Hong Kong Reduced to the Financial Testing Ground for the Chinese Communist Party! The Five-Year Plan Forces the HKMA to Back Offshore Renminbi, the Civil Aviation Department to Act as a 4S Shop for C919, Elderly Hongkongers Shifted to Low-Tier Mainland Healthcare, 70% of Electricity Handed Over to the CCP, and 970 Billion HKD in Bond Issuance in Five Years with the Legislative Council Reduced to mere

The video mainly analyzes how Hong Kong's five-year plan transforms Hong Kong's financial, fiscal, and livelihood systems into a backstop for the Chinese Communist Party's (CCP) capital account and industrial policies. This includes the Hong Kong Monetary Authority (HKMA) taking on the role of backstopping offshore RMB and Northern Metropolis financing, southbound funds absorbing massive amounts of Hong Kong debt, insurance funds serving as a floor for infrastructure, the gold market adopting RMB pricing, the Civil Aviation Department certifying domestic aircraft, offloading elderly cross-border healthcare to the mainland's low-tier medical insurance, increasing energy dependence on mainland control, and weakening the power of the Legislative Council, ultimately shaking Hong Kong's linked exchange rate and independent credit.

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Observe things as they are and reject fragmented understanding. Today, we continue to discuss how the current Hong Kong bureaucratic system has been 'marinated'—and marinated by the CCP at that. Today, we will focus on how the Hong Kong government is shaking its own financial foundations. In this episode, we are looking at the operating system beneath the surface. I have noticed one phrase that appears with very high frequency: 'trial-and-error field.' This stupid five-year plan doesn't even bother to pretend anymore. Now we are watching how a place that relies on a linked exchange rate system and common law is being converted, point by point, into the CCP's capital account and 'trial-and-error field' by a single document. This time, Hong Kong is not only aligning its narrative with the CCP, but even its own livelihood is being aligned with the CCP. What is the most 'fucking awesome' part of this report? It is that it has redefined the functions of Hong Kong's financial system. What kind of bullshit is written in black and white in Chapter 6 of the plan? It says Hong Kong must take on the role of a 'trial-and-error field' for the country's financial opening-up. Hey, this is written in black and white; everyone can go and check it. There is also Chapter 7, which writes that the fiscal budget must provide a solid resource foundation for the five-year plan. And what is written in the last clause of Chapter 7? It writes that the Chief Executive must report to the President of the country annually and report on what? Report on the implementation status of this plan. There is also a sentence in the first chapter of the plan that is just fucking outrageous—no, not outrageous, it is completely devoid of logic. How does it put it? It says Hong Kong is a 'safe harbor,' and a 'safe harbor' is a 'development harbor,' and security has become Hong Kong's number one competitive advantage for development. This sentence is typical of that CCP style—saying whatever they dream up, completely illogical language. Its linguistic style is very similar to what? It's like the boundary between opposing the CCP and being anti-China; the logic in it is almost zero. It is a very simple question: how can security and development be connected like that? How can you equate the relationship between these two? The connotations of security and development are completely different. If you can say 'a safe harbor is a development harbor,' then I have a lot of fucking things to say. Can I say this? Hey, I'll just say: the brake is the accelerator; as long as no accident happens, I am 'far ahead.' I can also say: not having an accident is an achievement; as long as the project hasn't failed, it is already glorious. It is all this kind of bullshit. The financial market never prices in the CCP's political security; the object of pricing is exactly the opposite—it is the object of insecurity. It is a very simple question: the financial market only prices in the predictability of rules. Writing 'national security' into the rules of a financial center as a competitive advantage itself shows that this bunch of idiots in the current Hong Kong government don't know what capital is paying for. If you read these three sentences together, what do you get? It means Hong Kong's finance has transformed from a market that prices risks for global capital into a testing ground for the CCP's capital account opening and trial-and-error. The money for this trial-and-error has to be paid by the Hong Kong government itself. And let me tell you, this 'error' cannot have any value; you will find out that this path is simply impassable. Furthermore, in this mechanism, the Legislative Council is not even left with a position for review.

