The Foreign Correspondents' Club Hong Kong

The question in China: what Panama Papers?

While the release of the Panama Papers rocked governments around the world, it hardly caused a ripple in China, one of the biggest sources of funds for these offshore accounts. China’s clampdown on any news of the leaks has been particularly effective.

Search engines, for example, reply to queries with: “Sorry, searches for ‘Panama’ came up with no relevant results.” A censorship notice sent by a Chinese provincial Internet office told editors to delete reports on the leaks, according to China Digital Times. “If material from foreign media attacking China is found on any website, it will be dealt with severely,” the notice said.

Social media in China was also effectively curbed. However, a well-known Chinese civil rights lawyer, Ge Yongxi, known for defending underground church leaders and political and social activists, was recently taken into police custody after sharing information about the Panama Papers on social media.

The leaks come at a bad time for China which is in the midst of a massive crackdown on corruption that has already been criticised as being an internal power play rather than actually tackling graft.

The Panama Papers leak is one of the biggest ever – larger than WikiLeaks in 2010 and Edward Snowden in 2013. There are 11.5m documents and 2.6 terabytes of information drawn from Panamanian law firm Mossack Fonseca’s internal database. The records were obtained from an anonymous source by the German newspaper Süddeutsche Zeitung, which shared them with the International Consortium of Investigative Journalists.

The documents show the myriad ways in which the rich can exploit secretive offshore tax regimes. Twelve national leaders are among 143 politicians, their families and close associates from around the world known to have been using offshore tax havens.

In China the leaks show that relatives or business partners of several current and former members of China’s ruling Politburo were tied to offshore companies that had the effect of obscuring their ownership interests.

Probably the most politically sensitive leak was the revelation that Deng Jiagui, the brother-in-law of President Xi Jinping, had set up two British Virgin Islands-registered companies through Mossack Fonseca in 2009, when Xi was vice-president. What the two companies – Best Effect Enterprises and Wealth Ming International – were used for is unclear. By the time Xi came to power the companies were dormant, it was reported.

Deng, of course, has been in the news before. In 2012, Bloomberg News reported on the vast business empire built by Deng and his wife both inside China and through offshore companies that amounted to hundreds of millions of dollars.

Another politically powerful Chinese couple – also in the news previously – Li Xiaolin, the daughter of the former premier Li Peng, and her husband, Liu Zhiyuan. The Panama Papers leaks showed that Li and Liu were the owners of a foundation based in Liechtenstein that in turn owned a company in the British Virgin Islands, Cofic Investments. A lawyer for Cofic told Mossack Fonseca that the company’s profits came from helping the law firm’s other clients export heavy machinery from Europe to China.

Another relative of a top leader is Jasmine Li Zidan, the granddaughter of Jia Qinglin, a former member of the Politburo Standing Committee. Li’s father, Li Botan, was a central figure in a report last year by The New York Times on the political ties of the Dalian Wanda Group chairman, Wang Jianlin. Companies linked to Li made hundreds of millions of dollars in capital gains from their holdings in Wanda property and entertainment enterprises.

Ideological leaks
One of the few mainland news outlets to mention the Panama Papers was Global Times, a newspaper run by the Chinese Communist Party. The newspaper questioned the lack of a named source for the documents, and the Chinese version of the article suggested that Western intelligence agencies could easily slip fake information into such a large trove of records.
The article accused the Western news media of using the leaks for ideological purposes by attacking, for example President Vladimir V. Putin of Russia.

“The Western media has taken control of the interpretation each time there has been such a document dump, and Washington has demonstrated particular influence in it,” Global Times wrote. “Information that is negative to the US can always be minimised, while exposure of non-Western leaders, such as Putin, can get extra spin.”

The Mossack Fonseca data relates to more than 200,000 companies for which the firm acted as registered agent. Often used lawfully to anonymously hold property and bank accounts, these companies were registered in a range of tax havens. Rather than dealing directly with company owners, Mossack Fonseca – the world’s fourth biggest provider of offshore services – mostly acted on instructions from intermediaries, usually accountants, lawyers, banks and trust companies. The biggest centres for this activity are Hong Kong and Switzerland. And China, Hong Kong and Russia top the list of hidden owners.

It should be noted that going offshore is legal. There are many legitimate reasons for doing so. Business people in countries such as Russia and Ukraine typically put their assets offshore to defend them from “raids” by criminals, and to get around hard currency restrictions.

However, there are also many not-so-legitimate reasons. In a speech last year in Singapore, UK Prime Minister David Cameron said “the corrupt, criminals and money launderers” take advantage of anonymous company structures. Others use them too: an offshore investment fund run by Cameron’s father avoided paying tax in Britain. The fund has been registered since its inception and has filed detailed tax returns every year.

Mossack Fonseca itself defends its conduct saying it complies with anti-money-laundering laws and carries out thorough due diligence on all its clients. The firm says it cannot be blamed for failings by intermediaries, who include banks, law firms and accountants.

Hong Kong connection
The South China Morning Post tracked down the firm’s man in Hong Kong, Zhang Xiaodong, who is better known by his adopted Cantonese name, Austin Cheung. Zhang has run the operation for more than 20 years.

The firm is accused of helping relatives of past and present Chinese leaders set up offshore companies in an alleged bid to avoid paying taxes. About a third of the Panama firm’s business was conducted on the mainland, with the bulk passing through the Hong Kong office.

Zhang joined the firm initially in its Panama City head office, staying there for a few years. His name first appeared on the Hong Kong branch’s list of directors in 1995, two years after it was set up. He moved to Hong Kong in 1997 and, in 2002, the office was rebranded as the Asia headquarters, of which he was president.

Among the banks, accountants and lawyers in Hong Kong which act as intermediaries is HSBC which has helped rich clients register more than 2,300 shell companies, the leaked reports say. Hong Kong’s richest man, Li Ka-shing, is a client of Mossack Fonseca. The leaked data showed that Cheung Kong Infrastructure, the Cheung Kong group’s infrastructure arm, used the firm to “organise” a string of related subsidiaries in Panama and the British Virgin Islands.

In reply to an inquiry by the Post, a spokesman for Cheung Kong Infrastructure said the group fully complied with the law of the countries it operated in.

Town Hall meeting debates increased revenue options

There was a big and active turnout for the FCC’s Town Hall meeting in early April which focused on budget forecasts and the operating revenue shortfall through the Club’s renovation period and what should be done about it.

President Neil Western explained that the Board of Governors was elected to run the Club and its finances, “but given that subscription fees had been frozen for 19 years it was considered prudent to talk to the membership about it and get feedback”.

Many emails had been received already from members, Western said. There had been many suggestions to alter some operating procedures and while the Board welcomed them, they would be considered within committees rather than being discussed in detail at the Town Hall meeting.

Treasurer Tim Huxley, in his presentation “Towards a sustainable financial future” for the Club, gave an overview of the financial state play: Club membership is 2,457, of which 1,993 pay full monthly subscriptions. The total revenue for 2015/2016 was HK$53,605,241. The forecast for financial year 2015/2016 is a deficit of HK$502,694, while the forecast for financial year 2016/2017 will be a deficit of HK$5,127,398. The deficit for 2016/17 equated to HK$184 per member per month.

Huxley explained the factors that contributed to the growing deficit: the 2016/17 food cover budget was down by 3.75 % because of lost revenue during planned renovations. The payroll for catering staff was budgeted to increase by HK$1 million or 5%, in line with hospitality sector inflation and allowing some additional staff to accommodate increased membership numbers. The total administration expenses would increase by 8.9% covering admin wage increases and increased staff numbers. Rent and rates increased by 10% from January 2016 to HK$577,500 per month. The sale of RMB deposits would reduce interest income by HK$101,000. The depreciation charge would increase due to the renovations.

