This Research Bulletin has been published in F Wu (ed) (2006) Globalisation and the Chinese City London: Routledge, pp. 85-107.
Please refer to the published version when quoting the paper.
The formation and growth of global cities (Sassen 1991, 1994, 2001) or world cities (Friedmann 1986, 1995), terms used synonymously for our purpose (compare Taylor 1997 for this), is triggered by global economic change. Friedmann, Sassen and others found that the world-wide networks of production, finance, trade, power and migration require nodal points provid ing the infrastructure, information and financial resources that make the networks work. Global cities are therefore mostly classified by economic criteria, of which three categories can be distinguished: institutions: presence and size of stock exchanges, banks, international law firms and other producer service providers; connectivity: linkages to global networks, visitors, passenger flights, long distance calls, financial transactions and Internet usage; and power: location of regional headquarters, decision-making within corporate command and control chains and supranational institutions.
The global networks are viewed as a system of nodes and links, with cities represented as the nodes, and the flows and power relationships between them represented as the links (Castells 1996; Beaverstock et al. 2000; Sassen 2002). Nodes and links are strongly interdependent. The networks grow with the number of links, thereby at the same time nurtur ing the main nodes, which serve as points of control and provide expertise and services in crucial fields such as international law, finance, accounting and travelling (Allen 1999; Taylor et al. 2002). This concept, linking the geographic notion of place with economic concepts of command and control, supply chains and producer services has been challenged from both the economics side for not being consistent with actual corporate decision-making processes (Jones 2002), and from the urban geography side for not paying sufficient attention to the individuality of places (Smith 2001). Further to this critique, Smith also rejects the economistic paradigm underlying the global city idea, as he claims that urban spatial and social restructuring is not necessarily preceded and determined by global economic processes but by political decision-making and local agency (Smith 2001).
While it is true that the concept is mainly conceived out of economic geography, the role and international contacts of global cities produce certain non-economic traits, which are also recognised as characteristics for these cities: temporary immigration, creating an international atmosphere, a mix of cultures and life-styles and often socio-economic polarisation; a global city culture, notably in the central business district (CBD), which is often described as lacking local characteristics; and a quality of life, at least in parts of the cities, that appeals to foreign experts, managers and diplomats.
These socio-cultural aspects have been studied elsewhere, mostly with reference to western cities (Fainstein et al. 1992; O'Loughlin and Friedrichs 1996; Sassen 2001; Beaverstock 2002). We now look at them in the specific context of Hong Kong. In terms of geographical scale, world city research engages on three levels of examination: macro level research looking at the global networks and the role of individual cities in them, micro level approaches focusing on processes within global cities, and b etween them the level of the global city region. For the latter, regional hierarchies of supporting and central functions have been identified, which in themselves are a gain organised in networks of nodes and links (Simmonds/Hack 2001; Scott 2001). This chapter makes references to Hong Kong's role within global networks and within the emerging cross-boundary global city region in the Pearl River Delta. The main focus, however, is on the local consequences of the global city. Our findings correspond with typical local changes observed in other global cities, such as a shift from secondary to tertiary industries, a vertically and horizontally growing CBD, increasing amounts of immigrants, both highly qualified experts and cheap labour (e.g. domestic helpers, couriers and cleaners), and social polarisation and segregation.
Friedmann (1998) has pointed to vital public policy issues raised by these changes, which concern regional governance, urban planning, sustainability and migrant societies. Urban planning for example is being challenged by competitive constellations in the world city network and the rising power of global investors, which tend to reduce urban policy to mere city marketing. Ng and Hills (2003: 152) compared Hong Kong with other world cities in Asia and criticised the economic focus of current world city research; and they advocated a focus on great cities' providing a good quality of life for all'.
GLOBALISED HONG KONG
Although not listed among the top world cities by Friedmann (1986), Hong Kong has since the mid-1990s frequently been identified as a highly globalised city (Tang 1997; Skeldon 1997; Meyer 2000; Lui and Chiu 2003). To explain this development just with global economy arguments would not go far enough. There is clearly a political context to refer to. In Hong Kong, the pre-handover government invested massively in the global city infrastructure, such as telecommunications, airport, port, a convention centre and land reclamation for a growing CBD. This was based on the view that a globalised Hong Kong would be better prepared to maintain a distinct character to that of the mainland. Even firms such as Jardine Matheson and the Hong Kong Bank have been described as then re-inventing themselves from colonial hongs to global players during that time (Sum 1995). On the China side, the Open Door Policy allowed Hong Kong to assume a key role for an increasingly globally integrated China and to build strong cross-border links (see Yang, in this volume). Hong Kong and the Pearl River Delta have developed into a global city region (Chu 1996; Sit 2001; Cartier 2002), yet with specific characteristics due to the persisting boundary, and with a specific role of Hong Kong in this region.
