JOSEPH CHENG: The basic nature of the crisis has changed in the sense that people are no longer talking about the controversial piece of legislation which triggered the crisis. People, in fact, are asking, why is the government not supporting, not considering our basic interests?
For the vast, vast majority of Hong Kong people and even the young protesters, they do not desire the overthrow of the Chinese Communist regime in Beijing nor the Hong Kong government in Hong Kong. They just want democratization. They want their right to protest. To put it in very simple terms, the bulk of the Hong Kong population simply want to be left alone.
SUNIL BERI: Hi, we're sitting here today with Professor Joseph Cheng in Hong Kong, formerly a university professor of political science at City University Hong Kong, and also a member of Civic Party, which is a pro-democratic party.
What we're going to do today is basically talk about the protests in Hong Kong, the genesis of these protests, and probably step back a bit and look at the roots and the causes of what has led to the current state of affairs, how we are progressing in the timeline to these protests-- the important dates-- and how these protests could develop going forward, and what the viewers of Real Vision can take away from this. So that's basically with that.
Maybe I can ask Joseph too if you could start a little bit about the genesis of these protests and how far should people think?
JOSEPH CHENG: Well, the socioeconomic conditions of a vast majority of Hong Kong people actually have been deteriorating. And this is especially so among the younger generation. People definitely are angry, dissatisfied, and they are also unhappy with the be-grant of the government.
Hong Kong enjoyed the per capita GDP of $48,000 last year. But behind this superficial prosperity, the gap between the rich and poor is very substantial. The Gini coefficient measured 0.539 in the last by-census in 2016.
A vast majority of Hong Kong people actually feel that their real incomes have been falling since 1997. For the young people especially, they certainly feel that there has been a decline in upward social mobility opportunities, limited job prospects for them, and they also feel almost hopeless in acquiring their own accommodation.
SUNIL BERI: So let me go back a bit and talk about the Gini coefficient. The Gini coefficient is a measure of the inequality that happened. So although it happened in 2016, it probably hasn't changed or gone down and probably has worsened. Is that a fair assumption?
JOSEPH CHENG: Probably so, given the fact that the property prices have been going up. And this certainly means that the gap between the rich and the poor-- that is those who have property and those who do not have property-- has been widening.
You see, the previous two administrations-- the Donald Tsang administration-- obviously neglected the supply of land, resulting in this crisis in housing conditions today. But the CY Leung administration-- Carrie Lam's predecessor-- as well as the present administration, they have all said that they would make housing a top priority in their policy programs. But so far, they have not been able to deliver.
And this has resulted in a lot of accusations on the part of the people that the government and the big businesses have been colluding. And in the recent one or two years, people are now accusing the Carrie Lam administration of betraying Hong Kong, namely that the administration has been too eager to toe the Beijing line, too eager to please the big businesses, and have not stood up for the interests of ordinary Hong Kong people.
SUNIL BERI: So let me go back and throw some numbers at you. So there is about 1.75 billion of the workforce that does not pay any taxes. The top 21 tycoons basically have more reserves than the accumulated reserves of Hong Kong.
And then at the bottom, you have basically the top decile of the income earners earning 44 times of the bottom decile of income earners. The minimum wage adjusted for inflation is about $3.50 or it's around about that number. Your savings rate is 26%, but does that reflect the true nature?
JOSEPH CHENG: Yes, you look at the young graduates-- young university graduates-- who now form the backbone of the protesters in the recent weeks, in the past 10 years and more, their starting median salary has been around 11,000, 12,000 Hong Kong dollars-- about $1,500.
But this is not the real issue. The real issue is that as they see it, it is extremely difficult for their salaries to break the, say, 30,000 Hong Kong dollars monthly point, despite the fact that they may gradually have been working for 10, 20 years and even more. And this also means that they cannot hope to have their own accommodation.
SUNIL BERI: So let me go back to the income. So what does 11,000 or 12,000 Hong Kong dollars you are able to do in terms of rent?