The options
Through emails, phone calls, suggestions at committee and Board meetings and talk around the Bar, eight options have come forward to address the projected deficit:

Option 1: Why not use Club’s reserves to cover the deficit?
Current freely available reserves as at February 2016 are HK$42.3 million, comprising HK$30.5 million in cash and HK$11.8 million in investments, equivalent to the 2015/16 catering expenses or nine months of the 2016/17 operating budget. Some HK$10 million from reserves have been set aside for the renovations.

Reserves historically have been built up to the cover cost of relocation in event of the lease on current premises not being renewed. While we have a new lease, we need to start building reserves again taking a seven-year view. No prudent company uses reserves to subsidise daily operations unless absolutely necessary

Option 2: Let’s soak the Associates!
Not all Associates are high earners and hence a higher monthly fee for Associates compared to C & J members should be avoided. The FCC should continue to try and maintain a diverse Associate membership.

The idea of doubling the joining fee for Associates would seriously compromise the diversity we are trying to promote from people with media connections, NGOs, and other non-senior banking/legal etc. applicants.

We have budgeted for only 24 new Associate members in 2016/17, which would yield HK$600,000 in joining fees. If we double the Associate joining fee to HK$50,000 that would bring in HK$1.2 million still well short of the deficit. The 24 new Associates is a conservative figure and this will increase if we continue to replace members going absent with new Associates, but this should not be done on a one-for-one basis, as some absentees will rejoin. Admissions will also depend on number of new C&J applications received/approved.

Option 3: Increase revenue from current outlets

The gross profit from all catering outlets from April 2015-March 2016 is HK$25,814,301 on a turnover of HK$39,874,394.56. Gross profit is the selling price less the raw material cost only. It does not include cost of service, utilities, staff, rent, etc.
To cover the deficit from existing catering operations would require an increase in turnover of around HK$8 million to HK$48 million. With breakfast having proved to be the only significant area of under-utilisation, this will be impossible to achieve.
An F&B price increase would not be advisable now as we have recently undertaken one and there was a noticeable drop in revenue in the months immediately following implementation. To cover the budgeted deficit from current F&B sales alone, an overall price rise of around 13.5% would be required.

Option 4: Awaken the dormant members – minimum monthly spend

As of January 2016, there were 669 members with zero monthly spending other than subscriptions.
A minimum monthly spend of HK$200 would raise HK$1.6 million per year from these members, not sufficient to cover the deficit.
Minimum monthly spend would also put undue pressure on F&B outlets, particularly at the end of the month end when people would seek to use the amount.

Option 5: Club merchandise – leverage the FCC Brand

Revenue from FCC merchandise sold between April 2015 and March 2016 was HK$426,714, with a gross profit of HK$107,326, or under HK$10,000 per month.
Members have proposed numerous additional items such as cuff links, cloth bags etc, but sales volume and storage space precludes this.
If every member guarantees to buy a minimum 38 FCC wine glasses every year, we would raise sufficient profit from souvenir items to cover the budgeted deficit.

Option 6: Spouse membership – double the money or double the trouble?

The FCC currently has 1,629 spouse members. A limited number of other clubs such as Yacht Club and HK Club charge spouse membership fees of between HK$335 and HK$390 per month.
If FCC were to charge a spouse fee of HK$300 per month, it would raise HK$488,700 per month or HK$5,864,400 per year, sufficient to cover the budgeted deficit. A HK$200 per month spouse fee would generate HK$3,909,600, still a significant contribution to covering the deficit.
Clause 7 of the Articles of Association states that spouse members shall be accorded the use of the Club’s premises and facilities on the Member’s subscription. Any change to this Article will need an EGM and it is felt this is quite likely to be hard fought

Option 7: Reward the regulars?
Proposal from an existing Silver Member: reduce F&B prices by 30%; abolish Silver/Honorary membership; and monthly subscriptions for all members (including existing Silver members) should rise to HK$1,400 per month.

In reply, Huxley said it was not good practice to run F&B at a loss, and it would likely lose membership and face some opposition from some existing Silver members. Limited Club facilities mean that increased usage by members wishing to benefit from reduced prices could not be accommodated.

Option 8: Monthly subscriptions: a 21^st century solution?
Monthly subscriptions for full members have remained the same since the last century. No other Club has managed to do this while also keeping price increases manageable. We have achieved this by increasing membership numbers, but we are now at capacity.

HK$184 extra revenue per member per month is required to cover the budgeted deficit.
A proposed HK$150 per month rise in monthly subscriptions for members paying HK$950 per month and HK$50 per month for those on the discounted scheme would raise HK$309,650 per month or HK$3,715,800 per year or HK$4,025,450 per year on the basis of 13 months.

While not sufficient to cover the projected deficit, if this was blended with a projected increase in joining fees from replacing members going absent with new Associates (taking into account the trend of increased absent members), the deficit could well be covered.

With the exception of the spouse membership proposal, none of the options considered here come close to covering the projected deficit.

Blending a subscription increase with a realistic target on joining fees makes managing the deficit a strong possibility. By not using more of the possible options available, we continue to have bullets available to use later.

Will we lose members? Possibly, but if HK$150 per month is a deal breaker, then these members were probably not big spenders or contributors to the FCC in any case.

We are suffering from keeping subs so low for so long. We need to educate the membership that regular increases should be the norm, not the exception.

The FCC will remain among the best value venues in Hong Kong and will not be looking to make large profits. If we find ourselves with a significant surplus, we can decide to forgive the “thirteenth month” on occasion.

In acknowledging this is a Correspondents’ Club, the value of our Associate membership should not be overlooked.

Budget forecast and revenue shortfall
Erik Floyd asked about the operating deficit which would be more than HK$5 million in 2017 because of the renovations. He said that since the renovations were a one-off cost, does that mean raising the subscription fees was to solve a one-off problem?

Huxley explained that the deficit included the depreciation on the renovation costs and the rent. And there would a 3.75% drop in revenue during renovations. Even if you increased subscriptions by HK$150 it would not solve the problem and you will still have a two-month revenue gap during the renovations.

Floyd had seen the operating deficit was a small amount in 2015, but questioned what the other income numbers listed that would generate a rather large surplus for 2015 and 2016.

Huxley said the other income was joining fees and income from Club investments (large cash reserve and a small investment portfolio). The reason the Club had an investment portfolio was because previous treasurers had quite rightly decided that cash shouldn’t be eroded by inflation in the current low interest rate environment. There had been quite a considerable unrealised gain on the investment portfolio and the Finance Committee was incredibly cautious with investments (Hong Kong blue chips investments, very well-managed funds). It is also quite a small portion of the Club’s overall assets.

Peter Caldwell had noticed a substantial increase in the depreciation because of spending money to improve the facilities, but as the depreciation would only occur over a very limited period, what would long-term position be?

Huxley said the renovation costs would come out of reserves rather than the immediate current account. It was reasonable to have depreciation over 10 years on equipment such as fridges and as the building was old it needed constant maintenance. As the Board were custodians of a Grade 1 listed building, they were obligated to maintain the building.