Figure 1: A massive campaign started in 2001 to promote Hong Kong as Asia's world city
Photo: Breitung 2001.
While we will get back to this topic in the conclusion, the focus of this chapter is not on the reasons for global city formation but rather on the local and social consequences. The argument develops in three steps. Firstly, Hong Kong's claim to be a world city (Figure 1) is verified by four major aspects of global integration (air and telecommunications connectivity, financial services and command and control by regional headquarters). From there, we begin to examine the local level by arguing that global integration triggered sectoral and, more importantly, spatial changes in Hong Kong's employment structure, and thirdly the social and socio-spatial consequences are discussed referring to immigration, polarisation and segregation. The chapter is based on our research since 1997 (Breitung 1999, 2001a, 2001b, 2002; Günter 2003). Its timeframe is the period of global city formation in the 1990s. Despite the importance of the regional scale, we refer to the territory of Hong Kong when analysing local consequences, because of the persisting significant differences in terms of economy, society, administration and data collection and provision.
Air traffic. Passenger air connectivity is a n indicator and requirement for global cities (Rimmer 1996; Shin and Timberlake 2000). It indicates the extent of integration in global networks, and it is necessary for global command and control functions, since multinational firms and agencies require highly accessible headquarter locations. Accessibility is reflected in the number of flights from or to a destination. In the first half of 2000, our sample survey of departures from Hong Kong recorded 1,915 weekly passenger flights to 120 destinations (Breitung 2001a: 19). Although the connectivity to all parts of China was good, international links still dominated (78 per cent). Hong Kong's connectivity network within China was finely-meshed but weak, compared to a more solid international network (Figure 2). The top ten flight destinations from Hong Kong were other Asian hubs. The classic global cities in the West, New York and London, are ranked eleventh and twelfth (Table 1). With 14 daily flights to Singapore and 7 to New York, Hong Kong was at least as strongly connected to these cities as to parts of its natural' hinterland via land connections.
The amount of contact between cities, including tourism, family and business ties, is better reflected in the passenger numbers. Since domestic flights tend to use smaller planes, the share of international passengers would even be higher than the share of international flights. However, it must be noted that transit flights make passenger destinations hard to assess (for instance flights via Anchorage and, more importantly, between Taiwan and the mainland where no direct links exist).
Figure 2: Hong Kong's three air traffic networks
Source: Breitung 2001b.
Table 1: Flight connections from Hong Kong per week (2000)
Source: Breitung 2001a.
Telecommunications. In a similar way, telecommunications connections and infrastructure are both indicator and location factor for global city functions (Castells 1996; Sassen 2002). Hong Kong's strength in this regard can partly offset the high costs for office space and wages and therefore increase its competitiveness. Already in the 1990s, Hong Kong's telecommunication services were sophisticated, convenient and inexpensive (Enright et al. 1997). The subsequent market liberalisation made Hong Kong one of the most open telecommunications markets in the world. Competition has substantially reduced international call rates, improved the quality of services and increased Hong Kong's external connectivity from 44 Gigabits per second (Gbps) in early 2000, to nearly 900 Gbps in early 2002. The world's biggest civil satellite teleport, 10 submarine cables to overseas and two terrestrial cables to Guangdong provide Hong Kong with external connectivity second only to Tokyo. A 100 per cent digital fibre-optic and co-axial telecommunications infrastructure and the broadband network cover virtually all households and commercial buildings. The mobile phone penetration rate of 91 per cent (6.2 million subscribers) is among the highest in the world (Information Services Department 2003).
Finance. The flows of money and the availability of financial services are recognised as crucial factors in turning a place into a global city. Hong Kong has been portrayed as a leading financial centre by several authors (e.g. Jao 1997, Meyer 2000). In the 1990s, international financial interactions such as gold and currency trade, foreign loans and outward investment, saw the strongest growth. The total volume of loans increased from HK$ 500 billion (US$ 64 billion) to almost HK$ 4,000 billion (US$ 500 billion) in the ten years to 1996, and the share dedicated for investment outside Hong Kong from 33 per cent to 53 per cent (Census and Statistics Department 1997a). The destinations were mainly in Asia, increasingly China.
