We did not promise Link a monopoly on supply of shopping centres, insists Hong Kong Chief Executive Leung Chun-ying
In the second of a two-part interview, Leung Chun-ying talks about the Link Reit, mainland-Hong Kong relations and the support he receives from his family
On the Link Reit
Q: Are you confident about dealing with the Link Reit in the rest of your term?
A: The Link affects the shopping needs and hits the pockets of a lot of people in Hong Kong and the part of the population that can least afford to pay high prices for shopping. The conduct of the Link generally: firstly, a “reit” has to behave like a reit – a real estate investment trust. They are not a developer. Second point: the Link has a particular corporate social responsibility, because they serve the needs of public rental housing tenants. Many public rental housing tenants in Hong Kong can least afford to pay high prices. And I should also add that I’m particularly curious about the way that senior management of Link Reit is incentivised. I’m curious about whether the top management of Link is incentivised in such a way that they seek rental and profit maximisation. You could over-incentivise someone in his employment by giving the person a large portion of his package by way of a variable pay bonus.If you give the person an additional month or two bonus as salary, that’s one thing. If you say to the person that for every 100 dollar increase in rental income in that year, I will give you a big share of the increase, then you incentivise the person in a different direction. And bearing in mind the people that the Link serves, I think there is a case to answer.
Q: What do you mean by you are curious? Are you saying they’re doing something wrong?
A: I’ve looked at the figures and you can do some research. How much is fixed pay? How much is variable pay? And on the variable pay, how is that variable pay structured? You could say at the end of the year, the chairman of the board will sit down with the CEO and review the performance of the company and the performance of the person and the two sides could negotiate on the bonus. That’s one way of doing it. Then you could say it’s a fixed two-month extra pay. Or you could say, any increase in rental income in the past 12 months, I will give you a big chunk of it. Now then you incentivise a person in a very particular way that could carry social consequences. I think there is a case to answer.
Q: What then can be done about the remuneration package? Is the government considering buying back or suing the Link?
A: No, we are not buying back the Link. Corporates do have social responsibilities. The Link has a particular corporate social responsibility towards public rental housing tenants because they do not have other alternatives. We have a responsibility to public rental housing tenants because we were previous owners of these shopping centres and markets. We have a responsibility to satisfy their needs and if necessary to provide alternatives to Link Reit properties. When the chief secretary [Carrie Lam Cheng Yuet-ngor] comes back from her vacation [on June 30], we will carry forth our efforts in this direction.
Q: What do you mean by alternatives to the Link?
A: We as a government have a responsibility to address the needs of the people, particularly the shopping needs of the elderly because they are not mobile. We shouldn’t expect our 70 year olds and 80 year olds to walk a mile every day to go to a market. We shouldn’t expect our elderly people to carry heavy supermarket shopping, walking 500 yards. We did not promise the Link a monopoly on the supply of market stores and shopping centres.
On Hong Kong-mainland relationship and calls for Hong Kong independence
Q: Interactions between Hong Kong people and mainlanders appear to have gone from bad to worse in the last few years. To what do you attribute this?
A: Hong Kong is a pluralistic society, Hong Kong people are free to express their opinions. There was competition for scarce resources: maternity services, milk powder, kindergarten places and housing units. All these have been dealt with. Hong Kong-mainland differences have actually eased as a result of our policy response. What we are seeing is the shifting of this contradiction, from competition between mainlanders and Hong Kong people for rare resources to Hong Kong-central government contradiction, leading to, for example, advocacy of separatism and [Hong Kong ] independence. We should also bear in mind the fact that a huge number of Hong Kong people go to the mainland to travel, to study, to work and to invest. I’ve been told that 350,000 Hong Kong people live and work full-time in the three major Chinese cities. Now, 350,000 people as a workforce is about 8 per cent of our total workforce.
Q: It’s unimaginable that four or five years ago Hong Kong people would boo at the Chinese national anthem. In the past, Hong Kong people cheered for the Chinese women’s volleyball team, the Chinese athletes at the Olympic Games. Do you think it’s related to Hong Kong people’s discontent with Beijing’s tough approach on political reform or your governing style?
A: It’s a complex situation. Firstly, booing any national anthem is simply bad behaviour. Booing the national anthem of any country, including foreign countries, is simply something that cannot be condoned. But Hong Kong is a pluralistic society, we are seeing more and more people going to Tiananmen Square, getting there very early in the morning and saluting the red flag while it’s being raised there. We are seeing more and more Hong Kong young people studying at mainland universities and living there, working there, marrying a mainland husband or wife. Nothing to do with who is the head of the government. It’s a complex issue. On the question of [Hong Kong] independence and Hong Kong being described as a city state, you read articles and books written about them long before I declared my candidacy [in 2011]. They were there before I became chief executive. It’s a complex issue. Hong Kong was an anti-communist city, and some of this anti-communist behaviour or sense has been turned into anti-China and a pro-Hong Kong independence stance.
Q: Mainlanders are also becoming very critical of Hong Kong people. As chief executive, how are you going to both sides together?