John Batten said the deficit numbers should be further broken down. He gave examples such as wage costs rising 10% in 2015; Bert’s was closed until 6 pm; and as members were not using the Main Dining Room (MDR) much he believed there should be a standard rate for meals throughout the Club rather than fine dining in the MDR. He said given the high cost of the renovations, could some the renovations be rolled over or could put on hold?. He suggested the removal of the health club so space could be used as another facility, such as for committee meetings instead of using the Hughes Room.

On behalf of the House Committee, Nick Gentle said the committee was examining the alterations needed in the kitchen. There had been a fear that removal of the whole floor to deal with the piping was necessary, but the committee had found a way of avoiding that resulting in lower costs. Appraising the layout had occurred and some equipment was very old and needed replacing. As the kitchen needed renovating, the committee were collating quotes from designers and devising a timeframe.

The committee were also looking at the utilisation of the MDR and Verandah as well as its soundproofing and air-conditioning. As well as how to optimise the MDR to increase revenue, for instance by broadcasting sports events.

Donald Mayer asked whether the expenditure contemplated for the MDR was in the budget and what the amount was.

Huxley said that quotes were being obtained and consultants would be evaluating them, but the allocated budget had not been prepared yet.

Mayer asked why the kitchen had to be done at the same time rather than staggering renovations over a few years.

Neil Western explained that seeking government approval would take time, while Gentle added there were problems with the audio-visual downstairs as well as in the MDR, so it made sense to try to minimise costs by doing both together.

John Hung agreed that the kitchen renovation was necessary, but pointed out that the membership had submitted answers on the survey regarding the MDR’s use as a dining area and he thought the Board should decide on its use first before doing the rest. Currently it was used for functions and members could not use it. He thought the choice element was not always there for members.

Western responded that the Board had been analysing the survey and the Club’s policy states the room should be available to members rather than unavailable. He said the Board was considering the balance and thought members should have the right to use it as much as possible.

Tony Dick had observed restaurants and bars were always full, but questioned why the Club was losing money considering the rent was also quite low. And he also asked whether an outside consultant had been tasked to evaluate the F&B service and see whether the Club was getting real value for money.

Western responded that the Club was not always full and added that the survey had been overwhelmingly positive in terms of food and service. It was hoped that members who enjoyed the food and service could use the Club more, so a consultant could could help to drive more custom

Callan Anderson did not agree with the figure of 5% as the increase in staff costs as he had analysed his own staffing costs and industry inflation. He had also seen a high turnover of staff in the Club and thought there were high costs associated with taking staff on. He referred to the industry norms where staff at the Club found it difficult to obtain matching salaried jobs when they left the Club. He said that the band costs of HK$92,000 a month was too high and queried whether it was generating money and whether Bert’s Bar was being under-utilised.

Western said that the House Committee would be considering the music spend at Bert’s when the contract came up as it was probably the biggest spend outside of staffing costs. The revenue from Bert’s Bar in the evening was probably HK$200,000-$300,000 a month so an evaluation of whether or not a band actually generated profit would take place. The survey had shown a lot of support for Bert’s, but not many were seen actually using it. However, the Club had a long reputation for jazz so it would be an emotive debate.

Regarding the staff costs, Huxley explained that quite a few of the staff were temporary which resulted in more turnover. The increase in staff costs came from an occasional staff shortfall in some areas increase. Western added that in addition to service staff, the office staff were doing more work dealing with the increase in the number of committees and more paperwork and bureaucracy from the government. The office was short-staffed and that issue needed to be addressed.

Steve Vines believed that the staff estimate of 5% was very modest considering the staff costs inflation in the F&B industry in Hong Kong.

Edith Terry asked if any marketing expenditure had been budgeted and asked whether there could be better marketing of the jazz and professional events.

Western explained said that the Club’s website was being relaunched which would help in the marketing.

Having served on three committees at the Club, Susan Liang recommended bringing in a consultant to maximise the revenue from the MDR and Bert’s Bar before embarking on increasing the subscription fees. Regarding investments, she suggested that there should be some transparency with members advised quarterly of the investment portfolio performance.

She queried whether active members should be penalised through an across-the-board rise in subscription fees or targeting dormant members instead. To deal with the under-utilisation of the Club, policy needed to be formulated before choosing the easy option of increasing subscriptions.

Western said the noticeboard and website displayed a copy of the investment performance each month.

Keith Bradsher advised that raising the monthly subscriptions would mainly affect dormant members. For instance, raising F&B costs would mainly affect those using the Club, so a far higher proportion of the money raised would come from dormant members.

Western reported that hundreds of views had been received from the survey and the House Committee were looking closely at the food and ambience. A recent dining survey had been completed and further consultation would be undertaken before any large decision was made.

However, Philip Bowring thought no more money should be spent on hiring consultants; money should be fed back to the members instead.

Wayne Ma asked whether a F&B price sensitivity analysis on had been conducted including how much it would affect member spending. And whether lowering F&B prices would increase the revenue. He also proposed rewarding members who used the Club a great deal by reducing the F&B prices, but raising the subscription fees.

Huxley confirmed price analysis had been carried out and said that when F&B prices had been increased by 5% recently, F&B revenue had dropped by 11% before recovering.

Nigel Sharman referred to Huxley’s opinion regarding not running down the reserves for operating expenditure, asking whether he had considered the right amount of reserves needed by the Club. He suggested mixing and matching some options rather than choosing only one.

Spouse membership fees

Francis Moriarty said the Club’s prices were too low compared with other places such as hotels when renting to outside groups. He recommended raising spouse membership fees instead of journalists’ fees as journalists’ salaries were going down rather than up.

Floyd recommended broadening the revenue sources to increase revenue. He suggested instigating a fee for signing rights. Although it would not completely solve the problem, he thought it would bring in some calculable revenue and then perhaps limit the size of the subscription increases as a result.

Vines agreed and believed there were a number of options within the options proposed that did not have to be acted upon in their entirety. He suggested a minimum spend as it worked well in other clubs where members could buy a bottle of wine to fulfil the minimum spend instead of using one of the F&B outlets. It would also discriminate heavily in favour of those people who use the Club regularly and was an option that needed investigating.

Bradsher was concerned that if minimum spend was introduced then there would be a greater influx of people coming into the Club in the last three-four days of the month to fulfil the minimum spend requirement and the Club wouldn’t be able to handle such a surge. The Club was already packed at lunchtimes.

Western explained the reasoning behind the decision to expand the membership in the past three years was because there were so many dormant members and it was felt membership could increase by 10% as there was room in the Club.

Kevin Egan agreed with Vines that the Club should consider the issue of minimum expenditure. There were many dormant members and he thought it was ridiculous that the monthly subscriptions had stayed the same for 19 years. He recommended its increase to HK$1,100-$1,200 a month. If the monthly subscription fees were increased and a minimum spend introduced, then some dormant members may resign and replacement members could be added who would actively use the Club. Regarding spouse membership, he didn’t think it could be changed due to the wording in the Articles of Association.

Bowring said a minimum spend would partially address silver membership and honorary membership issues and there was no need to worry about overcrowding at lunchtime as Bert’s Bar could be used.

Mathew Gallagher did not agree with the minimum spend proposal as it could penalise members who were travelling.

Huxley agreed it was a valid point and had already been raised by a few members. He suggested the minimum spend could be cumulative, so that it occurred after three months or so to take into account those away from Hong Kong.

Terry suggested some kind of payment-in-kind scheme as some other clubs did, such as Thanksgiving turkey, wine delivery, etc. Regarding subscription fees, she thought members may have become complacent and would find any increase to be a shock. She believed journalist members should not be affected, especially local journalists as opposed to Correspondent members.

