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HONG KONG (BLOOMBERG) – When China regained control of Hong Kong more than two decades ago, the Communist Party entrusted the city’s wealthiest tycoons with enormous influence over local politics.
This week, President Xi Jinping took his most dramatic step yet to regain some of that power.
Xi’s radical reform of Hong Kong’s electoral system, aimed at neutralizing pro-democracy voices, will reduce the influence of billionaires such as Li Ka Shing and Lee Shau Kee, who used to exercise effective control over a quarter of the seats. on the 1200-member Election Committee decided by the Hong Kong CEO.
Under the new system, tycoons will lose more than 10 percent of their votes to smaller companies and mainland Chinese companies. The committee will also add 300 more seats held mostly by Beijing loyalists, further diluting the power of the magnates.
It is the latest sign of a fall from grace for Hong Kong’s wealthiest families, who have been blamed by some Chinese officials and state media for failing to avoid anti-government protests in 2019 or fix deep-rooted problems like housing affordability. Beijing’s dependence on tycoons has also declined markedly in recent years as China’s economy soared into a $ 14 trillion (Singapore $ 18 trillion) behemoth.
“The biggest loser from reform is Hong Kong’s pro-democracy camp; the second biggest loser is the big real estate moguls,” said Ivan Choy, who teaches politics at the Chinese University of Hong Kong.
“Beijing no longer wants to negotiate with them in key elections.”
Less affordable
One of the biggest sources of friction is the Hong Kong real estate market, the least affordable in the world. The soaring house prices in the city stem from a colonial system that limits the supply of land while auctioning off available parcels at a minimum price decided by the government. The local property moguls, who control most of the city’s buildings, have long been seen as the biggest beneficiaries of the system and the most opposed to any reform.
The 19 richest people in Hong Kong have a combined net worth of about $ 272 billion, which is equivalent to 74 percent of the territory’s gross domestic product, according to the Bloomberg Billionaires Index. Most of them made money starting in the real estate business.
In an interview this week, Leung Chun Ying, who served as the city’s chief executive for five years until June 2017, said the new electoral system will help the government address livelihood issues, including a shortage of livelihoods. households.
“This is the root of many social and economic problems in Hong Kong, the housing shortage,” Leung told Bloomberg Television on Tuesday (March 30).
The comments by Leung, who is now the vice chairman of China’s top political advisory body, mean that Beijing wants the local administration to focus on solving the long-standing problems plaguing the former British colony.
Some of the tycoons were attacked at the height of the 2019 protests. For example, 92-year-old Li, Hong Kong’s richest person, provoked the ire of Beijing after publishing a vague message in local newspapers that was widely interpreted as a call not only to stop the violence on the streets of Hong Kong, but also to emphasize freedom. , tolerance and rule of law.
China’s top law enforcement agency accused the tycoon of “fomenting crime.”
Call for ‘patriots’
The electoral renewal signed by Xi allows the national security police to vet candidates for the city’s Legislative Council, a step that would shut down all pro-democracy voices and align with Xi’s call for “patriots.” run Hong Kong. The United States, the United Kingdom, Japan and the European Union have condemned China’s moves.
In the old system, top moguls controlled the key votes in deciding the CEO, said Choy of the Chinese University of Hong Kong. While they had traditionally voted for the candidate favored by Beijing, there were times when they came close to the challenge, he said.
During the 2012 elections, Beijing’s favorite candidate, Mr. Leung, won with just 61 percent of the vote, the lowest among all CEOs, and many moguls showed their support for his fellow billionaire, Mr. Henry Tang, on the side of the pro-democratic opposition. to camp. Local press widely reported at the time that China’s liaison officers in Hong Kong had to intensify their efforts to gain support for Leung.
Supporting China
In addition to Li and Lee, who founded two of Hong Kong’s best-known business empires, Adam Kwok, from the family behind the city’s largest developer, and Adrian Cheng, whose family owns a proprietary jewelry conglomerate, they were also on the last committee for the 2017 CEO election. Representatives for Li, Lee, Kwok and Cheng did not respond to requests for comment.
However, some of the voting moguls are rallying behind the new system. Hang Lung Properties, whose chairman Ronnie Chan was on the Election Committee in 2017, said the group supports China’s initiative “to improve Hong Kong’s electoral system.” Robert Ng, a director of the Sino Group that owns properties such as the Far East Finance Center and the Conrad Hong Kong hotel, expressed his enthusiasm in a statement sent to Bloomberg News through a representative.
Mr. Ng fully supports the change “as it enhances the principle of one country, two systems and adds greater stability and prosperity to the livelihoods of the Hong Kong people,” according to the statement.
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