Hong Kong boasts more offices of international banks than Tokyo and Singa pore combined (Bank for International Settlement 1999, quoted in Ng and Hills 2003), including 73 representative offices of 100 worldwide largest banks, and the second most important stock exchange in Asia (Information Services Department 2003). Since 1993, the Hong Kong stock exchange lists titles from the mainland and has become the main place for mainland companies to raise money abroad. As the financial centre of China, however, Hong Kong is increasingly facing competition from Shanghai and even Beijing (Yusuf and Wu 2002; Zhao 2003).
Regional headquarters. Next to the flows of people, information and money, regional headquarters, as transmitters of power and control, are core features of global cities. These are good indicators, because their locations are more flexibly chosen according to location factors than the often historically grown top headquarters (Dunning and Norman 1987). The main functions of regional headquarters are: regional market analysis and regionally specific strategic planning, organising networks and production chains, financial control, cost reduction through bulk purchase, technical support to the activities in the region, and communication between headquarters and employees in the region (adapted from Perry et al. 1998).
The number of regional headquarters and regional offices in Hong Kong increased steadily during the 1990s (Table 2). Hong Kong and Singapore were traditionally fierce competi tors in this field. More recently, however, as the catchment areas of regional headquarters are shrinking in size due to their rising numbers and growing importance, even companies from Singapore, Taiwan and the mainland began setting up regional headquarters in Hong Kong (Table 2). In 1996, second regional headquarter in Hong Kong no longer serve Singapore, whereas those serving Greater China alone had increased from 8 per cent in 1990 to 39 per cent in 1996 (Perry et al. 1998). Subsequently, the reporting method has changed, b ut in 2001 83 per cent of the regional headquarters were in charge of Mainland China (Lui and Chiu 2003). For Hong Kong, competition with Shanghai and Beijing has become more important than with Singapore.
Table 2: Regional headquarters and regional offices by country of mother company
* no record (figure too low), Source: Census and Statistics Department 2004.
THE CHANGING EMPLOYMENT STRUCTURE
As postulated by the global city concept, global city formation has transformed Hong Kong 's employment structure. Many finance, logistics and business service jobs have been created, the wage level has risen, and manufacturing activities have been transferred to the extended metropolitan area beyond the city limits. With d ata mainly of the Quarterly Survey of Employment and Vacancies (Census and Statistics Department 1992, 1997b, 2002) we can analyse these changes and their spatial consequences in detail.
Becoming a Tertiary City
The total number of people employed in Hong Kong remained relatively stable throughout the 1990s, despite drastic sectoral and spatial changes. The city's secondary sector, the leading sector up to the early 1980s (Figure 3), has been severely losing employees due to outward processing (the transfer of production units across the border), but these reductions were compensated by increasing numbers of tertiary jobs within the city (Table 3). Outward processing and tertiarisation are both part of a functional differentiation within the extended metropolitan area (Sit 2001). They have increased productivity and the GDP in both Hong Kong and the region. While industrial employment has been diminished, Loh (2002) claims that manufacturing still plays an important role in Hong Kong's economy, since companies are Hong Kong owned and significant value is added in the city. This is obscured in the statistics, when manufacturing firms are re-classified as import and export firms, even though they actually trade their own products, and their employees still regard them as industrial enterprises. Such re-classification may account for 250,000 of the jobs lost' in the secondary sector until 1996 (Breitung 2001a: 106).
Figure 3: Employment by economic sectors in Hong Kong, 1971-2001
Source: Günter 2003. Data: Van der Knaap and Smits 1997, Census and Statistics Dept. 2001.
Table 3: People employed in selected tertiary industries 1992-2002
* Law firms, consulting, accounting, data processing, public relations, employment agencies, security services and others.
