Xi Jinping, China’s president, right, swears-in John Lee, Hong Kong’s chief executive, at a ceremony in Hong Kong, China, on Friday, July 1, 2022. Hong Kong’s new security-minded leader was sworn in by President Xi Jinping as the city marks 25 years of Chinese rule, after declaring the Asian financial hub had been reborn after a crackdown on the pro-democracy opposition.
Justin Ching | Bloomberg | Getty Images
Hong Kong’s new Chief Executive John Lee was sworn in on Friday in a ceremony attended by Chinese President Xi Jinping.
Analysts expect Lee to tackle longstanding problems in the special administrative region, including Hong Kong’s housing crisis and winning back the international business community. Maintaining security will also be key among Lee’s top tasks, they say.
The former British colony, which returned to China 25 years ago, is a semi-autonomous region under Beijing’s rule. However, the last few years have been politically turbulent for the city, which saw pro-democracy protests in 2019 turn violent.
In his inaugural speech, Lee described the “one country, two systems” principle as the “institutional safeguard” of Hong Kong, and called it the “cornerstone” in maintaining long-term prosperity and stability.
“Over the past two and a half decades, Hong Kong has been recognized as the world’s freest economy, the world’s number three global financial center and the fifth most competitive economy around the globe,” Lee said Friday.
David Dodwell, the chief executive officer of Strategic Access, a consultancy firm, said Hong Kong’s new leader faced many challenges.
“The first priority is security and stability, no question about it,” Dodwell told CNBC’s “Capital Connection” on Friday.
“The country as a whole and Hong Kong in particular, were really traumatized by the six months of street chaos in 2019. And very, very clearly, Beijing would not welcome that happening,” Dodwell said, adding that the government will also have to deliver on housing.
The new chief executive’s biggest challenge lay in reinventing Hong Kong’s appeal, said Tara Joseph, senior director at business risk consultancy, Strategy Risks, who recently left the city after living there for 20 years.
“Hong Kong has been brought to heel…it is not open and connected with the world. And John Lee has a huge job to convince the international business community that Hong Kong is a great place to be,” Joseph, — formerly the president of the American Chamber of Commerce in Hong Kong — told CNBC’s “Street Signs Asia” on Friday.
The Asian financial hub’s connection to the mainland is also important.
“Hong Kong always has an opportunity to be a win-win if it remains connected and open to the world, because everybody wants business to happen. China wants business to happen,” Joseph said. “The US and other Western nations [also] want to be able to have capital and movement into China.”
However, the administration of outgoing Chief Executive Carrie Lam may have “completely underestimated the unintended consequences [of] so-called integration” with the mainland, said Bernard Chan, former convener of Hong Kong’s executive council under Lam.
“There are a lot of unintended consequences. Local people felt that they’re losing out to their mainland counterparts,” he added.
He said the people felt that the Hong Kong government was not doing “enough to protect their interests,” explaining that China’s strong middle-class came to Hong Kong to access wealth management products, medical care, education and so on.
“But they seem to be competing with locals, and I think we did not do enough to mitigate those kinds of unintended consequences,” Chan said.
The new administration will also have to focus on housing, said Chan.
“A housing shortage has always been a big issue in Hong Kong. So just looking at the people he appointed, you can tell the main focus will be on fixing some of these very outstanding problems of Hong Kong,” he told CNBC on Friday.
George is Digismak’s reported cum editor with 13 years of experience in Journalism