Hong Kong shows the way

Having spent the depths of the recession in moribund Europe it is a real surprise to find that it is not doom and dismay everywhere.

I have just been in Hong Kong, part of my NYLONKONG three-city trip examining how these major financial capitals are faring, one year after the failure of Lehman brothers and near collapse of the business world.

Where London is “May Do,” New York is “Can Do” and Hong Kong is “Will Do – and preferably, yesterday.”

Just take the trip from the airport downtown. Hong Kong’s Airport Express is a shining example of exactly how city-airport transportation should be run: Fast, convenient and cheap.

Compare that to the complicated JFK Airway express to Jackson Heights or the efficient but ridiculously expensive Heathrow Express.

In Hong Kong, large-scale investment projects are continuing. From the harbour projects to the hotel renovations that are still under way. Of course it is not quite as busy as the heady days of two years ago, but here the construction projects have merely been postponed, not mothballed.

I arrived here days after Hong Kong announced economic growth in the second quarter of three per cent. Hong Kong is not alone. Singapore and South Korea have both announced strong growth numbers. The reasons are not hard to find. China is expected to grow at near eight to nine per cent.

To be sure, the number of overseas business arrivals has dramatically dropped. Cathay Pacific is cutting flights to Europe, cutting staff and hopefully cutting its future losses. Like any other global airline, there isn’t much cheer if you own lots of large, expensive and thirsty planes.

But there is something else going on here which goes beyond the numbers. There is still an optimism here that I have not found on my travels elsewhere this year. Even though unemployment has risen in Hong Kong, property prices have surprisingly bounced back in a dramatic fashion. I have seen luxury houses selling at 40 million dollars – prices that are just about where they were two years ago.

Fuelling much of this revival is “hot money” -- meaning that it’s coming across from mainland China. This “hot cash” has either come from China’s large trade surplus or is now filtering down from the country’s massive fiscal stimulus. It is sweeping across the entire economy of Hong Kong, creating bubbles in property and distortions in the market.

Hong Kong will always be a unique place. During the British rule it was the former empire’s window to Asia. Now part of China, it acts as that empire’s window to the West. Hong Kong has survived by being “in the middle” -- facilitating investment, trade and business.

A top business executive summed it up saying that in Hong Kong you think fast and act faster. Whoever is in charge, there is a deal to be done. After a winter of financial misery, mayhem and misfortune it has been a welcome relief to escape to this place where the only question people ask is: “How much?” It is to New York that I head next, to see how the Big Apple has weathered the great recession, one year after everything ground to a halt.