Hong Kong's ascent to a global city was also a main force behind strong growth in the tertiary sector. Trade, business services and financial services gained the most jobs between 1992 and 1997, especially in global city functions such as air transport and communications. After 1997, the growth of all these industries slowed down significantly (Table 3), partly due to the regional crisis but possibly also to a loss of competitiveness. This can be interpreted as Hong Kong's global role coming under threat (Balfour and Clifford 2001), but it can also be interpreted as a global city giving way to a global city region. While the growth of many producer services has come to a halt in Hong Kong, it has accelerated in Shenzhen, just across the border. This points to a second phase of functional differentiation within the region, now also involving some lower level tertiary activities, and not necessarily to a weakening of the region as a whole.
Spatial Concentration of Work Places
The economic transition during the global city formation had grave spatial implications on the local level in Hong Kong. The job losses due to de-industrialisation were most severe in northern and eastern Kowloon, where the employment share in manufacturing dropped from up to 60 per cent in 1991 to 35 per cent in 1997 (Breitung 1999). The growing business service and financial sectors, on the other hand, were and are still highly concentrated in the centre. In 1997, more than 320,000 out of these sectors' 520,000 employees worked in just three districts (Figure 4), and 155,000 in the Central & Western District alone (Census and Statistics Department 1991b, 1992, 1997b).
Figure 4: The three zones and the location of the CBD in Hong Kong
Source: Breitung 2001b.
Figure 5: Change in employment structures in selected industries in the three zones (1992, 1997)
Area A: Central & Western, Wanchai and Yau Tsim Mong Districts
The result of the sectoral shift has thus been a stronger spatial concentration of jobs, in defiance to the government's de-centralisation policy. This is illustrated in Figure 5: the individual columns show growing employment shares in the New Territories in all industries (especially manufacturing and trade, but even in finance and hotels), and a decreasing share of the centre in most industries. However, when viewing the same diagram horizontally, it appears that de-industrialisation has more than neutralised de-centralisation. During 1992-1997, the growing share of highly centralised industries pushed up overall employment in the three central districts by approximately 1 per cent per annum. The three districts' share of the total employment in Hong Kong increased from 37 per cent to 39 per cent. Employment in the New Territories grew at a rate far below the 5 per cent annual population growth, and the share of the old industrial areas located between the centre and the New Territories declined sharply.
For Hong Kong, the diverging trends of de-centralising residential patterns and centralising work patterns are causing serious planning problems. Commuter traffic is increasing dramatically, especially through the cross-harbour tunnels and underground lines. On the long run, the location of the CBD on an island far from the territory's geographic centre, let alone the greater region, will definitely become a disadvantage.
Segregation in the Central Business District (CBD)
In order to accentuate the ongoing centralisation process, we zoom in from the three most central districts (an area of 29 km 2) to the 3.3 km 2 CBD between Sheung Wan and Causeway Bay (compare Figure 4). The only significant secondary industry left in this area was printing and publishing, which is actually more a producer service, and like other lower value-added services (e.g. trade and hotels) meanwhile also on the retreat. Most expanding industries were related to global city functions and the international flow of people, capital and information. Striking increases were noted in communications, air travel, business services, investment banking and stock exchange related activities (Table 4). These operations rely on high information density and agglomeration economies. As they are extremely high value-added, local businesses, residential use and secondary industries could not compete with them.
Table 4: People employed in selected industries in the CBD of Hong Kong
Source: Breitung 2001a. Data: Census and Statistics Department 1991b, 1992, 1997b.
The resulting processes of concentration, segregation and displacement become even more obvious when zooming further into the CBD (Breitung 2001a: 120ff): (a) The 1 km 2 core CBD (compare Sit 1981) boasts 40 per cent of all financial sector jobs in Hong Kong and over 70 per cent of the jobs of the sector in the total CBD. The second strongest industry in the core CBD is business services. (b) Just outside the core CBD, business services rank first followed by trade. (c) In adjacent Sheung Wan and Wanchai, the same two sectors dominate, but already in reversed order. (d) Towards the eastern part of Wanchai and Causeway Bay, retail and restaurants take the top rank.
This sequence from finance to business services, trade and retail, illustrates a segregation that has come about through different returns per square meter and agglomeration economies. It was both cause and effect of the very high property prices. By the end of 1999, the average office rents in the core CBD were about 50 per cent above other CBD locations and 72 per cent above other locations in the three central districts (Rating and Evaluation Department 2000). This price difference quantifies the agglomeration economies. Segregation and displacement of less profitable businesses in the CBD have increased notably during the 1990s. Employment in the CBD grew by over 10 per cent from 1992 to 1997, which is more than in the three central districts and much more than in the entire territory. The 1 km 2 core CBD gained almost 15,000 jobs in the financial sector, but lost jobs in other industries. The increase in employment was stronger at the fringe of the CBD where all tertiary industries expanded, displacing residential use and manufacturing.
