rising asset prices have deepened discontent among lower-skilled workers. Singapore’s ruling party saw record support for the opposition in elections last month, and China has arrested local officials in the aftermath of protests over abuse of power as inequality grows.
A record 1.26 million among Hong Kong’s 7 million residents lived in poverty as of mid-2010, according to a government advisory group, even as the combined wealth of the 40 richest surged 20 percent to $163 billion in January from a year earlier, Forbes magazine said. The rich-poor gap is Asia’s widest, based on United Nations data.
Tsang “will continue to adopt a pragmatic and balanced approached to governance,” his office said in an e-mailed response to a Bloomberg News inquiry. “The government would continue to listen to public views and opinions in a humble and open manner.”
The term of the chief executive, who is elected by a group of people appointed by China’s central government, ends on June 30, 2012.
The support for Tsang, 66, hasn’t yet reached the lows endured by predecessor Tung Chee-hwa, who resigned after hundreds of thousands took to the streets calling for his ouster. Tung oversaw a surge in unemployment and a property bust that had thousands of homeowners owe mortgages greater than their property values. Ex-Governor Chris Patten, who managed the Hong Kong handover, maintained support in excess of 50.
A further dip in Tsang’s backing to level of 45 could signal a “governance crisis,” said Robert Chung, poll director of the Public Opinion Programme.
Planned payments of HK$6,000 ($770) per permanent resident and the introduction of a minimum wage haven’t boosted the popularity of Tsang, a policeman’s son. Inflation was 5.2 percent in May, the fastest pace in almost three years. China’s top official on Hong Kong, Wang Guangya, warned the city’s leaders this month that home prices may turn into a “political problem,” and urged more care for “ordinary” residents.
Hong Kong’s retail rents have climbed 27 percent since the start of 2009, according to Colliers International, making it harder for smaller businesses to stay in operation without moving to less-popular areas of the territory. Causeway Bay and Central had the world’s second and third-highest retail rents after New York’s Fifth Avenue, Colliers said June 13.
Hong Kong’s peg to the U.S. dollar means the city follows interest rates set by the Federal Reserve, which has held its benchmark rate at a range of zero to 0.25 percent since December 2008. To cool home price gains that Tsang called this month “quite frightening,” the city’s government has taken measures including releasing more land to build homes, raising minimum down payments for homebuyers and adding a requirement that foreign buyers deposit an additional 10 percent.
“Hong Kong has a fixed exchange rate; at the top of a cycle, inflationary pressures build dramatically, Hong Kong becomes less competitive,” Adrian Mowat, JPMorgan Chase & Co.’s chief Asia and emerging-market strategist, said in an interview with Bloomberg Television today. “And so we’d expect Hong Kong’s growth to slow next year. We’re very bearish on Hong Kong property, which quite frankly, is unaffordable for the bulk of the population.”
The city government raised last month its estimate for inflation this year to 5.4 percent, from a previous forecast of 4.5 percent, which would be the highest since 1997. It also increased its economic growth forecast this year to as high as 6 percent from a previous range of 4 percent to 5 percent due to “robust” domestic demand.
“With July 1 fast approaching and public anger constantly surging, the government should better be prepared,” Chung said in a report accompanying the poll, which has a margin of error of 4 percentage points.
Hong Kong police spokeswoman Janet Lui said a permit has been issued for the rally on July 1. While declining to forecast how many people may turn out, Lui said the organizer had applied for a rally of 50,000.
Tsang started office with a record-high rating of 72.3 in 2005, benefitting from perceptions of competence in handling the Asian financial crisis of 1997-98.