Paul Christensen pointed out that not all Associate members were rich, some were retired and many Associate members had no salary.

Eric Wishart thought Huxley’s presentation had been a build-up to increasing the monthly subscriptions and thought a minimum spend was feasible and a serious proposal. He could see the argument behind the monthly subscription fees due to the upcoming budget problem with the renovation. However, HK$950 was still a lot of money and the Club should not underestimate some members’ financial situations.

Sharman said that as a former journalist he had no issue with subscription fees increasing or decreasing and thought the continuance of the Club as a place where Journalists and Correspondents could meet and mix with other Corporate members was very important and should be preserved. In terms of the minimum spend, he asked what were the experiences of other comparable clubs in Hong Kong, did they experience an end of month influx and whether they were able to manage it?

Huxley replied that the other clubs usually had a lot more space and reported there was usually a surge of members on the last Wednesday of the month. He also said that not all Correspondents were badly paid and not all Associates were well paid.

Patrick Boehler asked whether there could be space for compromise regarding spouse membership and whether spouses should have a discount membership instead.

Western explained that procedurally, such a decision would need to go before the Companies Registrar, but if accepted an EGM would then be held which requires 75% of the membership to approve it.

Francis Cassidy said as the Club was overly crowded and introducing a minimum spend would result in an influx of members. He recommended reducing the number of guests coming into the Club and levying a charge onto spouses to encourage them to buy drinks.

Western asked for a show of hands in favour of a minimum monthly spend and over 75% of the room were in favour. He also asked for a show of hands in favour of introducing spouse membership fees and the vote was split 50:50.

Jim Suttie thought that introducing a minimum spend would not generate any more revenue for the Club as it would only affect dormant members. They currently paid HK$950 a month without the Club doing anything for them. However, if a minimum spend was introduced then they may resign and could be replaced by more active members.

Andrew Work said that money was not necessarily generated through a packed bar. He suggested members could acquire double credits if booking breakfasts and devising other incentives. He had received a fantastic response from the events booking department when he had asked for a quote, but he recommended quotes should be followed-up more actively.

Nangyal Tsering thought it was important to preserve the FCC as a Club dedicated to writers, journalists and the artistic community as well as preserving freedom and exchange of ideas which separated it from other clubs in Hong Kong.

Christine Houston asked how many members were on the waiting list (200). She said that members had been lulled into a false sense of security through having no subscription fees raised for 19 years. As there was a very long waiting list, even doubling the joining fee would result in members still joining and not affect the Club badly.

HKFP continues fight for media access through judicial review

Photos by: HKFP

HKFP Editor-in-Chief Tom Grundy has joined with a group of human rights lawyers to file a judicial review against the government in light of its policy of barring online media outlets from government press conferences and press releases.

In April, Grundy received an offer of assistance from Hong Kong’s Legal Aid Department, according to an editorial on the HKFP website. He is now seeking to link with interested parties and individuals to gather funds to begin proceedings.

HKFP is not alone as other online news organisations face the same problem and all are struggling with with the government to get access since before the site was launched in June last year. The Correspondent, which supports his claim for a judicial review, has followed HKFP’s progress over the year. Its recent return to the crowdfunding arena was less than successful having failed to reach its target by a large margin. However, considerable progress has been made in terms of quantity and quality since HKFP opened for business. Positioning itself as a totally independent – and free – alternative news source, in its first six months HKFP attracted over eight million page views to its website and published more than 2,300 news and comment pieces.

HKFP said that in January this year, the government’s Information Services Department stated that access to its online Government News and Media Information System was only made available “to registered or licensed mass news media organisations which include registered newspapers, periodicals and news agencies, as well as licensed TV and radio stations”.

In a letter to Grundy, it said: “In the absence of a legally binding registration or licensing regime… we are not in a position to distinguish among a wide range of ‘online media’ organisations, nor is it possible for us to grant access to all those that claim to be ‘online media’ for on-the-spot reporting, given the practical arrangements required.”

Separately, on October 27 last year, Grundy was barred from attending a weekly press briefing held with Chief Executive Leung Chun-ying despite presenting his HKFP and Hong Kong Journalists Association credentials.

HKFP regularly covers matters involving the Hong Kong government. Its staff are all qualified, full-time Hong Kong Journalists Association members. HKFP Limited is a registered company with shared office space at Cyberport.

Bill of Rights violation

Photo by: HKFP

It is the view of HKFP’s legal partners that hindering digital news outlets from access to government press conferences and press releases is a breach of the Hong Kong Bill of Rights Ordinance.

Article 16(2) of the Hong Kong Bill of Rights Ordinance states: “Everyone shall have the right to freedom of expression; this right shall include freedom to seek, receive and impart information and ideas of all kinds, regardless of frontiers, either orally, in writing or in print, in the form of art, or through any media of his choice.”

A document obtained by HKFP shows that foreign print publications and international broadcasters are among news outlets currently granted access to the online government information system, but digital media outlets are excluded.

‘Archaic’ policy

Despite the fact that the vast majority of Hong Kong’s electorate access their news through the internet, HKFP – as a digital outlet – has been obstructed in its ability to ask questions of public officials or obtain information on public affairs simply because it does not produce a paper edition.

A Senior Counsel with experience in judicial review matters, said that there are “reasonable prospects of success for a judicial review of the policy”.

Other media organisations, or interested parties and individuals, are invited to contact HKFP to assist in gathering funds to challenge the government’s outdated policy.

Banker turned corporate watchdog

Hong Kong is a global finance centre, and as such employs a good number of financial journalists. David Webb is not one of them. He is an activist, not a reporter. But he seems to break a lot of stories. Cathy Holcombe reports.

When Webb first burst into the watchdog scene, in the late 1990s, I was working on the business desk at the South China Morning Post, and on some days he was quoted in almost every other story. I have to confess to arguing against this profligacy of Webb quotes – it’s embarrassing, I said, as if we have no investigative skills of our own.
Yes, well: In a town where business journalists are often stuck on a merry-go-round of press conferences and corporate announcements, they scarcely have time to produce anything other than spot-news reactions.

In contrast, Webb’s close readings of financial statements have uncovered everything from dubious credentials of the management, to unsavoury related-party asset trades, to outright falsehoods in the filings. Webb-site.com keeps track of “bubbles” – companies, usually small caps, that trade well above their underlying value.

Some investigations can take months, if not years. In the early 2000s, Webb noted that a number of “small, naïve companies” were issuing convertible bonds with a “nasty twist” – a floating convertible-price feature. Webb discerned that this feature gave the issuing bank, Credit Suisse First Boston, room to make a killing at the company’s expense, but he waited to see how events played out in the market. Meanwhile, Merrill Lynch got in on the game, issuing similar “toxic convertibles”.

Eventually Webb published an exposé, based on a study of 15 companies who had issued the products to raise funds. The bankers made a stunning average profit of 31% on each convertible bond issuance, and the shares of the issuing companies that had subsequently crashed by 30% on average.
These are stories that otherwise simply might not have been picked up by this town’s phalanx of financial journalists. Which raises the question, why?

The swinging door
Financial journalism has long had a tendency towards corporate boosterism, in this town and globally. Part of it is the nature of the readers: perhaps subscribers to magazines such as Forbes enjoy stories that reinforce their pro-business sentiments. Then there is the existential conflict of interest, i.e., the dependency on corporate advertisers, or sales of financial data to corporate clients. In Hong Kong there is the additional issue that many media outlets are now, or traditionally, have been owned by establishment business figures.

