Good news for Hong Kong in leaked Carrie Lam tape: a solution to the unrest is at hand

The tape proved that the chief executive and Beijing are both keen to see ‘one country, two systems’ thrive. But it must work both ways
For a return to peaceful prosperity, all Hong Kong needs is for Lam to swallow her pride and her financial officials to loosen the purse strings

Richard Harris

Published: 2:00pm, 5 Sep 2019

Why you can trust SCMP

So square the circle: 1. Hong Kong is in a state of “unforgivable havoc”. 2. I did it. 3. I am sorry. 4. Given the choice, I should resign. 5. Please forgive me. 6. I have not given my resignation to the central government … 7. Err, that’s it.

The morality of recording Chief Executive Carrie Lam Cheng Yuet-ngor’s private conference and leaking it verbatim to the press is dubious. But this is politics; it’s standard operating procedure. It is naive to think that leaks will never happen and equally naive to be so open in discussion.

Always assume you are on the record. Don’t say anything you don’t have to. The tiny sob and tremor in her emotional delivery reveals its authenticity and the enormous stress that she admits she has imposed – on herself.

Lam has demonstrated that she is too honest, too naive, too badly advised by inexperienced people, yet too willing to talk and not listen.

Her version of a dialogue has been a monologue. Nevertheless, the leak has been extremely beneficial to observers, for we have a great deal more visibility from the government side – and it looks good for Hong Kong and its economy.

Her heartfelt apology to a select group of the business community is telling. Why apologise to a small, select group of enormously rich people; why not also apologise to the people of Hong Kong who live in poor housing, have low incomes and poor prospects, and who have not benefited from the feather-bedding cartelisation by the government of those very businesses? Indeed, if she just did a “Bill Clinton” and said “I feel your pain” – the violent protests would ease.

Hong Kong leader can defuse this crisis by taking on the property tycoons

The other key exposure is how intelligently the central government is playing its cards. It is convincing evidence that Beijing understands the nuances of the issues in Hong Kong; the concerns of the young people, high property prices and the advantageous position of the billionaire cartel families.

Beijing appreciates that an invasion by the People’s Armed Police or worse would escalate globally and, in any case, is genuinely reluctant to be seen as interfering excessively in “one country, two systems”. It has been singularly the most successful of China’s outward-looking policies in the past three decades.

A chief executive so weak that she cannot even make her own future clear is the last thing the central government needs. The leaked tape reveals her to be feeling powerless, unable to act, impotent; almost as if she is discussing her position as a third party.

Her resignation would be a headache for everyone. A successor would have to be a person used to serving two masters. Someone with significant political, commercial and organisational experience – a moderate with a personality.

Everybody would like to go back to the pre-2013 era of peace and making money, before the last two chief executives poked the hornets’ nest

Yet, even though she can’t see it herself, this chief executive can still speak truth to power with real influence to put forward a sensible, peaceful action plan for Hong Kong. The mainland authorities know that the best source of advice is going to come from people on the ground – and they look to her to provide it.

The bottom line is that everybody would like to go back to the pre-2013 era of peace and making money, before the last two chief executives poked the hornets’ nest to see what was inside in order to curry favour up north.

The result was exactly the opposite of what Beijing wanted, causing unnecessary disturbance to Hong Kong and its economic prospects.

Beijing has only one inviolable red line: that Hong Kong people do not encourage disturbance within mainland China. “One country, two systems” must work both ways. That is not too much to ask, but it has not been asked enough.

The Hong Kong disturbances are such an easy problem to fix. We are richer than any other city in the world. The Exchange Fund alone has around US$450 billion in official reserve assets. Take off about US$50 billion of that to support the peg, and it leaves us with maybe US$319 billion (HK$2.5 trillion) in real cash money (without including potential borrowing at near-zero per cent interest). This is an almost uncountable pot of gold.

If this is a time to consider emergency powers, maybe it is enough of an emergency to spend our own money on ourselves. This is the rainy day.

Indeed, soon after I first suggested this, the financial secretary announced an insulting giveaway of HK$19 billion. This is chicken feed when the budget surplus last year alone was HK$138 billion (nearly 10 times more than forecast).

Let’s man up today by setting aside HK$1 trillion to be spent in the next five years on micro infrastructure, more MTR lines, buildings, schools, hospitals, pensions, overseas tertiary education – and no more fat subsidies to the fat cats.

The Reuters tape contained good news for Hong Kong, revealing a genuine desire to keep “one country, two systems” – albeit a little fuzzier than the purists would like. All we need now is for the chief executive to swallow her pride and we can get back to work.

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

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