JOSEPH CHENG: Not much. So most of the young people actually are now staying with their parents, eat with their parents. And this will reduce their basic expenditure and they still have a bit of money to spend. Otherwise, if they have to be independent completely, they try to rent a partitioned room right around 80 square feet. That would cost 7,000, 8,000 Hong Kong dollars-- more than one half of their monthly salary.
SUNIL BERI: Right. So the median income that is spent on Hong Kong's rent average or median rent according to government figures is about 69%. And for the benefit of the viewers, the subdivided room is basically a 300-square-foot or an 800-square-foot flat that is subdivided into smaller rooms, where they just simply have a room to sleep and work, but not much other than that. Is that the correct definition?
JOSEPH CHENG: Exactly.
SUNIL BERI: And is that something that is within the Hong Kong Island or Kowloon Island or you're talking about the outlying islands?
JOSEPH CHENG: Well, I basically apply this to Hong Kong. And Hong Kong Island and Kowloon, that is the most central urban areas. If you move further outside to the suburbs to new territories, you may pay less-- maybe 25%, 30% less in terms of rents, but then you have to spend more on transport and you have to spend more time. Have to understand that Hong Kong people normally work quite long hours-- at least 10, 11 hours a day.
SUNIL BERI: So they could spend another 45 minutes to 1 and 1/2 hours getting back home.
JOSEPH CHENG: Each trip.
SUNIL BERI: Each trip. On each way. OK. So we covered about the cost of living, which is obviously very high. And everybody knows that, but I think it gives a different perspective-- what it actually buys you. So you're basically buying an 80 square feet, which I think is smaller than the prison cell.
JOSEPH CHENG: Depends on the prison, or which country you go to.
SUNIL BERI: Hong Kong.
JOSEPH CHENG: Yeah.
SUNIL BERI: So that basically solves the one issue, or makes people aware what the housing issue is. Let's go back and talk about the second issue you said-- about the career advancement, and what type of jobs they can get, and what type of businesses they can go into.
JOSEPH CHENG: Most people can still get jobs. Even at the very worst, people with a degree or subdegree can still work as an agent, as a sales person, or at a very minimum, they can offer private tuition to younger children. So that means that they have no difficulty earning the basic pocket money.
But you have to be aware that there is no unemployment benefits in Hong Kong. And unfortunately, most of the young people, after their tertiary education, still have high hopes on the basis of the traditional Confucian values. They still expect to be able to do something. And they still hope to have a respectable career ahead. And you may say, therefore, that their expectations are higher than their counterparts, say, in Europe.
SUNIL BERI: So 26%, or roughly around that number of Hong Kong's GDP comes from property, or property related things. And I think about 40% is from services. Could you highlight how that affects the career prospects? And what type of industries are not there that will give the younger generation the opportunities?
JOSEPH CHENG: Most young people can get jobs in the tertiary sector, which provides more than 90% of Hong Kong's GDP. And they normally work in small businesses. Those who are most fortunate of course can still get very respectable, very well-paid jobs in the financial sector, in the major multinationals, and so on. But this doesn't apply to ordinary young people. So they work in small businesses. They get $11-$12,000 in the beginning, and gradually move up to about $20,000 or so. Very difficult to break the $30,000 Hong Kong dollars [indiscernible].
And this at the same time is a bit frustrating in that they still have to stay with their parents. They have no plan, or they cannot afford no plan to acquire their own accommodation. They normally will save up, and go for a holiday with their girlfriends, and boyfriends, and so on.
SUNIL BERI: So staying with the career opportunities, what about the technology sector, which is proposed by the government? And what about the government sector as a source of employment? How will that work? One is on the cutting edge of technology, the new age, new businesses, and the other one is more stable. What are the opportunities there?
JOSEPH CHENG: Civil service jobs are considered very stable, reliable, with career development paths, and therefore very much sought after by ordinary people and young people. However, because the government is not expanding, because of the population trends, because we have a rather mature economy-- so it is more and more difficult for people to get tenured jobs within the civil service.