As the digital era disrupts media, another threat to the Fourth Estate is economics: declining profits means less available money to underwrite quality, investigative journalism. But what if this digital disruption also makes financial journalists themselves more cautious?

The business writer Michael Lewis, in a recent interview with the British magazine The Spectator, identified the swinging door between the media and the financial sector as a threat to critical financial journalism, just as the swinging door between business and government is a threat to vigilant regulation.

“Journalists are often financially insecure, just as politicians and regulators are often financially insecure – and I’m talking about personally financially insecure,” Lewis said. In his view, this insecurity might explain why major financial media failed to properly investigate the myriad subprime-related shenanigans that led to the 2008 global financial crisis.

In Hong Kong, the door has been swinging for decades, dating back to the 1980s when the investment banking industry began to expand rapidly, and regularly recruited journalists into their ranks.
“The challenge for investment banks was capacity – there simply were not enough qualified and experienced brokers, analysts or corporate finance professionals to meet demand,” says John Mulcahy, a prominent Hong Kong business journalist in the 1980s who later held top research and executive positions at several stockbrokers.

Today the banking industry is more mature – stock market turnover is 70,000% greater than it was in the early 1980s – but many journalists regularly cross over into the banking sector for jobs.
Meanwhile, the role of corporate muckraking is almost single-handedly performed by an ex-banker who moved in the opposite direction.

The ex-banker
Some years ago I interviewed activist David Webb at his residence on Hong Kong Island. It was certainly a nice home, with high ceilings and ample sunlight pouring in through tall windows. But it was not a mansion, and one imagines Webb could live in a mansion.

He had arrived in Hong Kong to work in investment banking in the early 1990s, a time when even knuckle-draggers could make silly money in the business. Smart foreigners, on the other hand, could ascend to heights of insane riches.

Instead, Webb stepped off the corporate ladder about 20 years ago. He puts in a few hours a day as a private investor, and donates the rest of his productivity to his role as a watchdog on corporate and economic governance.

His output is prolific and ranges from careful examinations of the financials of penny stock companies, to purist – some would say priggish – interpretations of the Basic Law on the Hong Kong government’s taxation policies.

“Banking paid me well, but I’ve had far more fun as a private investor and activist,” Webb says, adding that he has been very successful investing in relatively well-governed undervalued small-caps for the last 21 years.

“That process is like being an expert mechanic shopping in a second-hand car lot with no warranties, and even worse, with drivers (controlling shareholders) attached. All the cars are discounted for the risk of lemons, so if you can avoid the lemons, and pick the cars that have been well-maintained by careful drivers, then you do well.”

Moreover, Webb believes it is his duty to do what he does: “If you have achieved financial security and have expertise in some area, then it seems almost selfish not to apply that expertise to the public good.”

One inspiration is George Soros, who in his younger days combined “investing and advocacy in a spectacular way”, for example, helping to bring down the Iron Curtain by funding photocopiers to help distribute information in his native Hungary in the 1980s. If Webb makes enough money in investing, he hopes to establish Webb-site as an independent foundation that can survive him and to expand its role in defending and advancing civil liberties and free markets in Hong Kong and China.

Recently, Webb’s activism has been aimed at defending Hong Kong’s traditions of freedom of speech and information. In January he spoke at the Foreign Correspondents’ Club about his failed efforts to appeal against a ruling on privacy issues which requires Webb-site.com to remove from its extensive archives past court cases, such as reports of bankruptcies, litigation or convictions. Webb argued that it was in the public interest to make this information available, but the Administrative Appeals Board ruled against him.

Hong Kong’s ruling on privacy issues is in line with the European court’s ruling on Google searches. In other words, it is perhaps another example of a China-related clampdown on transparency and free speech. But this “right to forget” issue is hitting Hong Kong at time when civil traditions are already under threat from Beijing.

“The recent case of the book publishers disappearing from Hong Kong and Thailand without officially ‘leaving’ is very worrying, and the fact that Hong Kong’s government took weeks to obtain the most basic information from mainland counterparts makes it look powerless and highly subordinated to mainland authority,” says Webb.

“There is also increasing mainland influence in traditional Hong Kong media, either by outright ownership or by pressure on advertisers (particularly those with mainland operations) not to support Hong Kong media who are critical of the mainland government.”

Graduates may face difficult personal choices. “If they work for critical media, then travel to the mainland may be difficult, fearing arrest on charges that their critical stories violated national security laws. They may also have concern for any family members in the mainland, and after the recent publisher disappearances, they may even be looking over their own shoulder while in Hong Kong,” says Webb.

In his view, this makes it all the more important that new, independent online media are able to fill the gap, “but they will face the same financial pressures.”

Indeed, the journalism profession is increasingly turning to non-profit or subsidised models. And the Fourth Estate may find itself more and more dependent on outsiders and activists, like Webb, to break the stories they can’t. After all, Webb left banking because he could afford to; this is the inverse of the journalism equation, where many leave because they cannot afford to stay.

Hong Kong’s Future

Sir David Tang gave an amusing, erudite and at times inspirational speech before a full house at the FCC on what has happened to Hong Kong, where it might go and what needs to be done.

David Tang fired both barrels at the performance of the Chief Executive CY Leung in his latest policy address as well as his overall leadership qualities. After regaling us with a visiting Martian’s view of the address, Tang called it “a silent contortion of the truth”.

“Does anyone here really believe that the government, our government, fosters harmony or shares prosperity?” he asked. “Does the government itself believe that it fosters harmony and shares prosperity? I believe these words are patronising and condescending at best, and at worst, meaningless.”

In any event, in the policy address he said there was “not a half-scintilla” on the Umbrella Movement, “perhaps the single most significant political event in Hong Kong since the riots in 1966”. Nor was there a mention on the defeat within LegCo of the introduction of universal suffrage for the election of the chief executive.

In the entire two hours spent delivering his address, Tang said, the Chief Executive “did not give the slightest hint of an amoeba of political or social dissatisfaction, yet a great deal of dissatisfaction is prevalent. It was no surprise, therefore, that even before he began his address, four members of LegCo were removed for protesting against his favourite past-time of sweeping what he regards as rotten political dust under the carpet.

“The supreme paradox for me is the opening line of his address: ‘Since taking office, the current term government has focused its efforts on promoting democracy,’ so CY Leung smugly said.
“Whoever wrote that for the first sentence for the Chief Executive, if he himself did not write it, must be a comedian; or perhaps a monkey who accidentally typed up those words on a typewriter. What it all means to me is the disingenuousness of our Chief Executive and government, and the contempt with which they hold us, the citizens of Hong Kong.”

However, Tang asked, should we have expected anything else? “After all, throughout the Umbrella Movement, our Chief Executive steadfastly refused to meet the protesters. We should remember that even Li Peng, the hardcore, hardline Chinese Premier at the time [Tiananmen in 1989] received [protest leader] Wu’er Kaishi, and what’s more, in full view on national television.
“By comparison, our Chief Executive hid behind the azaleas at Government House and pushed out that diminutive figure of Chief Secretary Carrie Lam, who fluffed around with absurd preconditions and insisted on meeting the students behind closed doors.

“You understand how parochial we seem, already.

“It all further means that our Chief Executive does not have the bottle to confront difficult issues, yet that is precisely the one quality that we should demand in our leader.

“We certainly don’t want one who totally ignored the heat of our political and social conditions and instead spent half of his speech pontificating on the woolly symbols of ‘One Belt, One Road’, which was mentioned 48 times. Quite apart from the embarrassing unctuousness towards the Chinese president, what on earth would an ordinary citizen of Hong Kong care or understand about One Belt, One Road?