A: I’ve been told that I’ve been criticised by more netizens on the mainland than by those netizens in Hong Kong for discouraging them from buying milk powder and stopping them from buying housing units in Hong Kong, not allowing them to travel to Hong Kong and so forth. There are sentiments on both sides. I think the solution is communication, that’s why I am very keen to encourage Hong Kong’s young people to go and see the latest developments on the mainland, warts and all. It is important for them to see for themselves and get a feeling.
Q: What’s your reaction to being criticised by more mainland netizens than those in Hong Kong?
A: Again, it’s a matter of communication. It comes with the job. In March I believe I gave a TV interview in Beijing, explaining to the mainlanders why we had to stop mainland travellers bringing more than two cans of milk powder out of Hong Kong and into the mainland. Communication is very important. I asked my Economic and Trade Office colleagues on the mainland to reach out to their target audiences to explain to them what Hong Kong is all about. We obviously should consider all effective means of communicating. Mainlanders’ complaints aren’t just about milk powder. There are certain policies that they regard as one-way traffic tilting in favour of Hong Kong people. For example, there are thousands of Hong Kong lorries that are driven by Hong Kong drivers to the mainland, but mainland drivers are not allowed to drive mainland lorries to Hong Kong. We don’t pay the central government for t the PLA garrison in Hong Kong, while we paid the British for the British garrison in Hong Kong before 1997. So the question was asked, why didn’t you carry on the practice and pay Beijing instead, when you paid London? Similarly, Hong Kong people can travel to the mainland anytime we like, we can work on the mainland anytime we like without even filling out a form. But mainlanders are restricted in coming to Hong Kong. There are over 300,000 domestic helpers working in Hong Kong drawing a monthly salary of let’s say HK$4,000 to round it up. HK$4,000 multiplied by 300,000 by 12 is a lot of money in a year. We have a policy that allows Hong Kong employers to employ domestic helpers from countries such as the Philippines, Thailand, Indonesia and so on. Why not mainland China? Now, these are the complaints that we get from the mainland as well. So, within the one country, between the two systems, it is very much a balancing act. I think Hong Kong people should also be aware of these one-sided privileges we have been getting under the two-systems arrangement.
Q: How long do you think we can enjoy these one-sided privileges? Mainlanders may have been more understanding during the early years of the handover but now, they may not be as accepting, and have started to question such treatment.
A: For as long as Hong Kong remains useful to the country and that’s very much the premise on which Hong Kong was given the privilege of the two systems in Deng Xiaoping’s vision. Secondly, we should be able to articulate why and how Hong Kong is useful to the country, so there’s a lot of communication there. Communication is very important. Hong Kong has often been described as an international financial, trade centre and so on. I think the mainland should know we can broaden the sectors in which we could contribute to the country. We can’t sit on our laurels and say we’ve been good for the past 30 years in these areas and these are the areas we should remain good at. We should look for new areas we can contribute to the country as well. Hong Kong is given these privileges despite the disagreement on the part of the people in many areas because we have a strong central government.
On Leung Chun-ying’s family
Q: Your family members are always making headlines. Don’t you think because of your job, your family also suffers? Do they complain to you?
A: Actually they are used to this. I was secretary general of the Basic Law Consultative Committee and my three children were born into these kinds of conditions. Sometimes I do feel they are put in an unnecessary spotlight and under unnecessary pressure, but I would say by and large, they are taking the pressure and the limelight well.
Q: Have they ever asked you to step down because of the pressure?
A: Not at all. Not even during the time when we used Government House – and our bedrooms are upstairs – basically as our command centre during the Occupy Central movement. As soon as Benny Tai wrote his first article proposing the Occupy Central movement, it was back in January 2013, we took his words seriously. We started to equip parts of Government House as my temporary office should Occupy Central come to reality. And then we refurbished the Central Government Offices down at Lower Albert Road, which was vacant at that time, as the Occupy Central offices of the policy secretaries. So for more than 79 days we used Government House as our office. The police commissioner, his assistants and the secretary for security came here at least twice a day. We had Executive Council meetings, our daily [morning ] prayer meetings[among top officials]... The thing about being a head of government is that there is a lot that you can’t share with anyone else. That’s why I think for any political leader, experience is important most of the time. Except for personal experiences that you cannot share with others, I couldn’t share with my top colleagues all the things and I definitely could not share any of the things with my family members. Sometimes they wondered what was going on. Sometimes they worried, but I would pull through. So yes, on occasion, unfair on them, there is some pressure on them, but again I’m not new to the situation, and they are not new either.
Q: Do they ever tell you that you shouldn’t have taken the hot seat and we don’t have to face those abuses?
A: No, not at all. They see the progress that we as a city are making as a result of this government’s policies: housing, ageing society, tackling poverty and so on. They know what’s happening and they know that these efforts are being rewarded, not me personally, but Hong Kong is being rewarded by these efforts.
Q: Are you sure your family members will continue to support you for a second term? There are rumours that you cancelled your trip to Tianjin to handle the booksellers issue. Is it true? Even though you have received Beijing’s support, your critics say the support is only for the post but not for you personally?
A: The central authorities are supportive of Hong Kong and the chief executive they appointed. Like all government leaders, we have to travel, but we need to strike a balance between travelling and tending to needs at home. So that Tianjin trip was one of these decisions. And it’s not the first time that I cancelled an overseas trip.