IMMIGRATION AND A CHANGING SOCIAL STRUCTURE
One of the major challenges in global cities (Friedmann 1998) is their expanding immigrant population. Immigrants contribute to the cultural and demographic diversity in global cities and play a vital role in their development, both as cheap labour and as specialised professionals, but the fact that a considerable part of the population regards themselves as temporary workers rather than citizens, has an impact on the civic society. In addition to this, immigration on both ends of the income scale is also contributing to the widening income gap. Hong Kong's latest population census provides remarkable evidence of these developments (Census and Statistics Department 1991a, 1996, 2001).
Diversification of Immigration Patterns
The total population of Hong Kong grew from 6.0 million in 1994 to 6.7 million in 2001, despite the very low fertility rate. Natural growth figures dropped from 42,500 in 1994 to 18,600 in 1999, but the migration balance jumped from 78,800 in 1994 to 150,600 in 1999 (Census and Statistics Department 2000, 2001). The main groups of immigrants were: (a) Expatriates: the number of newly issued employment visas, often for employees of foreign or multinational companies, grew from 16,000 in 1986 to 47,000 in 1996 and peaked at 85,000 in 2001 (Immigration Department 2004). (b) Returnees: many Hong Kong people who had previously left the city returned in the 1990s, a lot of them with foreign passports and enriched with higher education and work experience in mostly English speaking countries. (c) Foreign domestic helpers: 35 per cent of the total net migration from 1986 to 1995 was due to the growth by 133,252 in the number of foreign domestic helpers (Siu 1996). We will look at this phenomenon in the next paragraph. (d) Mainland immigrants: in 1980, a quota on mainland immigrants was introduced, which has been frozen at 150 persons per day since 1995 (Skeldon 1997). In 1995, mainlanders accounted for 28 per cent of the legal immigrants, almost entirely in connection with family reunions.
Hong Kong has always relied strongly on immigration (Lin 2002). Until the 1960s not even half of Hong Kong's population was born in the territory. The share has increased to 60 per cent since then, and at the same time immigration has diversified towards a more international pattern (Table 5). Among the foreigners coming to Hong Kong, North Americans and Southeast Asians boasted the highest growth rates (Table 6). The world city attracted business people on the high end of the salary scale, and cheap labour from the Philippines, Indonesia and Thailand on the low end.
Table 5: Hong Kong population by place of birth 1961-2001
Table 6: Foreign residents in Hong Kong 1987-1997 (in 1,000)
Indonesia was not among the top ten countries prior to 1992.
Foreign Domestic Helpers
Hong Kong's biggest immigrant communities are the Filipinos and Indonesians, who mainly work as domestic helpers. During the 1990s, the amount of Filipino domestic helpers more than doubled to 155,450. Around 69,000 Indonesian domestic helpers, a negligible group in 1991, now comprise the second largest faction (Immigration Department 2003). Globalisation is a major force behind this influx of foreign domestic helpers (G ü nter 2003). On the one hand, enhanced mobility allows people from poorer countries to earn a better living in places like Hong Kong. Especially the Philippines have made the export of labour their niche industry' in the global economy (Tyner 2000). On the other hand, the global city is run by people with little time, but enough money to support their exclusive lifestyles by employing domestic helpers.
As the high- and low-income groups expanded, employing domestic helpers and seek ing double income also became a strategy for the middle-class families to maintain their status. Today, most foreign domestic helpers in Hong Kong actually work for Chinese middle-income households. The affordability of domestic help has further increased with the recruitment of Indonesians, who are more susceptible to illegal underpayment than the Filipinas.
Compared to the rigid rules enforced on immigrants from China, the policy towards temporary immigration from Southeast Asia is relatively lenient. Some claim that local domestic helpers are being pushed out of the job market, but the fact is that they tend to seek part-time work in small households while immigrants cater to the full-time market. Competing with both are the numerous illegal immigrants and female applicants for immigration from China. Since the 1970s, Hong Kong has replaced the traditional Chinese Amahs with Filipino maids, and currently still finds it convenient to keep recruiting them. While there are many historical, political, cultural and psychological reasons behind this phenomenon, a major factor from the economic point of view is the weak legal status of foreigners. Unlike legal Chinese immigrants, who might take up other jobs or apply for social aid when they lose their job, they have to leave the city once their work contract expires. It is commonplace in global cities that low-income immigration goes hand in hand with a low legal status, either through restrictive visa rules or illegality.
