CJAH Blog for the week ending 8th January 2010

First of all I would like to wish all readers a very ‘Happy New Year’ and express the hopes that it will prove to be less challenging than the past two years though as you will see I have my doubts about that. It seems to have been a long and cold holiday but I am sure that with a new year upon us now we are all looking to see if there will be opportunities ahead.  The one thing that is certain is that one man’s downturn is another’s ‘uptick’! So let us hope that we are all in the frame for an ‘uptick’

Here we are on the threshold of a new year at this stage full of uncertainty. Everyone that I talk to seems to be full of doubt about the way that things will work out in the year ahead. The one thing that seems to be a shared and widely held opinion is that everyone is counting on China and Asia to out perform and pull the Global ‘onions out of the fire’. Whether or not this will happen only time will tell but it has to be said that the numbers speak for themselves; undeniably there has been strong growth in China’s economy, of course much of this has been stimulated by government intervention, with investment in infrastructure and by taking other measures to stimulate the domestic economy such as that which I witnessed in Shanghai where retail outlets were instructed to open 24 hours a day over a two day period over the New Year holiday. This provided retailers with a month’s retail results in 48 hours and according to the media it exceeded the November results. Certainly I have never seen so many people filling the shops and restaurants on the Nanjing Road even late into the evening. All of these measures have created an explosion in manufacturing capacity which may be difficult to sustain and could result in the growth of inflation.

In trying to see how Hong Kong would fare in the year with this vibrant growth at its back door and what I think many have agreed will be a flat year in global markets I was struck by the lack of symmetry in the forces that Hong Kong will have to manage.  In a sense it is rather like landing an aircraft with cross winds and downdrafts which make the pilot make an asymmetric approach.  Hong Kong has in recent years acted as the business integrator between China and its Global Trading partners and through this interaction prospered. The challenge for Hong Kong going ahead will be on the one hand to convince China of the added value that it brings to the motherland at a time when the traditional partners are (we hope) firmly in recovery mode and at the same time to convince those traditional partners that Hong Kong is still relevant to their trade and investment activities in this part of the world. This will require vision in the medium and longer term to create the policies that will keep Hong Kong ahead of its rivals. The historic way in which Hong Kong has evolved gives me confidence that somehow it will achieve this.

Quite apart from the reports about the performance of the China economy the news coming out of China is likely to be dominated by the International Expo in Shanghai due to open in May 2010.  Having seen the site and the scale of the massive developments that have completely altered the base infrastructure in Shanghai it is possible nay probable that there will be unfavourable comparisons made about the way that the two cities manage developments. I would say that Hong Kong should not lose heart because whilst obviously all this development has had an impact on the level of economic activity it will draw to a conclusion before May 2010 and the question that struck me was “what next”? Hong Kong has its ten mega projects to digest out beyond 2020!

So again with these thoughts may I wish a very “Happy New Year” to all my readers?