Okay, let's start with money. Let's make the linked exchange rate system clear first. That is, for every single Hong Kong dollar issued, the Exchange Fund must hold an equivalent amount of US dollar assets in reserve, and then maintain the Hong Kong dollar exchange rate within the band of 7.75 to 7.80 against the US dollar—well, what we traditionally call a peg to the US dollar. The Hong Kong government is the single largest user of Hong Kong dollars. For instance, taxes are collected in Hong Kong dollars, civil servants are paid in Hong Kong dollars, and government bond fundraising is also done in Hong Kong dollars. Now, what does this plan ask for? It asks the Hong Kong government to make payments in RMB. This means a second currency would appear in the government's ledgers, and this currency is not backed by the Exchange Fund. Furthermore, for the government as the largest user to switch to using RMB itself, what is this equivalent to? It is equivalent to the government undermining the demand foundation for the Hong Kong dollar itself. So, what economic function does this measure serve for Hong Kong? I honestly cannot think of any, nor can I find one. And this is not even the most serious problem; what is the most serious problem? It is the establishment of some kind of liquidity replenishment mechanism for the Hong Kong RMB offshore market. What does liquidity replenishment mean? To put it bluntly, if fluctuations occur in the exchange rate of RMB in the offshore market, well, someone has to inject money into it. But the Hong Kong Monetary Authority can only supply Hong Kong dollars and US dollars, and who is the ultimate supplier of RMB? It is the People's Bank of the Chinese Communist Party. If you want to stabilize the exchange rate, you must have RMB on hand, as well as US dollars and Hong Kong dollars. Where does the RMB in the hands of the Hong Kong Monetary Authority come from? It comes from the currency swap agreement signed with the People's Bank and deposits in the market. Writing the responsibility for liquidity replenishment as Hong Kong's responsibility means that if there is a run on the offshore RMB market, Hong Kong's institutions must step up first. Isn't this just targeting whatever foreign reserves the Monetary Authority has left? So, do you see the intentions of the Chinese Communist Party? There isn't enough money to build the Northern Metropolis, so they want to hollow out the Monetary Authority. If the RMB exchange rate in the offshore market fluctuates, they also want the Monetary Authority to step up first. Then the responsibilities of the Hong Kong Monetary Authority become completely confused: you have to maintain the linked exchange rate, and you also have to maintain the offshore exchange rate of the RMB. Isn't this forcing the Hong Kong Monetary Authority to act as the dual lender of last resort for both the Hong Kong dollar and the RMB in the offshore market? Now, Hong Kong has to both maintain the linked exchange rate of the Hong Kong dollar and smooth out the exchange rate fluctuations of the RMB. So, the question we should most clearly ask is: who provides this capital, and who bears the risk? If something goes wrong, who takes the blame? Because it's a very simple issue: you cannot vaguely write providing turnover and taking ultimate responsibility as the same thing, right? Another thing is that Hong Kong cannot print RMB either. Why should it undertake the obligation of being the lender of last resort for the RMB offshore market? This sort of thing has actually happened before, during the August 11 exchange rate reform in 2015. At that time, following the RMB exchange rate reform, the offshore RMB overnight HIBOR once soared to over 60 percent, and then spiked again in January 2016. On both occasions, the Hong Kong banking system bore the brunt of it. At that time, the interest rate spread between China and the US was not yet inverted, meaning China's interest rates were higher than US interest rates. Now the interest rate spread is minus 330 basis points. If trouble happens again, what will the Hong Kong financial system use to withstand it? Just tell me, with your scale of hundreds of billions of US dollars, how the fuck are you going to manage the RMB exchange rate?

