Hong Kong needs a mainland-appointed provincial leader, to boost integration and revive the flagging economy

Hong Kong requires a voice in a China that is becoming more economically integrated, and that cannot be provided by a local chief executive
Such leadership would integrate Hong Kong’s rather separate economy more closely into China, supporting local people as they build careers on the mainland

Richard Harris

Published: 8:45am, 12 Mar 2021

Why you can trust SCMP

This is a business column and, as such, we must look ahead. Rational investors must make decisions based on the logical forecast of what is most likely to happen in the longer term – whether you like it or not. What we want, or indeed what we hope for, is irrelevant. The nuances of the national security law and the events of the past year may be debated – but businesspeople have to deal in the here and now.

Hong Kong is rapidly becoming a “red city”, much more like mainland China, and the historical barriers between us, which once were complete, then fractured, are now well and truly breached. The city had a good 20 years of autonomy; now, mainland processes and philosophy will be incorporated into most aspects of daily life.

That does not mean Hong Kong will become fungible with the mainland. That would be damaging for China’s economy as well as its global standing. China would lose a highly valuable commercial window on the world, which it needs to become less confined to its own sphere of influence.

The most likely scenario is that Hong Kong will remain an international enclave with its own commercial law, currency and communication freedoms. Change these, and global confidence in Hong Kong as an international financial centre will be fatally impaired and business might as well move to Shanghai or Beijing.

China needs a calm and prosperous Hong Kong. Unfortunately, years of mismanagement, stubbornness and complacency in the higher echelons of the local government have forced Beijing’s hand. You can imagine senior officials pulling their hair out, saying: “We gave Hong Kong the leadership they wanted – and look what happened!”

02:24

Time to stop talking about Hong Kong’s ‘premature death’

The parish council quality of governance has led to overly close relationships with local fat cats and certain favoured individuals. The disparity between the mega rich and the rest has soared with gross domestic product per capita leaping over the past 24 years. The majority, especially the young, have become discontented with the poor housing stock, artificially high prices and low salaries.

When the Hong Kong civil service is allowed to do things such as organise vaccine distribution, collect rubbish, build roads and fight fires, it is as efficient as any other in the world. When the Hong Kong government creates policy, it often results in an omnishambles. It is because leaders have had no personal accountability.

I cannot remember one session, let alone a “two sessions” high-level Chinese policy meeting, where the special administrative region was discussed so much, front and centre, so early in the meeting, by such important people. We are normally relegated to a footnote. That big signal means further change.

Will the chief executive become no more than a mayor?

The current chief executive’s term expires on June 30, 2022. At the last chief executive election, held in 2017, potential candidates had emerged by October – that’s just over six months away.

The chattering classes are already discussing various candidates, almost all of whom are stale retreads from various administrations. Such grandees are normally in it for the aggrandisement, the nice house, nice car, the security detail, the motorcade and contributions to their retirement fund.

They are already being shunned by Beijing in discussions about the future. A politician is rarely a prophet in their homeland – take Margaret Thatcher for example – and none is likely to magically develop the leadership qualities to inspire the people of Hong Kong or promote the city’s position within the mainland’s economic firmament.

The case for a mainland-appointed provincial chief – or governor – is becoming overwhelming. It is a working role. Ideally, it would be an ambitious mid-career official with an eye on greater things after Hong Kong.

That would provide him or her with the ambition to align interests not only with Beijing but also with the people of Hong Kong. Such a candidate would have the authority, influence and, most of all, the airtime from the leadership to make a success of our flagging economy. It is a win-win option.

Hong Kong needs a voice in a China that is becoming more economically integrated, and that cannot be provided by a local chief executive. This is not to say that it would be a complete takeover.

The old governors were appointed, paid and gained their authority from London, arriving with a tiny entourage. They battled for the stability, growth and prosperity of their colony knowing that success – including the welfare of the people – would benefit their career.

02:40

‘We do not want unpatriotic people in our political system,’ says Hong Kong leader Carrie Lam

There is no need to change the rest of the government, which would revert to its administrative role. Only someone from outside can erode the entrenched vested interests both inside government and in the public sector. We have had the negative changes – a governor would hopefully bring new ideas, positive change and creativity.

Such leadership would integrate Hong Kong’s rather separate economy more closely into China, supporting local people as they build careers on the mainland. Investors, entrepreneurs and the rest of us in business have to face the realities of the situation today by making decisions as if we were already fully integrated into the mainland.

The advantages and disadvantages of the past are a sunk cost. We have to make a bet on what is most likely to happen and deeper integration with the mainland is the most certain forecast we have had for a while.

Richard Harris is chief executive of Port Shelter Investment and is a veteran investment manager, banker, writer and broadcaster, and financial expert witness