Posted by: Bruce Einhorn on January 28, 2009
The Year of the Ox has gotten off to a bad start in Hong Kong. In a ceremony at a local temple yesterday, a government official drew the worst straw in a ceremony that is supposed to forecast the state of the economy in the year ahead; the fortune stick was No. 27 out of 27. The big fireworks display in Victoria Harbor didn’t turn out so well, either, with a boat catching fire. Nobody was hurt, thankfully, but still, not a great omen after a brutal year that left Hong Kong in recession. As I wrote in a BusinessWeek story and slide show (World’s Gloomiest Countries), when it comes to expectations about business and the economy in 2009, Hong Kong has the dubious honor of being one of the gloomiest places on earth.
That said, there is some reason for cheer. The air pollution in Hong Kong typically clears up during Chinese New Year as factories across the border in Guangdong that contribute to the city’s smog close for the holiday. This year, many of those factories are going to remain shut, victims of the global downturn. That will add to China’s growing unemployment problem and could lead to social instability that might be worrisome to the Beijing government. However, fewer factories in Guangdong could mean less air pollution drifting down to Hong Kong. We’ll see in the months ahead, since typically winter is the worst time of year for smog in Hong Kong. (The wind often blows from the north then, dumping the Guangdong pollution on the city.)
Improvement might be temporary, with pollution coming back once the economy recovers and factories reopen. On the other hand: The factories that have closed are the smallest, least efficient ones – and also the worst polluting ones. Even with an economic recovery, many of those factories aren’t coming back. That could possibly help solve one of the biggest problems that Hong Kong faces over the long term. With Hong Kong gripped by gloom, that’s something to think about other than No. 27.
BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.