Beijing is worried that Hong Kong developers’ tepid response to local megaprojects may further erode investor confidence and this was why a top central government official took on the task of cajoling the private sector on behalf of city authorities, political analysts have said.
Economic and property specialists said the central government’s “explicit” call to the local private sector was a rare approach as they expressed scepticism over whether developers would heed the advice and risk potential financial losses.
As businessmen, their prime consideration is profit and being accountable to shareholders, but as patriots, they also have to oblige or risk incurring Beijing’s displeasure, some have said, arguing this could skew free-market principles on which the city’s economy is based.
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But the message from Xia Baolong, director of the Hong Kong and Macau Affairs Office, was not just about megaprojects but a direct appeal for tycoons and businessmen to be more committed to the city’s longer-term vision and to embrace reforms, others said.
During a full-day meeting in Shenzhen with about 30 representatives from real estate developers, commerce chambers, tech firms and state-owned enterprises operating in the city, Xia had appealed for “concrete” action and for them to “recognise their responsibilities”.
In his full remarks published by the office on Sunday, he urged them to go beyond their traditional advantages and not to rely only on the same old ways to succeed.
The city’s business leaders, whom he praised as a “major force” in growing the economy and supporting national development strategies, were asked to show their patriotism by taking the lead in the city’s reinvention and replacing inertia with reforms.
Xia also put forward a list of suggested actions, such as promoting the city’s image overseas, to make further contributions for improving people’s livelihoods and firmly supporting local authorities’ long-term development plans.
Political pundit Sonny Lo Shiu-hing said the appeal appeared to coincide with the city government’s plan to grant private real estate companies large land parcels under the Northern Metropolis drive, a 30,000-hectare (74,000-acre) project earmarked for housing and technology development.
While the government would only begin to gauge interest from potential bidders by the end of the year, Beijing could be concerned that the large-site development pilot scheme might attract a lukewarm response, he said.
Secretary for Development Bernadette Linn Hon-ho, who joined city leader John Lee Ka-chiu and seven other top local officials at Friday’s meeting, said over the weekend that Xia had urged property tycoons to back the government’s long-term development drives such as the Northern Metropolis by actively bidding for the projects involved.
“Believing that the local government of Hong Kong has been traditionally weak, [Beijing] is trying to turn it into a stronger administration, but still it is unable to mobilise the business community on something like this, and that’s why Beijing has stepped in,” Lo said.
“To Hong Kong’s business sector, this is an important signal: it’s not just talk, it’s action that [Beijing] ... is asking for.”
Veteran China-watcher Johnny Lau Yui-siu said: “From a macro perspective, if those real estate developers refrain from land bidding, the entire investment atmosphere in Hong Kong will also have problems, something Beijing does not want to see, especially when Donald Trump is returning to power.”
With the new challenges, Beijing had turned to the well-tested approach of providing “guidance” to businesses, the veteran observer said.
“This is an organised and public effort that will put pressure on capitalists, in which everyone needed to express their stance with a 10-minute speech to explain what investments they could make,” he said.
A government source said that while these messages had been shared with businesses in previous closed-door meetings, the public statement from Xia this time, which was also reported by the state news agency Xinhua, was meant to demonstrate Beijing’s commitment to supporting Hong Kong’s economy and to highlight the social responsibilities of private companies.
Stewart Leung Chi-kin, chairman of the Real Estate Developers Association of Hong Kong, said most firms would support the call by looking at as many government projects as possible.
“We are doing business, of course, we will look at every opportunity. But whether we will go ahead still lies in how much profit we can gain,” he said, calling on the government to come up with detailed plans for such projects as soon as possible.
Professor Chau Kwong-wing, who heads the Ronald Coase Centre for Property Rights Research at the University of Hong Kong, said asking developers to actively join government land sales was similar to asking them to risk suffering losses.
“Direct pressure from central authorities could affect international investment in Hong Kong, which is known for its free-market economy,” he said, adding he was taking a cautious stance on whether developers would respond to the call.
Kevin Tsui Ka-kin, chief economist at research firm Orientis, agreed the call was essentially a top-down instruction from Beijing.
“It is a rare practice in Hong Kong’s private sector, so the risks it might bring are unknown,” he said. He added that the potential dangers could include uncompleted projects, a problem that was happening in some mainland Chinese cities.
But Jonathan Choi Koon-shum, chairman of Hong Kong-based Sunwah Group, who joined Friday’s meeting, said high-level officials such as Xia would not get involved in specific details such as requiring Hong Kong developers to buy government land, but would instead focus on providing overall direction for development.
“He wanted the business sector to explore and invest in new directions beyond traditional areas,” Choi said. “And, of course, the sooner, the better.”
The group chairman said the business community welcomed Xia’s guidance and it was still expecting more details from the government, particularly regarding development plans for the Northern Metropolis.
The Hong Kong government has run into difficulties in selling land in recent years, with the Urban Renewal Authority rejecting a joint-venture offer from CK Asset Holdings earlier this month for a site in Kowloon City, as the sole bid deviated from the development plan.
Data from the Rating and Valuation Department showed lived-in home prices fell by about 1.7 per cent in September, hitting their lowest level since August 2016 and taking the 12-month decline to 12.5 per cent.
Prices have slumped 7.5 per cent so far this year.
More from South China Morning Post:
- Xia Baolong urges Hong Kong tycoons to take action, says US containment to continue
- Beijing’s point man on Hong Kong affairs urges tycoons to bid on long-term projects
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