The Demographic Impact of Immigration
The quota mentioned in the previous section keeps the influx of Mainland Chinese at a relatively low level. Although this policy is popular among the general public in Hong Kong, it keeps many cross-boundary families separated, which is problematic from an ethical and demographic point of view. Hong Kong is actually denying some of its own residents' offspring the right of abode, while the local birth rate is among the lowest in the world and most foreign immigrants come without children. Changing immigration patterns therefore influence Hong Kong's age structure. In 1996, only 2 per cent of the Filipinos were under 14, compared to 19 per cent of the total population. 28 per cent of the local Chinese were 30-40 years old, but 33 per cent of the North Americans, 43 per cent of the Japanese and 53 per cent of the Filipinos in the city. The median age shifted drastically from 28 in 1986 to 36 in 2001.
Another significant effect was gender specific. In the earlier days, immigrants were predominantly male, but the recent influx of domestic helpers has pushed the female population over the 50% mark. It is particularly high among the Filipinos (93 per cent), Thais (87 per cent) and Indonesians, and among newcomers from China and Macao (due to cross-border marriages). The foreign domestic helpers ha ve also accelerated the increase in female workforce participation from 29 per cent in 1971 to 43 per cent in 2001. They became part of the workforce themselves and allowed more local women to seek alternative employment to housework. The foreign managers, experts and professionals working for the global city are still predominantly male, often single, and have a low and decreasing average number of children.
Socio-cultural Impact: The Growing Importance of English
Changing language use exemplifies a cultural aspect of becoming global city. Despite the de-colonisation process, the percentage of people who speak English at home grew by about 40 per cent between 1991 and 1996, and more people claimed to be able to communicate in English (Table 7). Those speaking English at home include mixed families, Filipino domestic helpers communicating with their employers, and returnees whose children were brought up in English speaking environments. This trend is in contrast to the general perception of declining English standards among the local population and the diminishing use of English in public following the change in sovereignty. There seems to be a widening gap between a primarily Cantonese speaking society and the cosmopolitan residents who are proficient in English. This diverging trend is detrimental to the global city development, because it reduces social cohesion and makes the recruiting of locals more difficult for multinational companies.
Apart from English, Putonghua will increasingly be important for the development as a global city. Hong Kong people have shown great flexibility and prepared themselves for the integration with China. The percentage of people speaking Pu tonghua at home remains low, but those who feel able to speak the official language of China have increased by almost 90 per cent from 1997 to 2001 (Table 7).
Table 7: Languages spoken in Hong Kong 1991-2001
Socio-economic Impact: Income Polarisation
Between 1991 and 1996, the median income in Hong Kong grew by 84 per cent per worker and by 76 per cent per household. Even in price-adjusted terms, this reflected an extraordinary growth in wealth during the global city formation (Table 8). This growth, however, was not evenly distributed. The salary classes above HK$ 15,000 monthly income enjoyed the strongest gains, which can be attributed to the social ascent of the middle-income group and to immigration. The growth of the high-income group boosted the real estate market and the general price level in Hong Kong, which was harmful to the lower income groups.
While the global city formation (1991-1996) was characterised by rapidly growing incomes and increasing polarisation, the economic slow down (1997-2001) saw reduced income growth, but a continuation of the polarisation process (Figure 6). The group earning around HK$ 4,000 per month did not participate in the growth of incomes or even suffered from dropping incomes. This group comprises domestic helpers and other people with low wage jobs.
Table 8: Overall income growth in Hong Kong 1991-2001
Source: Census and Statistics Department 2001
Figure 6: Redistributed income from main employment in Hong Kong, 1991-2001
IIn order to increase comparability and clarity, the data of different income classes have been redistributed to HK$ 2,000 class widths and transformed into smooth graphs. The numbers on the y-axis refer to the HK$ 2,000 brackets (HK$ 2,000 = US$ 257).
