China Gambles in Hong Kong

WSJ.com - China Gambles in Hong KongChina Gambles in Hong Kong

City Leader's Early Exit Marks
More Pragmatic, Responsive Tack
By CHARLES HUTZLER in Beijing and MEI FONG in Hong Kong
Staff Reporters of THE WALL STREET JOURNAL
March 3, 2005; Page A11

The man China picked to run Hong Kong when it took over the former British colony in 1997 is stepping down -- and that may be to China's credit.

Hong Kong Chief Executive Tung Chee Hwa will resign soon, said politicians in Hong Kong and a person in Beijing knowledgable about the plans. Mr. Tung, who flew to Beijing yesterday for the annual meeting of a top government advisory body, side-stepped reporters' questions about his fate, saying only that an announcement would come at an appropriate time.

The departure of Mr. Tung, whose unpopular rule in Hong Kong led to massive street protests in recent years, represents a surprising gamble for China's usually risk-averse leadership. Allowing him to resign early appears to signal a desire for accountable leadership even as China seeks to fend off demands for deeper democratic changes in the city.

It also shows a rare willingness on the part of China's government to tacitly admit failure, say Hong Kong politicians and Chinese analysts, and marks a move toward a more pragmatic and responsive form of governance than China traditionally has offered. The denouement is expected in a few days, when Mr. Tung, as expected, is made vice chairman of the largely powerless Chinese People's Political Consultative Conference.

Letting Mr. Tung go -- and an unusual criticism of his governance by Chinese President Hu Jintao in December -- marks a departure from the usual arms-length manner in which Beijing handles the partially self-governing city and capitalist financial center that China recovered from Britain nearly eight years ago. But it conforms to a major shift that Mr. Hu's administration is trying to engineer in the way rapidly changing China is governed as a whole.

"This is in line with China's increasingly pragmatic and proactive style of leadership," says Ma Ngok, a political scientist at Hong Kong University of Science and Technology.

Since assuming power in China two years ago, Mr. Hu has struck a note of populism, promising to bring accountability and responsiveness to an authoritarian officialdom whose frequent negligence and ineptitude has battered public confidence. To do this, the Hu leadership has taken what for China is the rare step of ousting officials from office for poor performance.

During the 2003 outbreak of severe acute respiratory syndrome, China cashiered several top officials, including the mayor of Beijing and the country's health minister, for failing to respond adequately and covering up the disease. Just last month, the cabinet removed the deputy governor of a major industrial province following an explosion in a state-run coal mine that killed 214. Mr. Hu also has ordered all 68 million Communist Party members to attend seminars designed to make them more responsive to public demands.

Still, the premature departure of Mr. Tung -- who had been highly unpopular with a Hong Kong public increasingly hungry for greater political freedoms -- risks inciting fresh demands for democratic change not just from Hong Kong but from fast-developing cities in China. "There is the risk that other Chinese cities will look to Hong Kong and think, 'OK, mass protests can remove state-appointed leaders,' " says Joseph Cheng, political science professor at Hong Kong's City University.

Mr. Tung, a sober-mannered former shipping magnate with no political experience before he became chief executive in 1997, has presided over a series of policy blunders that at one point brought half a million protesters onto Hong Kong streets and strained Beijing's patience. After his most recent gaffes -- a series of botched property-development deals -- Mr. Tung drew unusual public criticism from Mr. Hu, who in December urged Mr. Tung to assess his inadequacies and improve his governance.

Nevertheless, many had expected Beijing to allow him to limp through the remainder of his second term, due to end in 2007, rather than to risk a messy separation and implications of Beijing's fallibility in picking the wrong man for the job. It remains unclear whether Mr. Tung asked to resign or whether Chinese leaders pushed him to.

By law, Mr. Tung's post will be filled temporarily by his second-in-command, Hong Kong's popular Chief Secretary Donald Tsang, who is credited with helping oversee the relatively smooth transition of the civil service from British to Chinese rule and won plaudits for intervening to support the Hong Kong dollar -- which is pegged to the U.S. dollar -- during the 1997-98 Asian financial crisis.

Mr. Tsang is "more knowledgeable, he's neither rich nor poor, he's more in touch with ordinary people," says Edmund Lo, a former branch bank manager turned cabby who partly blames his fall in fortunes on one of Mr. Tung's early initiatives to build more apartments, creating a housing oversupply right before the Asian financial crisis hit and the market collapsed.

Mr. Tung's departure might enable Beijing to appear responsive to popular discontent. But China's leaders remain in firm control of Hong Kong's politics and the choice of its next leader. If Mr. Tung departs before July, his successor is likely to be picked by the same 800-member committee that elected Mr. Tung for a second term at Beijing's behest.

By law, Hong Kong will have to elect Mr. Tung's successor within six months of his departure, which could mean Hong Kong's next chief executive will be in office until 2010, putting off for three years the thorny question of political change in methods for selecting the chief executive. Pro-democratic factions in Hong Kong had been pushing for direct election of the chief executive in 2007 or at least a more-representative, larger election committee.

"It's not a victory for Hong Kong, it's a victory for Beijing," says veteran democracy advocate Martin Lee of Mr. Tung's exit. Mainland authorities "got their appointee to leave without acknowledging their mistakes."

Until recently, Chinese leaders appeared to prefer to stand by Mr. Tung, even though his tenure has been marked by missteps and bad timing.

But Beijing's dissatisfaction with him rose visibly within months of Mr. Hu's team taking office. A controversial proposed antisubversion law that Beijing prodded Mr. Tung to pass energized Hong Kong's democrats and spawned a massive July 2003 demonstration, forcing Mr. Tung to postpone the law's adoption.

That set the stage for a further confrontation, as the invigorated democracy camp tried to marshal public discontent to press for broadening the city's limited use of direct elections. Beijing drew the line on further concessions. After pro-Beijing candidates held their own in legislative elections last fall, Beijing breathed easier, the Chinese analysts say, but the passing of that crisis made it easier to think about replacing Mr. Tung.

Beijing may also be counting on continuing good economic times to offset critics and calls for more democracy in Hong Kong.

Since the protests in 2003, Beijing has sought to give Hong Kong's economy a boost, giving its businesses greater access to robust sectors of the Chinese economy and letting many more mainland tourists visit the city. Those measures, along with a natural spill-over effect from China's torrid economy, have buoyed the economy, which after years of torpor expanded 7.8% last year.

"If the economy under Tung Chee Hwa had been good, then people would never have come into the streets to demand direct elections," says Feng Zhongping, a specialist on European and Hong Kong affairs at a think tank affiliated with China's intelligence agency. "If there's money to be easily made, everything will be OK."

Write to Charles Hutzler at charles.hutzler@wsj.com1 and Mei Fong at mei.fong@wsj.com2