• wethepeopleofhk

Hong Kong government is illegally practicing socialism!

Updated: Dec 9, 2020


Hong Kong (HK) was once considered by some, who did not look deep enough to know otherwise, to be one of the freest economies in the world! Not any more!


HK is not only directly controlled by the Chinese Communist Party (CCP), but its actions across the board in HK means that everyday HK is becoming just another dirty Chinese city under its "Socialism with Chinese characteristics."


For example, Cathay Pacific Airways Ltd. having been coerced by CCP in 2019 has recently been rewarded with a sweet financial deal in 2020 of US$5 billion of HK tax payers' public purse money that keeps it alive in an industry that has serious problems post-COVID-19.



Wikipedia

"Socialism" is a political, social, and economic philosophy encompassing a range of economic and social systems characterised by social ownership of the means of production and workers' self-management of enterprises. It includes the political theories and movements associated with such systems. Social ownership can be public, collective, cooperative or of equity. While no single definition encapsulates many types of socialism, social ownership is the one common element.


We wish to note...

1984 Sino-British Joint Declaration On the Question of Hong Kong Annex 1.1 (bold format added below):

"...The National People's Congress of the People's Republic of China shall enact and promulgate a Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China (hereinafter referred to as the Basic Law) in accordance with the Constitution of the People's Republic of China, stipulating that after the establishment of the Hong Kong Special Administrative Region the socialist system and socialist policies shall not be practised in the Hong Kong Special Administrative Region and that Hong Kong's previous capitalist system and life-style shall remain unchanged for 50 years."


Since at least 4 September 2019 - when the Chinese Communist Party (CCP) formally announced that all of the Hong Kong government, including the "independent" judiciary, must follow its directive and stamp out pro-democratic resistance to its rule - HK has come under the direct control of CCP. China under the one party rule of CCP is "socialist" with "Chinese characteristics" - whatever that means depends on what CCP wants it to mean!



Cathay Pacific Airways coercion - then CCP's sweet bailout-purchase of US$5Billion from HK public purse!


The strange tale of the demise at the hands of CCP and then the puppet Hong Kong (HK) government's financial bailout of Cathay Pacific Airways ("CX") gives us a hint at the undercurrent of coercion facing a "foreign owned" business in HK's civil aviation industry regulated entirely by CCP.


The Swire Group's privately owned parent company is John Swire & Sons Limited. The Swire Group, started by John Swire (1787–1847) in 1816, had its beginnings as a modest Liverpool import-export company based mainly on the textile trade. Cathay Pacific Airways majority shareholder is John Swire & Sons Limited.


Stock market media businessinsider.com on 12 August 2019 wrote Cathay Pacific [stock] plunges to decade lows after China retaliates against its protesting employees (CPCAY). Cathay Pacific was coerced by CCP into illegally taking action against it's employees taking away their fundamental human rights including freedom of speech and freedom of peaceful assembly.


Cathay Pacific airlines, Hong Kong’s flag carrier, Saturday announced a “zero-tolerance” policy for employees taking part in the ongoing protests that have rocked the city-state for the past three months.




Bailout: Cathay Pacific braces for [US]$1.3bn half-year loss

Aviationbusinessme.com 19 July 2020


"Hong Kong’s Cathay Pacific has warned shareholders to expect a [US]$1.3 billion (HK$10 billion) loss for the first half of 2020 after the carrier flew almost 100% fewer passengers in June compared to the same month last year.


Cathay Pacific's warning comes just days after shareholders approved a HK$39 billion bailout plan to save the company.


The airline's record half-year projected loss compares to a HK$1.3 billion ($167 million) profit in the first six months of 2019."




Cathay Pacific To Receive a US$5Bn Bailout

Airwaysmag.com on 9 June 2020


"Cathay Pacific (CX) has announced it will receive a US$5.03bn (HK$39bn) in recapitalization financing by the Government of Hong Kong in exchange for a minority stake in the company.


The bailout package means an extension of the previously delivered US$3.5bn in the form of loans, share purchases, and new funds from issuing new stock as a plan for the carrier to stay afloat amid the current crisis.


The capital restructuring will imply government participation in the company with a 6% stake through the limited company Aviation 2020, of which it is the owner.


Further, the governmental entity will have two observers in CX’s board, according to Hong Kong finance secretary, Paul Chan.


On its part, the airline’s Chairman, Patrick Healy said that this help was “absolutely necessary” to the survival of the company as it was “close to collapse.”


Healy also said that the injection would mean a redoubling of efforts by CX to be more competitive. Thus, the chairman announced a new round of cash-saving actions in the form of pay cuts and voluntary leaves.


STAKES IN THE COMPANY

According to CX’s filing with the Hong Kong Stock Exchange (HKEX), the restructuring process includes preference shares worth HK$19.5bn.


Additionally, the deal covers rights issues at HK$11.7bn alongside a bridge loan worth HK$7.8bn, and warrants to subscribe for shares totaling HK$1.95bn.


While travel restrictions reduced inbound and outbound passenger traffic for the Cathay Pacific Group, other companies with stakes in the airline will see their participation diminished with this bailout deal.


Swire Pacific, Air China (CA), and Qatar Airways (QR) will have now 42.3%, 28%, and 9% in stakes, respectively, reported CNN.


However, the Hong Kong executive does not expect to stay as a shareholder in the long term as its dividend payments are planned to stimulate CX as soon as possible, according to carrier and city officials.


Swire is the largest shareholder of Cathay Pacific Group, with a 45% stake.


CATHAY PACIFIC'S FINANCIAL SITUATION

According to its Chairman, CX has a collapse in passenger revenue to 1% from normal levels, which caused a loss from HK$2.5bn to HK$3bn per month since February.


In this scenario, passenger capacity was cut by 97% while executive pay cuts and a voluntary leave scheme affecting 80% of staff were implemented. Additionally, the company deferred aircraft orders and accelerated fleet retirements.


Apart from what the carrier calls being “agile in responding to this unprecedented crisis,” with this capital injection, its focus now remains on cash conservation.


Regarding this, CX argued that the company’s recapitalization would require more liquidity; thus, it will also slash executive pay by 30% and implement voluntary special leaves for its employees.


Healy expects that with these measures and the recapitalization financing, the airline could now re-evaluate its business model in the long term and grow in a better competitive position than its current one."



United Nations Economic Social Commission for Asia and the Pacific (UNESCAP) wrote on 15 April 2020 "Many estimates are being thrown around about the potential impact of COVID-19 on global and national economies. Perhaps the only thing they agree on at this stage is that it will be bad – the main source of disagreement seems to be on exactly how bad it is going to get. The answer largely depends on a number of things: how long the pandemic will last, the severity of social distancing restrictions on business, and the magnitude and effectiveness of government stimulus packages..." (Bold format added).



As of 17 July 2020, the value of stock of Cathay Pacific Airlines Ltd. is 0.68 EUR -44.55% of what it was worth 12 months ago!



For background please read 'HK's Big White Elephants' part 1, part 2 and part 3.



Further references:

  1. RTHK 6 October 2020. Feature: Flight attendants aim for new horizons

  2. RTHK 15 October 2020. No breakthrough in talks with Cathay: union




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