Hong Kong's Gini coefficient, an indicator for income inequality (see Lui 1997), rose from 0.43 in 1971 to 0.53 in 2001 (Wong 2002). This is much higher than in other comparable Asian cities (Ng and Hills 2003). In terms of household income, the highest earning 20 percent of households earned 50.7 per cent of the total income in 1986, which increased to 56.5 per cent in 2001. In contrast, the lowest earning 20 percent of households earned 5.0 per cent of the total in 1986, which dropped to 3.2 per cent in 2001. Relatively speaking, the poor suffered a further set-back. In absolute terms their nominal income was more or less stable until 1997, but dropped markedly during the financial crisis. Over the whole decade of the 1990s, it declined by 23.3 per cent, while the income of the highest earning fifth of households rose by 26.1 per cent (Wong 2002). Although such data can easily be misinterpreted (see Lui 1997) e.g. household incomes in the lowest bracket fell partly due to the decreasing size of households all data suggested growing income polarisation.
Socio-spatial Impact: Segregation and Suburbanisation
Whereas Forrest et al. (2004) are right to say that there are no areas of ghetto-type disadvantage in Hong Kong', as in U.S. or Third World cities, we argue that globalisation has indeed led to a strong and growing spatial segregation. The disparities are, however, hard to trace by quantitative analysis as Hong Kong's society contains three distinct sub-societies with very little contact and interlinkage. These sub-societies are defined not in the first place by different levels of wealth but as socio-cultural milieus, while then internally displaying distinct social stratifications.
First, the local, mostly Chinese urban population is relatively homogeneous, although social stratification and spatial segregation exist. They comprise most of the population in Kowloon and the new towns. Recent immigrants from China, concentrated in the poor areas of Kowloon, have always started at the bottom of the social ladder but after some time integrated well into this society. There is no reason to believe that this has changed, especially as their number is lower now than in the past.
Second, the colonial upper class used to live quite separated from the locals, mostly around Victoria Peak and adjacent parts of Hong Kong Island. This pattern has now been filled by the global city immigrants and supplemented by emerging suburban settlements. These areas contain many of the territory's top-earners but also a large number of low-wage support staff such as domestic helpers. Both are predominantly immigrants. The middle-income stratum is lacking.
Third, a small group, which however obscures many spatial analyses, is the rural population in the New Territories. They inhabit large parts of sparsely populated land and therefore feature prominently in maps (Forrest et al. 2004). As some have earned well from land sales, they do have a strong social stratification, but this does not always show in official statistics. Not all may report their wealth accurately to people and institutions outside their sphere. On the other hand, poverty in these areas is easy to overestimate. A less monetary society and strong social ties in the villages support life on little income.
For our purpose the third group is of little relevance, but the rising gap between the first two groups is highly significant and closely linked to global city formation. With a more internationalised pattern of immigration, its spatial focus has changed. In the past, most immigrants were Chinese who settled in Kowloon first. In the 1990's, most newcomers moved to the high-class areas of Hong Kong Island. At the Peak and the south coast, almost 30 per cent of the 1996 population were in Hong Kong for less than a year. The strongest increase of recent immigrants compared to 1991 was recorded between the Peak and the inner city. Similar trends could be observed for related criteria such as foreigners, English speakers, high income s and the 30-44 year age group. The share of foreigners, for example, has increased from 33 per cent in 1991 to 43 per cent in 1996 in the high-class areas and from 8.5 per cent in 1991 to 12 per cent in 1996 in the rural suburban areas, but stayed more or less unchanged in Kowloon (7 per cent) and the new towns (5 per cent) (Breitung 2001a: 96). Thus the spatial segregation between the local and the global city sub-societies has grown, along with some income polarisation. Polarisation was highest yet among the new immigrants, in this case without any spatial segregation, as rich and poor live in the same areas in fact in the same flats or houses.
The increase in the rural suburban areas points to a second spatial phenomenon. Hong Kong had never in the past any significant low-rise suburbanisation as in many western countries. This is changing now with foreigners moving into villages (e.g. in Sai Kung) and immigrant enclaves being built (e.g. Discovery Bay). The increase from 8.5 per cent to 12 per cent would be much stronger if the statistical areas in question did not contain a mix of rural and suburban population. Interes tingly, the said increase pertains mostly to North American, British and Filipino immigrants. The share of most other nationalities in Hong Kong's rural areas has not changed significantly. The global city immigrants, foreigners and returnees bring with them distinct western or Anglo-American housing ideals and have the money to realise these in Hong Kong. As for the Filipino immigrants, their place of residence does not reflect choice. Most of them live in their employers' places.
