10 months before the Hong Kong chief executive election – who’s in and who’s definitely out?

Mike Rowse says aside from the sure bet of Leung Chun-ying seeking a second term, few of the names being thrown up now are likely to feature in the 2017 race

PUBLISHED : Sunday, 22 May, 2016, 12:03pm
UPDATED : Tuesday, 31 May, 2016, 11:10am

We live in an uncertain world, so it is unwise to be too dogmatic, especially about political matters. As former British prime minister Harold Wilson once said, “a week in politics is a long time”, and our chief executive election is still 10 months away. Nonetheless, as the race has clearly started, I think we are entitled to speculate a little. The first banker is that, short of hell freezing over, incumbent Leung Chun-ying will seek a second term. His agenda and mindset are based on a full 10-year programme and he hasn’t made much secret of it. Already, some heavyweight political voices are starting to say two terms is logical. In the circumstances, he must be regarded as a short-priced favourite.

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The next two obvious candidates are Chief Secretary Carrie Lam Cheng Yuet-ngor and Financial Secretary John Tsang Chun-wah. Lam has said she intends to retire. Though some people have speculated otherwise, I am inclined to take her at her word. The only thing that might change her mind is if Beijing concluded Leung should not have another term, and persuaded Lam to perform her patriotic duty. She wouldn’t take part in a seriously contested election just to make up the numbers, nor stay on as chief secretary.

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Tsang obviously does want the job, and has dropped a few public hints about how he might play things differently, by openly supporting the Hong Kong football team when it played the national squad, and celebrating the success of local boxer Rex Tso Sing-yu. Tsang’s recent budget attracted some pan-democratic votes. He won’t stay as financial secretary, and is unlikely to be persuaded to accept “promotion” to chief secretary. As with Lam, it’s a case of “chief executive or nothing”.

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Other names trotted out by the chattering classes include Legislative Council president Jasper Tsang Yok-sing, former financial secretary Antony Leung Kam-chung, and former security secretary Regina Ip Lau Suk-yee. Tsang may be too cerebral for a job requiring street-fighting skills. Leung, at one time, seemed a shoo-in to succeed Tung Chee-hwa, but Lexusgate did for him, and with one chief secretary already in jail and a former chief executive before the courts, a Leung candidacy might create the wrong impression. Ip is clearly interested and almost made the ballot last time when the wheels started to fall off the Henry Tang Ying-yen bus. There could indeed be a role for her, if only to give CY some competition.

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I think we can forget the idea of a Tang comeback, which just leaves us with one dark horse, Rita Fan Hsu Lai-tai, who some think could have run last time.

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What sort of event could upend all the betting? Almost by definition, these are the “unknown unknowns” made famous by former US defence secretary Donald Rumsfeld. Such a possibility can’t be ruled out. After all, who could have foreseen in 2012 that a basement would finish Tang’s once-promising career? It might be safer to stick with a known unknown and my personal favourite in this category is what might happen to the local property market.

Current price levels are still absurdly high despite having dropped by around 10 per cent from last autumn’s peak. But how far could they drop before the market hits bottom? Some banks are forecasting a further fall of 20 per cent. Such a decline would be painful for many but probably just about bearable. But in Hong Kong, we always overshoot – so, what if the total price drop was more like 50 per cent? At that point, there would be a serious negative wealth effect, which could spill over to the whole economy.

Interestingly, this is one area where our chief executive and financial secretary might have different views. Tsang has twice speculated about dropping the special stamp duty measures if the market stabilises or drops substantially. On each occasion, Leung has been quick to emphasise the need to stay the course.

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One thing is certain, whoever holds the top post from July next year, he or she will sorely need a better cabinet than the sorry bunch we have at the moment. Far too many bring to mind Benjamin Disraeli’s description of the government team as “a range of exhausted volcanoes”.

Mike Rowse is the CEO of Treloar Enterprises and an adjunct professor at the Chinese University of Hong Kong. mike@rowse.com.hk