It’s tough being a senior Hong Kong official as city faces issues on national and financial security
Challenges range from navigating judicial sagas to bracing for the impact of Beijing’s fiscal policies
Senior Hong Kong officials have their work cut out for them these days, especially with the pressing task of defending the city’s judicial independence after three student leaders were jailed last week by the Court of Appeal over an illegal protest, reversing an earlier and more lenient ruling by a lower court.
The sentencing has been criticised as political persecution by opposition pan-democratic politicians as well as some local and Western media outlets. Both the government and the city’s legal community have found such criticism unwarranted and unacceptable.
The city’s No 2 official, Chief Secretary Matthew Cheung Kin-chung, and others such as barrister Ronny Tong Ka-wah, who is a government adviser in the Executive Council, have rejected the “biased” reports by local and foreign media. They warned that politicising the decisions of judges is dangerous and damaging to Hong Kong’s reputation for judicial integrity and independence, which has long been treasured.
As this critical debate rages on, another group of officials looking after the city’s economic and financial affairs have something else on their plate that is also crucial – to monitor the impact on Hong Kong, positive or negative, of the latest directive from the State Council further regulating the country’s outbound investments.
Interestingly, bad news for Chinese companies in their “go global” ambitions can sometimes mean good news for Hong Kong. One such aspect of the directive is to strongly restrict overseas property investments.
Still fresh on the minds of Hongkongers is the trend of “land king” sites in the city being snapped up by mainland companies which seem unperturbed by daunting prices. Their almost cavalier approach not only shocked veteran local developers, the flood of mainland capital was also regarded as a major culprit responsible for skyrocketing property prices.
The impact of the latest round of restrictions from Beijing, however, will not just be confined to the property market if you look at the timing and the authorities involved.
Firstly, the directive was jointly issued by four major departments: the central government’s top economic supervisor, the National Development and Reform Commission, followed by the Ministry of Commerce, the People’s Bank of China, and the Foreign Ministry.
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Secondly, it was announced just after the critical Beidaihe meeting, which conveyed a more than clear message that, after thorough discussions in the summer resort, the top leadership had to come up with the decision to further curb capital outflow to ensure China’s economy would remain on a healthy track.
Economic stability will be a key issue to be tackled in the coming 19th Party Congress, besides personnel reshuffles.
Back in Hong Kong, while officials at the government’s Tamar headquarters are on full alert and making assessments, initial analysis could be twofold.
On the upside, mainland companies, state-owned or private, are encouraged to invest in projects under the “Belt and Road Initiative” – Beijing’s global trade strategy – which will continue benefiting Hong Kong.
Restrictions on investments in overseas property, entertainment, sports clubs and more may provide the city’s business sector with alternative opportunities. But it’s not without possible downsides as the directive now bans mainland companies from setting up overseas equity funds or investment vehicles without any concrete project, to name but just one aspect.
Hong Kong enjoys free flow of capital under the “one country, two systems” policy, as long as it is all lawful, and the city has always been one of the favourite markets for mainland investors. But it’s also under this principle that Hong Kong bears the responsibility to safeguard national security, which includes financial security.
This is a challenging time for Hong Kong, politically and financially.