Tung Chee-Hwa's Big Test

The SARS epidemic appears to be easing in Hong Kong, but the disease is likely to give Chief Executive Tung Chee-hwa a headache for months to come. Tung has long been criticized by pro-democracy activists who feel he too closely follows the mainland party line. But his initially slow handling of the SARS crisis has released a flood of abuse from ordinary citizens, the business community, and pro-Beijing politicians. Tung's initial response to SARS was "totally pathetic," says a top executive at a local retailer. Tung made "so many wrong decisions," adds Ma Lik, secretary-general of the Democratic Alliance for the Betterment of Hong Kong, the city's largest pro-Beijing party. "He's quite unpopular."

Tung's popularity has slid far enough that opposition lawmakers have dared to present a no-confidence motion in Hong Kong's legislature, scheduled for a vote on May 14. Tung is likely to win; he still enjoys the support of most lawmakers. The question is how he will fare in his ultimate power base, Beijing. Tung is close to ex-President Jiang Zemin, who chose the shipping magnate to lead Hong Kong. By some accounts, he doesn't have such a good relationship with new President Hu Jintao. "This is not an administration that is perceived as operating well" by Beijing, says Steve Vickers, president and CEO of Hong Kong-based International Risk Ltd.

Tung's office declined to comment for this article, but after meeting with Hu on Apr. 30, he told reporters that the President "has been very supportive." Tung is also moving quickly to convince Beijing he can handle the crisis. In recent weeks he has toured areas of the city hit hardest by SARS, and visited with victims and health-care workers. On Apr. 24, he announced a $1.5 billion economic stimulus package featuring assistance to the travel industry and other sectors hit by the SARS outbreak. And on May 5, he unveiled a plan to form an agency similar to the U.S. Centers for Disease Control & Prevention.

His performance has gotten mixed reviews. With tourists shunning Hong Kong, business slowing to a crawl, and locals worrying about their jobs, "the SARS impact is devastating," says Credit Suisse First Boston (CSR ) economist Dong Tao. Tao has lowered his growth forecast to just 1.8% for the year, compared with 2.6% before SARS hit.

The good news for Tung is that most of the bad news appears to be behind him. The number of new SARS cases in Hong Kong is falling, giving hope to many that the World Health Organization may soon lift its travel warning: On May 6, the WHO praised Hong Kong's efforts to contain the disease. The benchmark Hang Seng stock index has risen 6% since Apr. 25. And Beijing leaders have their hands full containing SARS in China. "Hong Kong is not necessarily at the top of their agenda," says Peter Cheung, a political scientist at the University of Hong Kong.

Unlike mainland politicians, though, Tung must keep voters happy. In November, Hong Kongers elect district boards. Although not normally considered important, the election will be voters' first chance to express their displeasure at the ballot box. "If Tung is the kiss of death for [the pro-Beijing] parties...he will develop 'health problems,"' and step aside before legislative elections next year, predicts Michael E. DeGolyer, a political scientist at Baptist University in Hong Kong and frequent critic of Tung. While other analysts believe that Beijing won't risk the embarrassment of dumping Tung, the chief executive may need to work fast if he doesn't want to be a political casualty of the killer virus.

By Bruce Einhorn in Hong Kong, with Dexter Roberts in Beijing

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