Hong Kong Needs Close China Ties to Prosper, Next Leader Says

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  • Dismisses concerns that Beijing has tightened grip on city
  • Lam speaks to Bloomberg days before becoming city’s leader

Lam Sees Challenges Ahead as Hong Kong Chief Executive

Hong Kong’s importance to the global economy will increase due to integration with China, Chief Executive-elect Carrie Lam said, dismissing concerns that Beijing was undermining the city’s autonomy.

President Xi Jinping’s Belt-and-Road Initiative -- along with a plan to create a Silicon Valley-like innovation haven by linking Hong Kong and neighboring Macau with the southern manufacturing powerhouse of Guangdong -- would benefit the financial hub, Lam said in an interview in Hong Kong on Friday.

“We’re now even more relevant,” Lam, 60, told Bloomberg Television on the sidelines of the Wharton Global Forum. “We will not only benefit from this deepening and opening up, we’ll actually be able to contribute to these major initiatives.”

Lam’s five-year term begins on July 1 -- the 20th anniversary of the former British colony’s return to Chinese rule -- in a ceremony that Xi is expected to attend. She faces growing concern that Beijing is eroding Hong Kong’s reputation as a bastion of free speech and the rule of law rather than preserving the “high degree of autonomy” it promised for 50 years after regaining stewardship in 1997.

In the interview, Lam brushed off such worries, saying that calls for independence, which gained traction in last year’s legislative elections, were a “sensitive flash point” that contravened China’s “one country, two systems” framework for Hong Kong.

Read more: China Purges Hong Kong Critics 20 Years After Handover

“People now seem to be making all sorts of allegations about the tightening grip of central authorities on Hong Kong,” Lam said. “I will always ask, just give us the evidence, what are the incidents that lead people to have those sort of allegations, and then we can discuss.”

Carrie Lam

Photographer: Anthony Kwan/Bloomberg

Incidents cited by pro-democracy activists include the 2015 abductions of Hong Kong booksellers who published works critical of the Communist Party. Last year, China also instructed judges how to interpret local law in a case that resulted in the ouster of two pro-independence activists elected to the legislature.

National People’s Congress Chairman Zhang Dejiang, China’s top official for Hong Kong affairs, said in a speech last month that Beijing was ready to invoke as-yet utilized powers to “supervise” the patriotism of public officers.

Besides political divides, Hong Kong’s first female leader inherits a city with the biggest wealth disparity in Asia and the most unaffordable housing in the world. Apartments the size of parking spots cost $500,000 and median wage earners would have to save for 80 years to buy a home. 

“The ultimate solution is provide more land and build more housing,” said Lam, who called the issue her top priority. “We need to take stock of what we already have in Hong Kong and try to optimize the use of all these things.”

She takes office with an average approval rate of 49 percent, according to the University of Hong Kong’s Public Opinion Programme, compared with outgoing Chief Executive Leung Chun-ying’s 20 percent. Support from Beijing helped Lam -- Leung’s former No. 2 -- overcome a more popular rival in March to win a vote among a committee 1,194 business and political elites, an electoral system at the center of pro-democracy rallies three years ago.

Lam has pledged to focus on economic growth rather than controversial proposals that have prompted waves of protests and frustrated the current administration. Hong Kong’s economy is projected to expand 2.5 percent this year, according to the median estimate of 26 analyst estimates compiled by Bloomberg. That compares with 2 percent last year.

Watch Next: Carrie Lam on Challenges and Future of Hong Kong

Graphic: How China Holds Sway Over Who Leads Hong Kong

The city’s gross domestic product has grown almost 50 percent to $309 billion since the handover, although its importance has diminished as China grows and opens to the world. Its share of the national economy has shrunk to 3 percent from 19 percent during the same period.

Lam wouldn’t say whether she would attempt to enact national security laws required by Hong Kong’s charter but feared by democracy advocates who see them as a tool to curb civil rights. Pro-Beijing officials have in recent months renewed calls for the legislation, which has been stalled since half a million protesters took to the streets in 2003. 

Reiterating her campaign pledge, Lam said she would “work very hard to create the necessary environment that will be conducive to a rational debate” on the legislation.

“The question now lies in what sort of legislation we’re going to enact that would strike the needed balance and assure of the freedoms and the rights that they will continue to enjoy,” she said.

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