“I even doubt that a single tycoon in Hong Kong could name more than two countries on the original Silk Road that was the inspiration for One Belt, One Road. Is our Chief Executive really trying to push Hong Kong trade, and our financial services, across Kazakhstan, Uzbekistan, Turkmenistan, Iran, Iraq… and inexorably into the heart of the terrifying Islamic State?
“Borat might have been able to get away with it, with humour – but hardly our sombre Chief Executive with any degree of seriousness.”

Wanted: a strong leader
Tang said that if he was to hold out any hope for a better Hong Kong, “I would first wish for a much stronger, and much more effective Chief Executive. I know this sounds [like] self-evident truth, but that is what we need to focus on.

“By which I mean someone who would at least appear to represent the people of Hong Kong, and not fearful of relaying to the Chinese authority those views which are considered to be discordant music to the ears in the north.

“But the most preponderant misreading on the part of the Chief Executive of Hong Kong is to second guess what the Chinese government does not want to hear. These furtive considerations do great damage to the status of the Chief Executive, because even before asking, he has turned himself into a puppet on a string, dancing obsequiously to the tunes and echoes of Zhongnanhai.
“I would even wish for a Chief Executive who was cunning enough to persuade the Chinese government to hear openly the grievances of Hong Kong, while knowing full well that they would fall on deaf ears. But at least under these open circumstances, we will obtain an airing of what those grievances are, then sooner or later people will become conscious for the need of compromise.

“And therein lies the secret of civilisation: divergent views being brought closer together openly, through peaceful, intellectual and intelligent negotiations. That, in a nutshell, is what Hong Kong is crying out for. A mediator, or a group of mediators who could bring those pan-democrats and the stiff establishment around the same table and begin the process of some kind of reconciliation.
“As a citizen of Hong Kong, born and bred below Lion Rock, I was really sad to see the anger – or should I say Tourette’s – displayed by those well-meaning legislators who were ejected from the chamber in front of an ossified face of our Chief Executive.

“These tribal confrontations exemplify deep bitterness and resentment, and precisely represent the fundamental and symptomatic illnesses of our territory.

“They are similar to the rifts between the Shiite and the Sunni, the Arabs and the Jews, and the North and South Koreans. But there is so much more hope of a lasting ceasefire in our case because we have, thankfully, at least not shed any real blood. Not yet.

“Indeed, the Chinese authority could simply transform our entire livelihood tomorrow by becoming a mediator of the two opposing sides. The two sides must meet, they must sit down opposite each other; they must start talking. They must carry a modicum of goodwill on each of their parts.

“It is only when the stinging palpitations of our political polarisations are diffused, that we can once again return to a marvellous and civilised legislature that has served Hong Kong well, before its fragmentations and the damaging of the fabric of our society before our own eyes.

“If we’re not careful and simply let the sour enemies sit inert, in stalemate across from each other on the chamber floor at LegCo, then we will be throwing away what we have managed to build, totally against the odds, a solid and burnished rock that was once considered merely as barren.

“Churchill was supposed to have said “democracy is the worst kind of government, except for those others which have been tried.” I should like to think that Hong Kong is the worst kind of place in which to live, except for those others which have been tried.

“My point here is that, given all the problems we have, with a deteriorating administration which half confesses itself to have a legislature that is becoming ungovernable and losing confidence among the majority of the population by the day, with a Chief Executive whose popularity is at a historic low, we must cling on to Hong Kong as our home, but we cannot afford to stand by our status quo.

“Our government has been growing apart from the people of Hong Kong and they must anticipate trouble. Already, there are over one million people in Hong Kong who are trapped by poverty, and they cannot be too pleased about the government. It is simply invidious that in a prosperous community such as Hong Kong, over 15% of our population should be living below the breadline.
“It is a shameful state, scandalous if you ask me. Then there was the Umbrella Movement, which clearly demonstrated the resolution of many ordinary people taking real democratic power seriously, and their dissatisfaction can only be increased by the defeat of the universal suffrage motion in LegCo.

“Then the disturbing case of Lee Po and his colleagues and those hawkers openly branded as separatists by the Liaison Office. To compound our problems, the dwindling numbers of visitors from the mainland, financial oscillations in the markets, not to mention the growing number of the aged against a falling number of our workforce, the umpteen cases of abduction in the mainland about which we hear very little, the dark appearances of triads at demonstrations, the thorough incompetence of the government in creating a proper cultural anchor in the city…

“There are many more things which need fixing, and most of them could not be achieved given the standoff between the pan-democrats representing the majority of ordinary people, and the establishment, so-called, hugging most of our somnambulant tycoons, and that elephantine Communist Party in China.

“Thank God, thank God we still have a decent judicial system and a fairly uncorrupted community and genuine freedom in Hong Kong. This holy trinity – which is what I call it – remains the pride of Hong Kong people.

“You think Shanghai, say, with her mainland judicial system and corruption, and lack of freedom, could overtake Hong Kong as China’s premier city? You would have to be utterly insane, and stupid.

“Ergo, we must hang on to this holy trinity of a decent judicial system and uncorrupted community and genuine freedom until the bitter end… or 2047 at least. In my moments of fantasy, I even think Hong Kong could play a vital role in shaping the future of China.

“Why else would 50 million mainlanders come flooding through Hong Kong every year?

“It’s because of our holy trinity. This would make the seven million of us in Hong Kong the greatest and freest de facto Chinese diaspora, which in turn could change the course of Chinese history in our lifetime.”

Other subjects that came up during the Q&A include:

Outside influence on student protesters. Maybe there was a tiny amount of support by outsiders, “but if you thought in our city full of bright, loyal young people require a conspiracy outside of Hong Kong to support a movement – that was genuinely moving – I think that is far-fetched in itself. So, in a nutshell, no.

I have to tell you there are serious and influential people I know – who don’t live in Hong Kong but own a lot of Hong Kong – who keep telling me, oh, it’s the Americans or CIA. I think that is absolute balderdash.

Should Britain support Hong Kong more. At this time there is no point blaming Britain. In fact when Britain left Hong Kong it left the territory intact and did not take one cent… and it even paid rent for its consulate building. And you couldn’t have a greater champion than the last governor, Chris Patten, in trying to install a system of government or politics that would maximise the possibility of Hong Kong people ruling Hong Kong.”

The bookseller who eventually emerged in Guangzhou after some weeks. “The fact that he left his passport behind must have meant that somebody fairly high up in authority managed to get him abducted into China. And, of course, this indeed is a very serious matter – not only about the breach of the Joint Declaration, but as a fundamental principle of the one country, two systems. It is essential that we stand fast on this one. It sets an extremely bad example.

“I have heard that the Chinese authorities have now told the civil servants who carry out these sorts of things not to come to Hong Kong any more as they are slightly edgy about the recent bad press.

“I know one or two friends who were supposed to go to China for questions but decided not to and asked to meet in Hong Kong instead. They have now been told to bring a solicitor or policemen with them to feel safe. In a way the bookseller incident has defused that wind of bad change, which I hope will carry on.”

Tang talk goes viral

Not surprisingly, given the frankness of some of the views expressed, David Tang’s FCC talk ignited a minor firestorm on social media. A recording of the presentation posted on the FCC’s YouTube channel racked up nearly 10,000 views in the first day after posting, an exceptionally high number, with over 300 ‘likes’ (versus a mere three thumbs-down).