And then let's look at the bond issuance. To put it bluntly, this bond issuance relies on two main moves: first, opening up southbound capital, and second, attracting more large financial institutions controlled by the Chinese Communist Party (CCP) to buy Hong Kong bonds. The logic is very simple: once you have RMB liabilities, you have no choice but to use them. Or rather, it is precisely because of the fear that you won't use RMB that this RMB financing method was imposed on the Hong Kong government. In essence, issuing RMB bonds is a completely redundant and pointless exercise. Because whether Hong Kong is procuring goods from mainland China or purchasing everyday resources, is there anything that cannot be done through other existing, more convenient tools that have been used for a very long time and are already highly mature? The answer is that everything can be done through them. Hong Kong's RMB deposits hover around 1 trillion, and over 70% of global offshore RMB settlement goes through this Hong Kong route. What else? There is still an 800 billion currency swap between the People's Bank of China (PBOC) and the Hong Kong Monetary Authority (HKMA). The funding arrangement for the HKMA's RMB business was just doubled to 200 billion this February, and then in July, Pan Gongsheng announced what? That it would be increased to 500 billion. What is this currency swap? It means the PBOC gives RMB to the fucking HKMA, and the HKMA gives US dollars to the PBOC. That is the essence of a currency swap. If the Hong Kong government really needed RMB, bank counters could exchange it in a single day; there is no need to issue bonds at all. This is a classic case of mixing sand into Hong Kong's financial system. In the last episode, we also mentioned that over the next five years, the Hong Kong government will issue between 160 billion HKD and 220 billion HKD in bonds every year, and the government is already one of the single largest issuers in Hong Kong's bond market. So just think about that fucking stupid plan. What does it say in the text? It says it wants to develop the bond market, but the actual content is what? It's just finding buyers for government bonds. And the buyers found are all institutions controlled by the CCP. This is equivalent to the CCP making the Hong Kong government undertake a project that is completely unrealistic, oversized in budget, and visibly lacking in economic benefits. Then, because of this project, the CCP mapped out an RMB bond issuance path for Hong Kong. If this path succeeds, who will provide the fiscal deficit for Hong Kong? It will be provided by large financial institutions controlled by the CCP. In other words, Bond Connect will transform from an investment channel into a fiscal channel. The main idea is most likely to tie down the Hong Kong government using RMB liabilities. Therefore, the concerns of the CCP Central Committee are also glaringly obvious. What does this mean? It means that while I can control this current administration of the Hong Kong government through political ideological manipulation, I might not be able to control the next one. Well, now I am implementing the deficit measure across the board. In the previous episode, we discussed the borrowing itself; this episode discusses the counterparty of the borrowing. Once the counterparty is a party-affiliated institution of the CCP, the price of HKD bonds will no longer purely reflect Hong Kong's credit, but will begin to reflect what? It will begin to reflect the policy orientation of mainland capital. Hey, let's roughly calculate this scale: taking the median annual bond issuance of 190 billion, five years would be 950 billion. How much can local Hong Kong insurance companies, the Mandatory Provident Fund (MPF), and banks absorb? The remaining gap is the hole that southbound capital needs to fill. The plan doesn't write down the exact figure for this gap, but the issuance volume is fixed, and local absorption capacity is also limited, so this gap will definitely have to seek a solution northward. Chapter 6 of the plan also contains a sentence saying what? It says it wants to leverage the role of mainland large financial institutions' entities in Hong Kong as group risk management centers, supporting mainland banks and insurance companies in using Hong Kong as an international headquarters to develop overseas business. What does this mean? It means the overseas risks of the CCP's financial groups are to be concentrated in Hong Kong's branch offices to be managed. In other words, mainland credit risk, exchange rate risk, and overseas asset risk are all to be packed into Hong Kong's financial system. To take it a step further, what does this mean? It means Hong Kong's regulation has no jurisdiction whatsoever over these large party-owned financial institutions. Buying bonds only lets these funds be lent to the Hong Kong government. But once this step is completed, it is truly fucking malicious, equivalent to concentrating all risks entirely in Hong Kong. Then the CCP even specifically names what? It names patient capital to directly enter the market to invest in what? Hey, to invest directly in the Northern Metropolis, to invest in the Urban Renewal Authority. The money no longer follows the path of being lent to the Hong Kong government first and then used; instead, it can be poured directly into projects. What is this doing? This is negating the legal status of the Hong Kong dollar. And whose money is the patient capital in the plan? In the operational context of the CCP, it means letting insurance companies, social security funds, and party-owned capital invest in policy-designated areas. The money in Hong Kong that can be called patient capital basically amounts to three pots. First, the MPF, which has about 1.4 trillion HKD; second, the long-term assets of Hong Kong insurance companies; and third, the investment portfolios of foreign exchange funds. Actually, the CCP started pushing this long-term capital into the market back in September 2024. As we've mentioned before, how did the CCP do this in mainland China? It forcibly required insurance funds to invest a certain percentage of newly increased premiums into the stock market—yes, exactly that thing. This set of practices was given a new name in Hong Kong's 2026 plan: fucking patient capital. It just didn't explicitly name the MPF, but insurance funds have already been named. This fucking stupid plan demands what? It demands that Hong Kong's insurance funds invest in Hong Kong's Northern Metropolis projects—in other words, buy these junk bonds.

Why would insurance companies in Hong Kong buy such garbage assets? Current offshore bonds not only have high ratings but also high interest rates. Look at AAA-rated European bonds, US bonds, or even fucking Japanese bonds; their yields are higher than this crap, and their risk levels are lower. Furthermore, what assets Hong Kong insurance companies buy is determined by policy terms and capital adequacy ratios, not by government projects. If you plan and require insurance companies to invest in construction, it is equivalent to earmarking the money of policyholders for land leveling in the Northern Metropolis. The cash flow for these projects will definitely be negative before 2031, and it will most likely remain negative after 2031. Even if they are completed, I estimate that no one will use them. Look at the ghost cities all over the mainland.

