Hong Kong – Elections May Revive Political Battle

One year after the Occupy Central demonstrations, the climate surrounding Hong Kong politics is less tempestuous. But while there might not be large-scale protests in support of political reform, there is still widespread frustration about the performance of Chief Executive Leung Chun-ying and the mainland government’s interference in the SAR’s internal affairs. In the latter regard, a recent statement from a Chinese official that the chief executive wields paramount political power in Hong Kong can only have confirmed the fears of pro-democracy activists, given China’s close control of the process of filling the post.
In June, the LegCo rejected a proposal that would have permitted the direct election of the next chief executive from a handful of candidates vetted by Beijing. While that proposed reform did not go far enough for democracy activists, who have demanded the popular election of the chief executive with no interference from the Chinese government, the rejection of the measure, together with Beijing’s position on the division of power within the SAR government, ensures that the mainland regime will keep a tight leash on political affairs in Hong Kong.
As such, the main question of the 2017 election is whether Beijing will support the Leung for a second term as chief executive, which, given the weakness of his popular support, would signal China’s total disregard for the popular will, and could very well spark a fresh wave of popular protests. The LegCo elections scheduled in 2016 will provide a barometer of the opposition’s support levels, and a strong showing by pro-democracy forces could embolden activists to test the tolerance of the mainland regime.
Otherwise, the risks associated with doing business in Hong Kong are somewhat muted. The tight labor market—the seasonally adjusted unemployment rate was 3.2% at the end of the quarter—as well as recent increases to the minimum wage have increased labor costs in recent years, but the SAR’s labor market still ranks as one of the most efficient in the world.