Hong Kong’s business community welcomed Chief Executive Carrie Lam Cheng Yuet-ngor’s decision on Wednesday to withdraw her administration’s proposed extradition bill, with industry groups calling it the first step to restoring confidence and the city’s international reputation. After three months of protests against the bill, Lam said the proposed legislation would be dropped completely as one of four measures to ease public concern and allow the city to move forward. Business chambers said the decision was a breakthrough in a political crisis that dealt fresh blows to an economy already weakened by the US-China trade war. In addition to withdrawing the bill, Lam said two more people would be appointed to the police watchdog the Independent Police Complaints Council, senior government officials would hold direct talks with a cross-section of the community, and society’s stakeholders would be encouraged to advise the government on solutions to deep-seated problems. “I recognise that our response may not address all the grievances of people in society,” Lam said. “However, should we all think deeply whether escalating violence and disturbances is the answer? Or whether it is better to sit down to find a way out through dialogue?” Will tensions ease? Stunned city reacts to withdrawal of extradition bill that sparked Hong Kong protests The measures were in response to the protesters’ five demands, which included withdrawing the bill completely and setting up a commission of inquiry into the police’s use of force. Investors reacted favourably to the news, with the benchmark Hang Seng Index rising 995 points, or 3.9 per cent, to 26,523 on Wednesday, its biggest gain in 10 months. The American Chamber of Commerce in Hong Kong (AmCham) welcomed the government’s response. “Withdrawing the bill is an important first step to restore business confidence and the city’s international reputation. We believe an enhanced inquiry via the Independent Police Complaints Council to look into the events since June is a positive step ahead,” AmCham chairman Robert Grieves said. Grieves said AmCham was confident that Hong Kong would remain Asia’s leading business hub “if timely and concerted efforts are made to resume normality of life”. Joe Chau Kwok-ming, president of the Hong Kong General Chamber of Small and Medium Business, also said that withdrawing the bill was a first step to showing the administration’s goodwill in resolving the political crisis. “On a longer-term basis, Lam should float measures to address social issues,” Chau said. Chinese Manufacturers’ Association president Dennis Ng Wang-pun said the announcement was vital to reducing tensions in the city. Ng also urged society to be “rational” and address social conflicts through dialogue. Stewart Leung Chi-kin, executive committee chairman of the Real Estate Developers Association of Hong Kong, said the announcement was a “good start” and “better than not doing anything”. Sammy Po Siu-ming, chief executive of the residential division at property agent Midland Realty, said the bill’s withdrawal would be a positive stimulus for the housing market. “Recent sales of new homes show that the purchasing power in the market is strong. If the political problem eases, it may trigger an eruption in purchasing power in the short term,” Po said. “There will be numerous new projects for sale in the second half of the year. Developers are expected to offer prices at market level, attracting a large amount of funds and attention.” Key property developers such as Henderson Land Development, which had condemned the violence, declined to comment. Sun Hung Kai Properties said it did not have a comment on the issue while CK Hutchison Holdings was unavailable for comment. Hong Kong protests: what is the difference between Carrie Lam suspending and withdrawing extradition bill? Donald Choi Wun-hing, chief executive at developer Chinachem Group, said the strong rebound of the stock market signalled the restoration of business confidence. “This will be reflected in the stock and property market later,” Choi said. “In the past few months, [home prices] have fallen. If we regain confidence in prospects, I think the property market will be stable.” The protests arose from opposition to the bill, which would have allowed criminal suspects to be transferred from Hong Kong to mainland China. The opposition escalated into clashes with the police and spread throughout the city, disrupting operations at vital facilities such as Hong Kong International Airport. The bill was shelved on June 15 but protesters demanded its full withdrawal. The unrest battered the city’s tourism and retail sectors. Secretary for Commerce and Economic Development Edward Yau Tang-wah said that Hong Kong tourist arrivals were down 45 per cent year on year in the last week of August.