The funniest part is that it also mentions gold. There is a core sentence in there—what is it? It says to fully leverage the strategic asset role of gold and explore the development of a gold market denominated in RMB. Not only that, but it also calls for strengthening cooperation with the Shanghai Gold Exchange and the Shanghai Futures Exchange. Anyway, I don't recall Hong Kong having any strategic gold assets; the gold held by the Exchange Fund is only around two tons. It is the People's Bank of China (PBOC) that calls gold a strategic asset. You see, the PBOC has been continuously increasing its gold holdings since November 2022, and the reason given is quite grand: to de-dollarize its reserves. So, where is the value of the Hong Kong gold market? It lies in the London Good Delivery standard and the neutrality of settlement. Why do international investors trade gold in Hong Kong? Because the warehouses and clearing in Hong Kong are not subject to capital controls from any country. What are you planning to build? A gold market denominated in RMB and connected to Shanghai. But the RMB is not even freely convertible under the capital account. What the fuck kind of appeal does a market denominated in a non-convertible currency have for international investors? So, who can the buyers be? Mainland capital, right? This fucking stupid plan also says what? It says to comprehensively increase Hong Kong's gold storage capacity. I have to ask: whose gold is actually being stored in this warehouse? The plan doesn't say. But the four words 'RMB-denominated' have already answered that for us. And the aviation industry part is truly hilarious; it directly demands what? It demands that Hong Kong actively participate in the research, development, and certification of domestically produced aircraft. What kind of bullshit is 'helping domestic aircraft enter the international market through Hong Kong'? I don't recall the Hong Kong Civil Aviation Department having such a function; isn't it just a safety regulatory agency? To this day, the European Union Aviation Safety Agency (EASA) and the U.S. Federal Aviation Administration (FAA) have not issued any type certification for that fucking stupid C919 of the CCP. And this C919 thing, they were bragging so fucking hard about it before, and after the CCP's own airlines bought it and poured money into it, they are all fucking regretting it now, complaining endlessly. Now they want Hong Kong to wade into this muddy water—what, is this piece of junk not selling? Let's not even look at the production capacity or quality issues; now we know, it turns out the sales are the problem. That's the conclusion they reached. This plan writes the certification of the Hong Kong Civil Aviation Department as what? As a channel for domestic aircraft to go global. I bet the Hong Kong Civil Aviation Department is fucking stunned right now, wondering themselves when they got this function. But I'm not surprised at all. John Lee can create land out of thin air, so why would it be strange for the Civil Aviation Department's certification to become a channel for the CCP's aircraft to go global? Fine, a department in charge of transport safety can just change its name and sign—let's change it to a C919 4S dealership. This is turning a safety regulatory agency into a tool for industrial policy.

Well, let's look at the shipping chapter again, because after all, Hong Kong is an important entrepôt trade port. Let's look at this big drama of shipping. What kind of deadpan nonsense is in this plan? It says that Hong Kong and Yangpu Port in Hainan should engage in something called suspended port exports, acting as dual hubs for each other. Doesn't that sound very respectable? Translated into human terms, isn't it just: hey brother, your position as a transshipment station is going to be taken over by someone else in the future. You must know that twenty years ago, Hong Kong's container throughput was the world's undisputed leading number one. By 2024, it plunged all the way down to around tenth, and in 2025 to eleventh. If there are no surprises this year, it will slip to twelfth or even thirteenth. What did Hong Kong set as its own KPI? It's called stabilizing Hong Kong. Under the context of the Chinese Communist Party, anything with this word

