Since Hong Kong Financial Secretary Antony Leung enunciated a shift toward a more proactive policy aimed at developing the economy, a debate has started. In his budget speech last month, Mr. Leung renounced the territory's previous guiding philosophy, known as "positive nonintervention," and coined a replacement, "proactive market enabler." The new thinking underlying this change will have negative long-term consequences for Hong Kong. First of all, it's a mistake to get obsessed with the semantics of the two terms. Positive nonintervention was never accurately defined and has meant different things on different occasions. When colonial-era leaders pushed for airport construction, road projects, public education and public housing, they emphasized the word "positive," but when they ruled out industrial subsidies, they stressed the "nonintervention" part. The meaning of proactive market enabler is equally obscure. Chief among the apparent dangers is the government's intention to "take appropriate measures to secure projects beneficial to our economy as a whole when the private sector is not ready to invest in them." Even though the government has stressed repeatedly that they will not "pick winners," it seems clear that the government is from now on ready to finance projects that are privately unprofitable.
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