ALEX BRUMMER: Britain’s ties with Hong Kong mean we need decisive action from our next government
Britain’s General Election and Brexit distraction means that seven months of disturbances in Hong Kong have passed by relatively unnoticed by many.
Yet it was the formula of ‘one state, two systems’ agreed between London and Beijing which was intended to preserve free markets, the rule of law and human rights when the union flag was lowered there in 1997.
The rudiments of all this remain in the shape of the vibrancy of the Hong Kong Stock Exchange (HKSE) and the weekend’s freely held local elections. By the standards of greater China, human rights are only being mildly infringed.
A fight on their hands: By the standards of greater China, human rights are only being mildly infringed
Nevertheless, the political quake is shaking commercial confidence. Hedge funds are on the move, with Singapore and Tokyo among the beneficiaries. UK enterprises, including HSBC, Standard Chartered, the Big Four audit firms and the City law outfits, are sticking to the story that disruption is temporary and will pass.
This is no longer convincing, with the territory in recession and bank profits highly dependent on Hong Kong’s stability and success. Foreign policy timidity in the UK has created an opening for the US. Donald Trump’s last action, before heading off for the Thanksgiving break, was reluctantly to sign into law an act which whizzed through a divided Congress.
This requires the Department of State to certify Hong Kong is ‘sufficiently autonomous’ (shouldn’t this be the UK’s job?) and to slap sanctions on China if human rights are abused. Hong Kong has been dragged into the trade war with China.
This cannot be helpful to the UK. Analysts estimate that up to 25 per cent of HSBC’s revenues are at risk. Similarly, Standard Chartered, only recently recovered after a torrid decade since the financial crisis, earns around a quarter of its income there.
It is no wonder that HKSE boss Charlie Li set his sights on the London Stock Exchange. It would have been a safe harbour if Hong Kong’s freebooting capitalism were to be curtailed. The timing will be highly unfortunate for the next UK government if it makes Brexit its first priority.
Britain’s deep commercial ties with Hong Kong makes it a fantastic springboard for the conquest of the Pacific, especially for the UK’s world-beating financial and professional services.
Realpolitik will demand early and decisive action from the next government.
Taking Britain’s power companies back into public ownership is a key Labour objective. It argues that the big players, several in overseas ownership, are parasites.
Big changes have taken place in the industry, making it far less commercially attractive. The move to a carbon neutral future has required investment in renewables and the mothballing of old plants.
The UK’s sophisticated switching websites have exposed the Big Six to competition from newcomers such as Bulb. And Theresa May’s government sought to end price gouging by capping tariffs.
The impact has been dramatic. Centrica has lost 3m customers in the past few years. German-owned Npower, part of the Innogy group, says its retail unit shed 261,000 customers in the third quarter, bringing its customer losses up to 447,000 this year. The impact has been dramatic and it has just posted a nine-month operating loss of £142m and is forecasting red ink of £214m for the full year.
Ultimate owner Eon, which acquired Innogy’s retail operations, says it will not tolerate a loss-making enterprise for long. Shadow Chancellor John McDonnell’s plans to offer the owners bonds could be a relief.
The taxpayer would be lumbered with bills for a loss-making utility while the 60 energy upstarts, part of the free market revolution, eat the nation’s lunch. As with Openreach and broadband, Labour’s tidying up of lesser players could be a long, complex and expensive operation.
Built to order
Ocado is burnishing its tech credentials. It is aiming to have a ‘mini’ robotic warehouse near Bristol up and running by late 2020 or early 2021.
It will support 815 local jobs and be able to handle 30,000 orders a day. The aim is to use it as a model as it rolls out its high-tech systems globally.
The online grocer’s shares shot up and the market value jumped to £8.5 billion, which means it is worth more than Sainsbury’s and Marks & Spencer added together.