Hedging Their Bets on China Hong Kong High Rollers Wary of Investing in Country's Wild West
[WTN-L World Tibet Network News. Published by The Canada Tibet Committee. Issue ID: 01/06/06; June 6, 2001.]
By Clay Chandler
Hong Kong's business barons are famed for their love of gambling. Their willingness to take chances -- in the boardroom, on the stock market and at the racetrack -- is often celebrated as a key reason for this tiny harbor's extraordinary commercial success. But those same risk takers are responding with uncharacteristic wariness to an appeal from Beijing officials for help in developing China's vast, impoverished western provinces. A high-profile business delegation led by Hong Kong's chief secretary, Donald Tsang, returned last week from a 10-day tour of China's wild, wild west making few promises of new investment. The group, which included more than 200 of Hong Kong's wealthiest men and women, announced plans for barely two dozen investment initiatives. All told, the value of the projects adds up to no more than $30 million. There were pledges of new money for hotels in Tibet, concrete plants in Guizhou and a facility that makes traditional Chinese medicine in Ningxia. ChinaChem Group's chairman, Nina Wang -- whose estimated net worth of $1.2 billion makes her one of the world's richest women -- said she would invest in a clutch of small projects, including vineyards in Xinjiang.
Hong Kong's Dragonair struck a deal with Xinjiang Airlines to operate new flights to the region. And the chairwoman of Hong Kong's Tourism Board floated the notion of building a luxury rail line connecting Hong Kong with popular tourist sites in China's western provinces, such as the site of the terra cotta warriors in Xian or parts of the old Silk Road once traveled by Marco Polo.
But by the standards of Hong Kong's high rollers, this was small change --less than what many of their businesses earn or lose in a single quarter. And many of the "deals" were mostly symbolic, vague letters of commercial cooperation or pro forma signings for modest projects already in the pipeline.
China's rulers have made economic development of the western provinces a top national priority for the next decade. The government's "Western Big Development" initiative targets the provinces of Sichuan, Gansu, Guizhou, Yunnan, Qinghai and Shaanxi, the municipality of Chongqing, the Ningxia "autonomous" zone and the sprawling "autonomous regions" of Xinjiang and Tibet.
Together, those areas occupy more than half of China's land, account for the country's most important oil, natural gas and mineral reserves and encompass strategically vital borderlands and military installations. But they include only about a quarter of the nation's 1.3 billion people. Many inhabitants of China's western region are members of restive Tibetan and Islamic minority groups who have not shared in the rising prosperity of China's coasts. China's leaders need the region's energy and mineral resources to fuel continued expansion of the country's economy. They also hope higher living standards will ease ethnic and religious tensions in the region and tamp down recurrent calls for political independence.
Communist Party leaders make it increasingly clear that they expect the prosperous merchants from Hong Kong, a former British colony that reverted to Chinese sovereignty in 1997, to make a generous contribution to the cause. Chinese Premier Zhu Rongji, who welcomed the Hong Kong delegation to Beijing last week in a one-hour meeting at the Great Hall of the People, appealed to the delegates' patriotism and their pocketbooks. Hong Kong business leaders who invest boldly in western China are certain to be ranked among Hong Kong's top 10 richest people a decade hence, Zhu promised. Some interpreted Zhu's comments as a broad hint that Beijing would lavish rewards elsewhere on Hong Kong investors willing to ante up out west. But others weren't so sure.
Although the Hong Kong group's tour was intended to showcase business opportunities in the west, it left some participants overwhelmed by the region's imposing size, disparate cultures, harsh climate and limited creature comforts.
The tycoons toured the hinterland aboard a special Dragonair charter. Security was tight. During the group's visit to Urumqi, party officials blocked roads and cordoned off public squares to avoid trouble from disgruntled Uiqurs, some of whom have charged that the group's visit is part of a Beijing-led program to swamp ethnic minority groups by resettling the region with Han Chinese, the country's dominant ethnic group.
Hong Kong's gentry is dominated by descendants of Han Chinese from the nation's burgeoning eastern coast. Most are more familiar with Western cities such as London and New York than with western Chinese cities such as Urumqi and Chengdu.
Many, such as Li Ka-shing, the chairman of Cheung Kong Holdings and Hong Kong's richest man, are mainland immigrants who built their fortunes from nothing. But the group has mellowed with age and success. And some of those who joined the tour -- for example, Li's son, Richard, the 34-year-old chairman of Pacific Century Cyberworks Ltd., who zipped to Urumqi and back on his own plane -- are second-generation "princelings" raised in luxury. Hong Kong's business elite "has all gone soft," snickered a mainland-born financier who counsels some of them. "These aren't the sort of people you'd expect to tame a frontier. They'd rather sit in the VIP lounge sipping cappuccino."
Other analysts have argued that it is unrealistic for Beijing to expect Hong Kong's moguls to play a significant role in developing the western regions given that nearly all hail from commercial backgrounds unsuited to the task at hand.
Hong Kong's captains of industry made their money in property, trading, shipping and manufacturing, noted columnist Simon Pitchard in a recent edition of the South China Morning Post. Although they may know a lot about how to "build hotels, develop expatriate compounds and assist in the financing of toll roads," he observed, "none have the expertise to develop resource-based businesses" such as mining or drilling for oil and gas. Indeed, many observers in China, as well as Hong Kong, expect that U.S. and European multinationals such as Exxon Mobil, BP Amoco and Royal Dutch/Shell will prove the key players in western China's development, while Hong Kong's vaunted tycoons remain on the sidelines.
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