Beijing puts Hong Kong business on alert

China's government rejects calls for free elections in the city, rousing protestors to set in motion plans to block streets in Hong Kong's financial district.
CY Leung at the press conference on Sunday
CY Leung at the press conference on Sunday

Beijing has effectively put Hong Kong's financial district on alert after rejecting calls for free elections in the city, with a planned gridlock of business by protesters imminent.

The decision by China’s National People’s Congress Standing Committee, announced on Sunday, throws down the gauntlet to the Occupy Central movement.

Occupy Central, backed by Hong Kong media tycoon Jimmy Lai, aims to block the financial district by staging a sit-in protest just yards from the Asian headquarters of Citi and HSBC.

Beijing’s intransigence and protestors’ plans to bring traffic in Hong Kong’s streets to a standstill are a threat to the city’s reputation as a stable financial centre.

The movement’s organisers – along with a large swathe of pro-democracy protesters – gathered on Sunday night at a rally (pictured below) outside the office of CY Leung, Hong Kong chief executive.

It was unclear what steps Occupy Central would take next. But Kenneth Leung, a lawmaker representing the accountancy profession in Hong Kong, told FinanceAsia a number of civil disobedience acts were imminent.

“We are very upset. There is no way there can be a free election. It is election Chinese-style,” said Leung. "The business community is rightly concerned by the political situation".

Leung said action would not be limited to Occupy Central. He expects strikes by students and teachers, and "other acts of disobedience", to take place.

CY Leung, in a highly charged press conference on Sunday following the NPCSC’s decision, said he was expecting a reaction by Hong Kong citizens.

“If some people say, because the NPCSC’s decision has not met their ideal plan, they will come out to protest, I hope everyone can express their views in a peaceful, rational and legal way,” he said.

The announcement by the NPCSC sets out the framework for appointing Hong Kong’s chief executive from 2017.

In short, it allows the public to vote for the next leader of Hong Kong from a small pool of candidates pre-approved by the Chinese government, rather than by a public nomination.

“One person, one vote” it might be but the reality is that Beijing has rejected an open election process, instead opting to assert control: so, not the universal suffrage many people were calling for.

Hong Kong 2020, a political group led by former Hong Kong CEO Anson Chan, said in a statement the decision made a “complete mockery” of the public consultation process and it urged the city’s people “not to be fooled by sham democracy”.

“By ignoring every single proposal by moderate groups, the NPCSC has squandered a crucial opportunity to win the hearts and minds of Hong Kong people,” Hong Kong 2020 said in the statement.

Financial threat

Tensions have been building throughout the year. In June, the Chinese government unveiled a rare white paper effectively reminding Hong Kong citizens that the city was under its control.

Pro-democracy and pro-Beijing demonstrators have traded brickbats, with both staging popular marches, attracting tens of thousands of people.

There have also been rival – unofficial – public votes. One asked whether universal suffrage should be adopted, which was backed by nearly 800,000 people; another, dubbed the “Anti-Occupy petition”, was signed by 1.4 million people, it was claimed by organisers.

One of the signatories of the “Anti-Occupy” petition was CY Leung himself, stoking further anger.

The issue has increasingly moved from the political sphere to the business world; and the ramifications for Hong Kong could be stark.

Some critics of the Occupy Central plan have predicted chaos, with potential gridlock bringing not just the financial district to a standstill but most of Hong Kong and Kowloon, home to 5 million people.

In July, HSBC downgraded the city’s investment outlook for equities on the back of rising political turmoil, and Moody’s warned of the implications for Hong Kong’s banking industry.

Beijing also went so far as to warn the city that its status as a premier renminbi trading hub was at risk and a “growing cake Hong Kong should cherish”.

Banks, financial groups and other businesses have been drawn into the debate; the most recent example being the raid on the home of media magnate Lai, a vocal critic of Beijing.

Lai, a self-made millionaire, owns Hong Kong-based group Next Media, publisher of the Apple Daily newspaper. Local media have reported that Lai donated millions to pro-democracy parties.   

Meanwhile, the Hong Kong branches of the Big Four accountancy firms – PwC, Deloitte, KPMG and EY – ran a half page advertisement in June in the local press criticising the planned protest. Disruption, they said, would damage the city’s reputation and bring it to its knees.

A few days later, a bunch of their employees took out their own ad in the Apple Daily newspaper; arguing that their companies did not speak for them.

The Hong Kong Monetary Authority said in August it would check whether the city’s banks were ready for the potential disruption to business.

Over the next days and weeks it will become more apparent what that disruption might be.

As CY Leung said on Sunday, the decision by China’s NPCSC is not the final step; the move still has to be ratified by two-thirds of the 70 members of Hong Kong’s legislative council (Legco).

“We cannot afford a standstill in our constitutional development or else the prosperity or stability of Hong Kong will be at stake,” CY Leung warned on Sunday.

But Kenneth Leung, a member of Legco, said the 26 pro-democracy supporters among the council would not support the decision. "The channel for dialogue is closed. There is nothing to talk about," he told FinanceAsia.

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