John Lee’s priorities in Hong Kong: Security, housing, business attractiveness

China’s President Xi Jinping, right, swears in John Lee, Hong Kong’s chief executive, at a ceremony in Hong Kong, China, Friday, July 1, 2022. Hong Kong’s new security-oriented leader is sworn in by President Xi Jinping as the city marks 25 years of Chinese rule after announcing that the Asian financial center has been revived following a crackdown on pro-democracy opposition.

Justin Chin | 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 address the special administrative region’s longstanding problems, including Hong Kong’s housing crisis, and win back the international business community. Maintaining security will also be key among Lee’s primary 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, where pro-democracy protests in 2019 turned violent.

In his inauguration speech, Lee described the “one country, two systems” principle as Hong Kong’s “institutional safeguard” and called it a “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 world’s fifth most competitive economy,” Lee said on Friday.

Security

David Dodwell, chief executive of Strategic Access, a consultancy, said Hong Kong’s new leader faced many challenges.

“The first priority is security and stability, without a doubt,” Dodwell told CNBC’s “Capital Connection” on Friday.

“The country in general and Hong Kong in particular have been really traumatized by the six months of street chaos in 2019. And very, very clearly, Beijing will not welcome that happening,” Dodwell said, adding that the government would also have to deliver housing.

Business appeal

The new chief executive’s biggest challenge lies 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 a standstill… it is not open and connected to the world. And John Lee has a huge job to convince the international business community that Hong Kong is a great place,” Joseph — former president of the American Chamber of Commerce in Hong Kong — told CNBC’s “Street Signs Asia” on Friday.

The connection of the Asian financial center to the continent is also important.

Hong Kong always has an opportunity to be profitable if it stays connected and open to the world because everyone wants business to happen. China wants business to happen.

Tara Joseph

Director of Strategic Risks

“Hong Kong always has an opportunity to be profitable if it stays connected and open to the world, because everyone wants business to happen. China wants business to happen,” Joseph said. “The United States and other Western nations [also] they want to be able to have capital and movement in China.”

However, outgoing CEO Carrie Lam’s administration may have “totally underestimated the unintended consequences [of] so-called integration” with the mainland, said Bernard Chan, former head of Hong Kong’s executive council under Lam.

“There are many unintended consequences. Local people feel they are losing out to their mainland counterparts,” he added.

He said people felt the Hong Kong government was not doing “enough to protect their interests”, explaining that China’s strong middle class had come to Hong Kong for access to wealth management products, medical care, education, etc. .n.

“But they seem to be competing with the locals, and I think we haven’t done enough to mitigate that kind of unintended consequence,” Chan said.

Housing crisis

The new administration will also need to focus on housing, Chan said.

“Housing shortage has always been a big problem in Hong Kong. So just by looking at the people he’s appointed, you can tell that the main focus is going to be on solving some of these very unsolved problems of Hong Kong,” he told CNBC on Friday.

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