Thought January 06, 2020 / 10:23 am UTC

Beijing Signals Intention to Restore Stability in Hong Kong

By Siew Huay Liang

China appointed a new top official in Hong Kong on January 4 in a major leadership change. The appointment of a “strongman” has signaled Beijing’s intention to restore stability in the city as protests continue. We expect the new leadership to follow President Xi Jinping’s line in implementing “one country, two systems”.

China announced the appointment of new Hong Kong liaison office director Luo Huining to replace Wang Zhimin on January 4, in a move seen by many as a bid to restore stability in the city as protests continue. This is China’s first major leadership change in the SAR since anti-government protests started in June 2019. 

The replacement was not unexpected as speculation of Wang’s removal had been mounting, particularly since pro-government candidates suffered a major defeat in Hong Kong district council elections in November. 

Luo, a former party leader of Shanxi province, was known to have local experience in cracking down corruption and ending chaos in the landlocked province in Northwest China, although he had no prior position directly linked to Hong Kong. Wang, a former director of China’s liaison office in Macau, was primarily a bureaucrat like most of his predecessors before his Hong Kong assignment started in September 2017.

The Liaison Office is considered the top representative in Hong Kong and serves as the main communication channel between Beijing and the SAR. Luo’s appointment positively could bring fresh ideas to resolve the political turmoil in Hong Kong, although we expect protests to continue as some feel he is just a hard-line policy from China. Overall, we expect the new leadership to follow Xi’s line for a steady implementation of “one country, two systems”. Luo’s disconnection with the local elite business leaders, meanwhile, could serve helpful for policy changes that reach out to the people, in our view.

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Analyst Certification
I, Siew Huay Liang, the lead analyst certify that the views expressed herein are mine and are clear, fair and not misleading at the time of publication. They have not been influenced by any relationship, either a personal relationship of mine or a relationship of the firm, to any entity described or referred to herein nor to any client of Continuum Economics nor has any inducement been received in relation to those views. I further certify that in the preparation and publication of this report I have at all times followed all relevant Continuum Economics compliance protocols including those reasonably seeking to prevent the receipt or misuse of material non-public information.