This chapter shows rather distinctive transformations in Hong Kong during the global city formation period of the 1990s. Many of the processes observed in Hong Kong confirm earlier findings elsewhere. Wherever global command and control functions are found, they are highly competitive in their use of space and work force. The y tend to concentrate in the most central locations where they displace other uses, thereby triggering spatial differentiation and functional segregation. They also tend to concentrate the income gained in the hands of a small group of highly competitive employees, thus intensifying social polarisation. A significant part of the high-end workforce as well as low-end support staff are recruited from a global labour market. The relationship of these two distinct groups of immigrants has been described as symbiotic and at times quite removed from the local society. Their appearance changes the ethnic, demographic and social composition of the population in global cities.
Our findings overall reaffirm the respective accounts in the global city literature. However, the Hong Kong case also illustrates the decisive role non-economic and non-global factors can play in global city formation. These factors were mainly the different policy agendas pursued in the UK, China and Hong Kong during the period of transition. First, the political transition from a British colony to a Special Administrative Region (SAR) of China, which was initially perceived as a threat, gave additional urgency to Hong Kong's global integration in the view of the outgoing colonial power and the Hong Kong elite. Second, the links to the insufficiently globally integrated Mainland of China have greatly supported global city formation. The importance of a hinterland is generally recognised, but in the case of Hong Kong in the 1990s, the growth rates in the hinterland and the degree of dependence were unique. Third, with the principle of one country two systems' in place, the border remains as a barrier, hinder ing interaction in the global city region, but accelerat ing de-industrialisation and tertiarisation by upholding two different regulative regimes.
Apart from this specific historical situation, there are always many local factors influencing global city formation, such as the following examples for the Hong Kong case: First, Hong Kong's immigration policy effectively controls the labour supply from the hinterland, while favouring the import ation of foreign domestic helpers. Their diffusion beyond the initial foreign, upper-class employers literally carries globalisation into the living rooms of the local society. Second, as a newly developed economy Hong Kong had a smaller middle class in the first place. Despite polarisation and social decline, positive attitudes toward globalisation prevail due to the previous experience of development. Third, some specific cultural features such as Chinese values and the mixed residential structure supported social coherence and stability. These traditional forces are however weakening.
While Hong Kong shows many similarities and some distinct variations compared to global cities in the West, the same is true compared to globalising cities in the Mainland. Hong Kong is quite distinctive because of its colonial history, the well-established capitalist and globally integrated economy, the developed regulatory system (rule of law, civil service) and the lack of significant rural-urban migration. While both Shanghai and Beijing are in the process of global city formation, they are far behind Hong Kong in most aspects. Hong Kong was the first global city for China and still is the most important one. But Hong Kong's observed slow-down can partly be attributed to th e new competition. The rise of Shanghai and Beijing is much discussed in Hong Kong. Hong Kong is losing its exclusive role, but eventually a growing and increasingly globally integrated Chinese economy will support several world cities.
A second challenge for Hong Kong is seen on the regional level. The loss of functions to Shenzhen and the Delta is often described as another competition, but it is rather a matter of spatial differentiation and fading boundaries. Differentiation and the concentration of top command and control functions are, on the global level, at the root of world city formation. On the local level, an increasingly differentiated hierarchy of functions has been shown within a few square kilometres in the CBD. The same now also evolves on the regional level, with top functions concentrating in central Hong Kong, the middle range in Shenzhen and Guangzhou and the rest elsewhere in the region. In this view, t he shift of functions to Shenzhen is likely to raise the overall competitiveness of the global city region and thereby strengthen the centre as well.
The real challenge for Hong Kong may well lie on the local level. The social gap between the mostly immigrant global' sub-society and the local population is a threat to social stability. High differences in wealth can a rouse conflicts and crime, especially in times of economic or political crises. A lack of social cohe sion is also problematic from the governance and planning point of view, when the transient elite lacks genuine interest in the place and the local population feels disempowered, yet both compete for increasingly scarce government funds. World cities can greatly benefit from the social capital of international immigrants and the hard capital gained through their global role, if the material and immaterial gains are well distributed. Hong Kong has done so in the past, and the political challenge now is to integrate the different nationalities and social groups into one society and together build Hong Kong into a great city' apart from being a world city.
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Edited and posted on the web on 15th December 2004
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