On Twitter, as well, Hong Kong watchers and correspondents were quick to pick up and swap highlights of the event, with Tang’s comments on CY Leung’s leadership seeming to gain the most traction.

Tang’s talk even made it on to the normally relatively staid LinkedIn professional network, with an executive from Invest Hong Kong calling attention to the “full house” at the Club and Tang’s championing of Hong Kong’s “holy trinity” — an independent judiciary, lack of corruption and genuine freedoms.

The online media reaction was mixed. A Coconuts Hong Kong article on the presentation that contained a link to the full text of Tang’s speech was shared across hundreds of Facebook pages, while a debate raged in the comment section of the South China Morning Post’s story on the event.

Tang was alternately hailed as a “wise man” and “one of the few public figures in Hong Kong with any guts”, while others derided him as a “wannabe politician” and a “tabloid celebrity”. Regardless how they view Tang’s at times scathing opinions, few would disagree that the event once again highlighted the FCC as a key venue for dialogue on the city, and a regular host to some of its leading personalities.

Link to Coconuts story: http://hongkong.coconuts.co/2016/02/19/shanghai-tang-founder-slams-cy-leung-govt-beijing-speech-hong-kongs-future
SCMP: http://www.scmp.com/news/hong-kong/politics/article/1913976/even-li-peng-met-tiananmen-protesters-says-shanghai-tang

Mar/April 2016

Mar-Apr 2016 Harry’s rejects

Greening of Asia

The viral Chinese pollution documentary ‘Under the Dome’ has disappeared behind a wall of, no not smog – censorship. Created by former CCTV anchor and newswoman Chai Jing this documentary has been compared to Al Gore’s ‘An Inconvenient Truth.

Greening of Asia

Asia, particularly China, is an environmental disaster. Mark Clifford in his book “The Greening of Asia” – and at a FCC lunch – argues that there is a way out through a combination of business, government and civil society strategies.

[dropcap]A[/dropcap]s we all know, Asia has a lot of environmental problems. Mark Clifford, executive director of the Asia Business Council and formerly editor of the South China Morning Post and The Standard, a senior editor for BusinessWeek and the Far Eastern Economic Review, said he was staggered by the research into this book that showed just how bad it is.
“I originally thought of calling the book ‘The East is Black’, first coined by Time correspondent Sandy Burton [of the FCC’s Burton Room] more than 10 years ago, which the Chinese authorities didn’t take kindly to,” he said.
“I don’t want to sugar-coat the problems, however the book is unabashedly a glass-half-full kind of book: we have got a disaster, but I think there is a way out.”

Chai Jing coal towers – China burns more coal than any other country in the world – about half the total every year – and is responsible for more than a third of the greenhouse gases that impact global warming. AFP
While Clifford’s book looks at all of Asia, his talk focused on China, arguably the most important country that needs to clean up.
Coal is at the heart of global environmental and energy problems. China burns more coal than any other country in the world – about half the total every year – and is responsible for more than a third of the greenhouse gases that impact global warming.
So, coal is bad on many counts: about 1.2 million people every year die from outdoor air pollution alone mainly through sulphur dioxide, 90% of which comes from coal emissions; 70% of China’s carbon emissions are from coal; and although carbon dioxide is not a pollutant, it is a significant greenhouse gas.
“In my book I focus on business and what business is doing because I think business day in and day out solves problems and takes challenges and makes opportunities out of them,” he said. “However, business does not operate in a vacuum, but as part of a three-legged stool of government, business and civil society.”
Civil society in China, despite the enormous pressure it’s under, is increasingly important. “You see a lot of localised protest against chemical and other highly polluting industries – though most of these are what I call not-in-my-backyard protests.
“However, all of us saw the reactions to Chai Jing’s quite stunning documentary ‘Under the Dome’, which was downloaded more than 300 million times in that first two-week period. It had an enormous impact. So much so, the government removed it from the Web.
“This shows the importance of civil society, even in the Chinese context,” he said. “I think China is now moving towards taking action.”
Clifford said that since 2007 the top leadership in China has made increasingly bold and assertive comments regarding climate change and air pollution. Like last November when Xi Jinping announced that China’s carbon emissions would peak by around 2030. “This is the first time China has a committed to a date, or even talked about it,” he said. “Although our research shows that it could be earlier than that, what is it going to take to get there?”

Toward clean energy
Clearly the climate wars are going to be won or lost on what China and the US – by far the two largest producers of energy – are going to do.
“If coal use has to peak by the mid-2020s, we will probably need some sort of carbon tax to speed the transition away from fossil fuels.
“As part of that transition towards 2030, clean energy will need to take up some 20% of the total – coal now is about 70%, so clean energy has to take some of that.
“China is going to need 800-1,000GW of clean energy,” says Clifford. “If China, which now has about 200GW of clean energy, mainly hydro and some solar, builds the 1,000GW it needs, it’s more than any other country other than the US. It’s an enormous amount of power to build.
“While I am focusing on solar and wind, I don’t want to ignore that clean tech for China includes hydro and nuclear energy.”
In fact, China has the most ambitious nuclear energy programme in the world, though it will be a drop in the bucket given that by 2020 it is expecting to add 57-58GW from nuclear power – almost as much as France. So nuclear doesn’t really move the needle for China.
“Solar and wind are increasingly important,” Clifford said. “Already China is the world’s largest solar panel manufacturer. It didn’t actually use the solar panels domestically but exported most to Europe and the US until a series of what I would call protectionist moves made it much more difficult to sell into those markets.”
In a way, that turned out to be a blessing in disguise, Clifford said, because it put a floor under the pricing for China’s solar manufacturers and saved some from bankruptcy, although it has not been a profitable industry.
“I say in my book that Suntech, which had been the world’s largest solar manufacturer, went bust because it expanded too quickly. Suntech and other individual companies’ loss in terms of profitability, has really been to the rest of the world’s gain because we have seen solar prices fall by more than 80% because of China’s manufacturing capability in the past decade,” he said.
As the international markets have become more difficult, China has turned to the home market. “In the first quarter this year alone, it has installed 5GW of new solar capacity, which given the fact that Germany is the largest solar producer in the world with 38GW, it’s almost unbelievable.”

China is the world’s largest producer of solar panels and installed over 5GW of new solar capacity domestically in the first quarter of this year. Chin leads the world in wind turbine capacity at 15GW of output. AFP

Wind could be it
At the end of 2014, China had, by far, the most wind capacity in the world at 150GW. “Although wind is extremely cost-effective – the second most cost-effective after coal – China has some problems here because even though it has all this capacity, the US produces more electric power from the wind because it actually hooks the turbines up to the grid,” Clifford said.
“A lot of the problems we see in other parts of the Chinese economy are writ large in the electricity grid sector. It’s something that China has to do something about if it wants to reap the benefits of its investment in clean tech.”
So, on a theoretical basis at least, the wind potential is almost limitless in China. Some US and Chinese researchers estimate that wind could meet all of China’s electricity needs by 2030.
“Of course, this is highly theoretical, but the point is the wind is there, it’s cost-effective, and at this point it’s a matter of getting the grid and the policies right to make sure that these assets generate electricity.”
Ten years ago China had almost no wind capacity domestically and didn’t export wind turbines very much – a very different picture from solar. “However, China went through a really aggressive localisation programme where foreign manufacturers’ share of the wind-turbine market went from about 78% to about 14% in under a decade as China did everything it could to create a domestic wind-turbine industry.
“It’s important to remember that though there are a lot of problems – profitability for individual companies and linking turbines to the grid – this is real and not just smoke and mirrors: China spent US$89 billion last year on clean tech (US in the low 50s).”
Clifford said that what is also impressive is how the region – Asia ex-China – performed with spending more than US$60 billion on clean tech last year, about the same as the EU. Asia is playing catch-up, but it is putting in the money and resources; and it’s not only government initiatives and policies but a lot of corporate work as well.
“What works best is when government, business and civil society work together; and that we are using prices as much as possible to drive change as opposed to super-detailed regulations.
“And businesses are really giving the lead and direction to do what they do best, which is to solve this kind of problem,” he said.