Livelihood issues are the most fucking immoral aspect of all; let's take a look at just how immoral they are. The first point is about elderly care, and how did this wish-list make its promises? It said it would fund elderly Hong Kong residents retiring in Guangdong, and what kind of insurance did they buy for them? They bought China's urban and rural resident medical insurance and Huimin Bao. What on earth are these two things? To put it bluntly, they are programs prepared for China's low-income families, farmers, and urban residents. What are their characteristics? Low contributions, but also extremely low coverage—now practically amounting to nothing. Huimin Bao is even more fucking absurd; it's a commercial supplementary insurance endorsed by local governments. Right now, local governments are so fucking broke they're groaning, so what the fuck are they going to use to shoulder this? The counterpart to this is called urban employee medical insurance, which is funded jointly by employers and employees. Meanwhile, urban and rural resident medical insurance costs only a few hundred yuan a year and is currently running a massive deficit. Forget about urban and rural residents for a moment; even the employee insurance sector is suffering from massive deficits. What kind of drugs are covered? One sentence sums it up: the centralized procurement drugs covered by this insurance are the kind that send you straight to heaven once you take them. If taking that stuff doesn't leave you with any side effects, it's considered a blessing from your ancestors. As for curing diseases, it fundamentally doesn't have that function. The Hong Kong government is paying for Hong Kong elderly people to buy mainland low-end medical insurance, and that fucking abacus is clicking so loudly it's hitting me right in the face. In other words, as long as the elderly cross the Luohu Bridge to retire, they can be kicked straight out of Hong Kong's expensive public healthcare ledger and dumped into a pool where per capita medical expenditure is only one percent of Hong Kong's. Hong Kong is learning naming tricks from the CCP super fast now; what do they call this policy? They call it the expansion of elderly care services. This is clearly跨境 dumping their own welfare burden across the border, full of short-sighted political hypocrisy and financial scheming from start to finish. Regarding people's livelihoods, there is a second point, and this second point is energy. This plan made a target out of nowhere by patting their heads, saying what? Saying that by 2035, the proportion of zero-carbon electricity should be pushed to between 60% and 70%. But just in the previous version of the plan, the target for 2030 was only set at what? Only set at 30%. In just five years, it surged from 30% to 70%. How could Hong Kong locally generate that much green power? The only trick is what? Relying entirely on the power grid to ship it in in huge quantities from the Chinese mainland. The most ridiculous part is that the plan actually calls this enhancing energy security in the very same sentence. Anyone who does investment understands one principle: whenever things are centralized, security is impossible, and secure investments must be diversified. For an international metropolis to hand 70% of its power grid valves entirely over to the CCP and then turn around and call it energy security—isn't this just binding Hong Kong society with energy?

Finally, let's look at the most fatal foundation of this entire plan, which is the implementation mechanism. In fact, if we look at this plan, it has created a closed loop. What kind of closed loop? From five-year overall planning to the implementation of annual political affairs, then to the guarantee of fiscal budgets, and finally, the annual reporting of duties—meaning the Chief Executive has to report the progress of this implementation to that fucking idiot Emperor You Xi every year. This makes it so that the fiscal budget must prioritize sufficient funding for these projects. With just these few points, it completely overturns the power structure of Hong Kong's public finance. Originally, Articles 73 and 107 of the Basic Law were written very clearly—truly, crystal clear. How were they written? They stated that the budget must be reviewed and approved by the Legislative Council, and expenditures must be linked to GDP growth and follow the principle of keeping expenditure within the limits of revenue. In other words, how was Hong Kong before? The bottom line of the budget was always above any plan. Now, this order has been completely fucking reversed; the plan has become the supreme ruler, and the budget has completely degenerated into a money bag for moving bricks and providing blood transfusions for the plan. The true evaluator of the plan has become the CCP, no longer the Legislative Council. The most fucking awesome part is what? Facing a massive plan that requires issuing 970 billion in debt over five years, the dignified Legislative Council only appeared once in the entire discourse, and its role was severely shrunk to two words: "collaboration." What is the most fucking stupid sentence in this fucking plan? It is "government-guided market and economic development laws." In human economics, which objective economic law can be guided at will by people? This sentence is fucking bullshit and incoherent in terms of theory and logic, but it extremely honestly reveals the underlying worldview of the entire plan. What is this worldview? Among this current batch of fucking officials in Hong Kong, power is always above the laws of nature. Hey, this is the worldview of this group of bureaucrats in Hong Kong now. Talking up to this point, the bottom line of the entire plan has been completely exposed. It can be said that the twenty-two indicators mentioned earlier were just a facade pasted on the wall, while the provisions just mentioned are the operating system running at the bottom. Look at this series of combo moves: RMB settlement, liquidity backstopping, Southbound Trading to sweep up Hong Kong bonds, insurance funds backing infrastructure, gold priced in RMB, and then there are computing centers, domestic technology certifications, and the most fucking wicked thing is offloading the cross-border medical security of Hong Kong's elderly. And now, the Hong Kong government's naming is also top-tier; every item is covered with a skin, hey, this skin is called "innovative policy," but when you piece them together, the lens points to the exact same destination. Look, from Hong Kong's financial infrastructure to the public purse and regulatory agencies, these things are being transformed one by one into what? Transformed into a backstopping tool running errands for the CCP's capital account and industrial policies. In other words, Hong Kong is now entirely a tool for the CCP. And for this transformation, what are the real chips Hong Kong has handed over? It is the purity of the Linked Exchange Rate System, and even more, the last bit of independent credit Hong Kong had in the international financial system. I'll put it this way: these bureaucrats in Hong Kong will not have a good ending.