It is considered rather fortunate if you can become an executive officer and so on. And you may have to work on a contract basis at least for free for two contracts at three years each before you can be considered for a tenured position. And one's expectations have gone down. So now you may have quite a number of university graduates taking up clerical positions within the civil service, front line policemen positions in the disciplinary forces, and so on, instead of aiming at officers in the civil service, or police inspectors in the disciplinary forces, and so on.
SUNIL BERI: So you touched on the last point, about the demographics, so I want to talk to you about that. As we all know that you have falling expectations, and career paths, real incomes especially for young the generation falling. And you also have an aging population, which is a problem. Right now, I think it's about 44 years average age of Hong Kong. And then you have, it goes up to 48 in 2026. And I think at that time, about to 2030 I'm not mistaken, there's 30% of the population is at least 60 plus. So what has aging population done so far to the incomes and the poverty?
JOSEPH CHENG: On this point, Hong Kong is similar to various places in East Asia. Aging population means more demand on Social Security for services for the elderly, for housing and so on. But it also means that it also exposes the fact that the government is making limited provisions for the elderly. And in fact, those elderly people with no income now constitutes the bulk of the population living below the poverty line. On the streets, you may see old ladies collecting waste paper and so on to add to their very limited incomes. And this is a very sad scene for a prosperous city like Hong Kong, for an international financial center.
So the frustration on the part of the young people, the difficult situation of the aging people actually are calling for reorientation of the government with regard to the Social Security policy. The administration usually follows the so-called laissez-faire philosophy established by the British administration. And the central government in Beijing respects this traditional philosophy. The government in Beijing, as well as the establishment in Hong Kong, do not want to spend too much on Social Security, on social services, despite the fact that we have a surplus budget almost every year.
The idea is to respect the interests of the investors because their money can leave Hong Kong very easily, very rapidly, given the fact that we are an international financial center. So from Beijing's point of view, from the Hong Kong government's point of view, they tend to put investors' interests first. And that explains the accusation against government, big business collusion on the part of ordinary people. And ordinary people certainly believe that the government can certainly spend more. And Hong Kong people easily compares the public housing, or the general housing conditions in the territory with that in, say, Singapore, where people on public housing can still enjoy easily a public housing flat of 1,000 square feet for a family of four. And a flat of that size is considered a very luxurious flat in Hong Kong.
SUNIL BERI: Yes. So in Hong Kong, everything above 700 square feet is considered the luxury sector. So coming back, so you have a population basically, the younger generation, who doesn't see upward mobility. And then, when they go past their working age population, of working age, they also see the older people. The older people living below poverty has gone up 75% in the last 10 years in the last consensus. And although that number is like 530, it is still challenging for a population of a city of 7.1 million. So if you are going to age properly, the population is going to age faster now than it has ever done. We are probably ahead of China in terms of the demographics time bomb. Is that a major problem?
JOSEPH CHENG: That is a major problem in the sense that the elderly people in Hong Kong tend to have to rely on their own savings. Traditionally of course, Chinese families would like to rely on their younger members. But this is less and less so. In fact, in the past two or three decades, very often the middle class parents have to provide, have to help their younger members of the family despite the fact that they may be working on a full time basis. So this means that people have to save more. And the government has rejected the consideration of a universal pension system for the elderly because it does not want to assume the responsibility.
And four or five years ago, there were some debates within the community-- and the government, when Carrie Lam was actually the Chief Secretary in charge of the policy. The government and Carrie Lam rejected any demand for universal pension system, which is quite disappointing for the population. So for Hong Kong people, when they hear that Carrie Lam administration wants to tackle important people's livelihood issues, they say, well, why shouldn't we talk about this universal pension system? Or some universal medical insurance policy? These are the major issues-- plus housing facing the Hong Kong population. And certainly the Hong Kong people do not feel, do not believe that the government has done enough.
SUNIL BERI: All this has basically become a powder keg, if you like, for all the social issues. So the Chinese government took over Hong Kong, and maintain the one country, two systems policy, under which Hong Kong had a lot of autonomy, and probably still does. Talk to us about how that has developed under the various governments and