How green was my
Special Administrative Region
By Gavin Coates

[dropcap]M[/dropcap]ay 6 1982: My first morning in Hong Kong. Desperate to brush my teeth after a night out at the Bull and Bear and Disco Disco, I staggered to the bathroom, turned on the tap and waited in vain. Outside was torrential rain the like of which I had never seen before, but like a latter-day, urban Ancient Mariner I had not a drop to drink.
I mention water rationing, because this partly explains why so much of Hong Kong Island and the New Territories was not developed. Not only is it difficult to create construction terraces on mountains, but before Hong Kong could buy water from the Mainland, the water catchment areas and reservoirs were of critical importance and had to be kept free of development. It’s no coincidence that the Country Parks largely overlap with these catchment areas. Like many, I was astonished at the beauty and extent of the Country Parks only fairly recently established thanks to the governor, Sir Murray MacLehose. They and the other undeveloped hillsides, islands and beaches alone, endow Hong Kong with exceptional green credentials in terms of the proportion of protected land area.
The New Town Development Programme was instigated in parallel with the establishment of the Country Parks and this really kicked things off for the landscape architecture profession here, with a lot of help from former FCC member Michael Kirkbride. Entirely new cities like Shatin rose from nothing, starting in the mid-1970s, followed by Tai Po, Fanling, Tuen Mun, Sheung Shui and Yuen Long. The Hong Kong new town programme was to some extent a transplant from the British new town programme, requiring landscape architects to design the open spaces, parks, housing estate landscapes, as well as the greening of the road and land formation infrastructure.

Green times
From 1982 I worked mainly on Tseung Kwan O New Town (formerly Junk Bay) and various housing estates. I’m particularly proud of having been involved in the design of Yuen Long Town Park, completed in 1991. Unlike most other Hong Kong parks, which are terribly regimented, it is much freer; people sit on the grass, have picnics, play Frisbee, and relax, like in a real park.
In the late 1980s I was involved with the preservation of the big banyan tree at Pacific Place between the Conrad and Island Shangri-la hotels. Around the corner, the waterfall and lake area of Hong Kong Park turned out really well; the main waterfall must feature in countless wedding photographs. Try knocking on the stone face and you’ll find it’s hollow – all artificial but very professionally so.
At that time, I also started doing illustration and cartoon work, which became my main line of work until 2004. From 2000 to 2008 I drew the daily editorial cartoon for The Standard newspaper and a weekly cartoon for Hong Kong ComputerWorld from 1987 until 2004.
For the past 11 years I’ve worked on a series of Greening Master Plans (GMPs) commissioned by the Civil Engineering and Development Department of the Hong Kong government. Although the scope of the GMPs was mainly restricted to the streets and roadsides, more than 20,000 trees have been planted so far, scattered all over the urban areas of Hong Kong and Kowloon.
It really is quite exciting to be able to go around the city and check up on how they’re doing.

The GMPs were great as far as they went, but did not change the layout of the city. They did not address circulation or land use issues. If you wanted to green Queen’s Road East, for example, the vehicular lanes would have to be drastically reduced in order to plant trees down the street. Then you are up against entrenched attitudes. When it comes to this topic our policymakers seem to be stuck in the 1950s. The rest of the world is moving on, and urban design is increasingly about pedestrianising, reducing traffic speeds, widening footpaths, and putting in bicycle lanes. In Hong Kong the streets are exactly the same as they were when I first saw them in 1982. There has been little positive progress, and it is a bit frustrating.
Another area I would love to get my hands on is the ‘urban fringe’, that is the areas between the Country Parks up on the hillsides and the urban areas themselves. Many of these areas are former squatter areas which are now fenced off. They have tremendous potential to be developed as informal parks and woodlands, easily accessible to the urban population and dramatically improving accessibility – the slopes below Tai Hang Road, for example.

Good and bad
Much has been achieved over the years and there is still progress, albeit painfully slow. The opening up of the Central Waterfront Promenade is a huge step in the right direction – after waiting 150 years people will finally be able to walk along the seafront from Central to Wan Chai.
By the way, that whole waterfront is zoned as a park, let’s just hope we don’t have to wait another 20 years or more for it to be built.
The West Kowloon Park should finally appear in a few years, two decades after the land reclamation was carried out. Progress in urban planting is of course only one component of being green, and is frankly reduced to window dressing if the government persists with endless highway construction and massive, highly destructive projects like the rubbish incinerator proposed on Shek Kwu Chau island off Lantau.
When you go back to your old projects and see people enjoying the environment, you see the trees you planted now mature, that is very exciting. Now, I am teaching landscape architecture at HKU. I hope to encourage students to be bold in their thinking, to develop a passion for plants, design, and to make a positive difference. All we need now is a CE with a green rather than reinforced concrete mindset.

Photos by Gavin Coates

Green story books

[dropcap]I[/dropcap]n the grounds of the Eastern and Oriental Hotel in Penang stands, or at least stood, a truly magnificent tree. One that I could not identify, which for someone with an interest in trees, is always frustrating. I showed its impressive fruit to various people to no avail until the Tamil doorman proudly announced it was aptly called a ‘horseball tree’. The herbarium at Singapore later told me it was a Sterculia but somehow the first name was more evocative.
The image of the tree and its potential progeny remained with me and when I was confronted with responsibility for my own progeny in the form of my newborn son, a story began to germinate. The result was my first illustrated book “The Last Nut”, dedicated to all children under the age of 125, which I bet includes you. I’ll let you discover the story yourself, and say only that it involves a nut that becomes a mighty tree and that the most important character can be seen in the mirror at the end of the story.
The best way to distribute the book turned out to be by visiting schools, reading the story, and asking the schools to send out order forms afterwards. I quickly learned that the majority of children are way ahead of most adults when it comes to curiosity and concern about our environment.
A second book “Pinky the Dolphin and The Power That May Be” followed, a story about the plight of the pink dolphins that live off Lantau, again ending with the mirror.
This was followed by ‘The Search for Earthy’s Best Friend’ featuring a characterisation of our planet, with guess-who at the end of the story.
These three books suit the 5 – 10 age group, other titles “Earthy Love” and “Earthy is Nuts About Trees” cater for younger readers or listeners.
Other titles include “My Life My Chopstick”, which explores the futility of life as a single, megalomaniac chopstick, but ends with a happy pair.
I have read these books to thousands of children and am always amazed by their incisive questions.
I wrote and illustrated all the books and if you would like to find out more, please have a look at http://www.earthypublications.com/. FCC members are welcome to order from me directly.

Gavin Coates

How to Win and lose at politics in XI’s China

Politics has always been a game of high stakes in the
People’s Republic, ever since the era of Mao. And 35 years
after reform started, the stakes had never been higher,
according to Kerry Brown, Professor of Chinese Politics,
University of Sydney and former British diplomat, at an FCC
lunch on September 30.