Alone on the Hill

For as long as anyone can remember, the business of Hong Kong has been business. The most succinct reflection of that is the postcolonial title of the territory’s head of government. It’s not mayor or minister, but Chief Executive. The job description effectively matches the title: maintain a positive balance sheet (deep fiscal reserves), satisfy your major shareholders (domestic and foreign conglomerates and banks), execute top-down management (the Establishment knows best). The formula proved wildly successful for the colonial British, who coupled their administrative skills with the enterprise of the local Chinese to transform a clutch of villages into the most intensely commercial aggregation of humanity on the planet. In 1997, when the British returned Hong Kong to China, Beijing followed the template. After all, if it ain’t broke, don’t fix it.

Hong Kong ain’t exactly broke. It’s a financial powerhouse and a gateway to and for China — nearly half of foreign direct investment in China has originated from or gone through Hong Kong, as well as about 15% of the mainland’s total trade last year. It’s also a unique experiment in sovereignty: an open, international enclave prevailing within an authoritarian state.

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But in recent years, Hong Kong has been in flux. This freewheeling society has also become a fragmented, discordant one, unsure of itself and its place in China. The economy lacks direction, while the city’s glittering wealth masks a widening income gap with intimations of class warfare. Ordinary people are increasingly agitated over everything from the ever rising cost of living to the cozy ties between government and Big Business to what is widely perceived as Beijing’s growing influence. Hardly a week goes by without some street march over some cause or grievance. Many citizens think Hong Kong needs fixing.

Leung Chun-ying believes he’s the one to fix Hong Kong — a different leader for a different era. On July 1, the 15th anniversary of reunification, China’s President Hu Jintao is expected to swear Leung in as Hong Kong’s third Chief Executive (CE). He is unlike any helmsman the territory has had. The British governors were mostly Foreign Office mandarins (plus one politician, Chris Patten, the last of the line). The first two CEs were a grandfatherly shipping tycoon, Tung Chee-hwa, who was a transition figure, and a career civil servant, Donald Tsang, who lacked gumption. Their experience of life was in bubbles — the family firm for one, the bureaucracy for the other. By contrast, Leung, 57, is a self-made man from the real world: a beat policeman’s son who worked his way through college, became a land surveyor, prospered in the tough China market, entered public service and never forgot his past — a past that shapes his vision of Hong Kong’s future. The territory, Leung told TIME in a recent interview, requires a reset: “A slightly more proactive role of government in economic development. A fairer sharing of the pie. And putting behind us, for good, the short-termism that has plagued Hong Kong.”

Many governments adopt such strategies. But by signaling greater intervention, Leung is departing from Hong Kong’s sacrosanct laissez-faire policy. While lower-income residents desiring a new deal back Leung, tycoons brand him a socialist bent on eroding the territory’s fiercely capitalist ethos. Many liberals distrust Leung too. Depending on who’s talking, he is smart, caring and resourceful — or a cunning, bloodless stooge for Beijing who will curb Hong Kong’s freedoms. His critics call him “the wolf” and distribute posters of him in a Mao suit. To this divisive figure falls the task of healing the divisions in one of the world’s most iconic cities.

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A Man Apart
I first met Leung two decades ago for a story on Hong Kong’s future in the run-up to the 1997 transfer of sovereignty and beyond. Those were jittery years. China promised Hong Kong that it could mostly run itself and retain its two most important features: rule of law and freedom of expression. Deng Xiaoping called it “one country, two systems.” Many in Hong Kong didn’t think Beijing would keep its pledge — from 1984 to ’97, about 800,000 residents emigrated. Leung’s assessment mattered because, though then only in his 30s, he regularly met mainland officials in his capacity as secretary general of the Basic Law Consultative Committee, which oversaw the drafting of Hong Kong’s post-’97 miniconstitution. Speaking in the British-accented English acquired during his studies at Bristol Polytechnic, he impressed me with his grasp of both the details and the bigger picture. I wrote that he was potentially a future CE.

Later, when Leung became head of the Executive Council, a powerful advisory body, he and I would talk privately from time to time but never for another story until now. Even informally, he was relentlessly on message about diversifying Hong Kong’s economy beyond finance and trade and creating a more equitable society. If there’s one thing everyone agrees about Leung, it’s that he is aggressively focused. He admits it : “I am driven. I identify a goal, a target, and I go for it.”

That single-mindedness was evident in his quest for Hong Kong’s top post. The CE is chosen by the 1,200-member Election Committee comprising mostly movers and shakers vetted by Beijing — an exercise that democracy activists slam as a “small-circle election.” Leung’s chief rival in the March 25 ballot was the No. 2 in government, textile magnate Henry Tang, born with a platinum spoon in his mouth and widely acknowledged as a nice guy with superb taste in wines but with barely an original thought in his head. Hong Kong’s Establishment of senior officials and tycoons signaled to China’s leaders, through both public comments and private conversations with locally based mainland representatives, that they preferred Tang, probably because he was one of them and unlikely to rock the boat or change Hong Kong’s course.

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Despite being written off even before nominations closed in late February, Leung kept hammering away, not just wooing the Election Committee but also frequently going straight to the people, even though they couldn’t directly vote for the CE — making speeches, pressing the flesh, in the hope that his higher public ratings would sway committee members. “I bring with me a stool, a notepad and a pen,” he would say on neighborhood visits, especially to marginalized areas. “If you are willing to speak, I am ready to listen.” Most in the Election Committee, particularly the moguls, stuck to Tang. Only in the last few weeks of campaigning did Leung gain traction when Tang self-destructed in part from a couple of personal scandals — admitting adultery and the fact that he had an illegally built, luxuriously fitted basement under one of his properties.

With Tang sliding in public surveys, Beijing put its weight behind Leung and, local media reported, influenced delegates to toe the new line. That string pulling may have helped Leung win by a narrow majority, but it also sparked alarm. Longtime accusations that he is a covert member of the Chinese Communist Party re-emerged (he has repeatedly denied this), and many concluded that he must have struck a sinister Faustian bargain with China’s leaders in return for their backing. Leung says otherwise: “If [Beijing] helped, I don’t know how, because up to 11 p.m. the night before [the vote], I was ringing for the nth time the election members. I worked my tail off winning their votes.”

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As Leung tells it, his work ethic was drilled into him by his policeman father and his mother, an illiterate villager, both from China’s northeastern Shandong province, who made their way to Hong Kong, where Leung was born. When a child, he helped his parents sell plastic knickknacks after his father retired from the force. The family earned enough to buy a 42-sq-m apartment in a low-income neighborhood. Leung’s elementary-school grades got him into a good public high school. He obtained a local diploma in land surveying, then went to Britain, laboring in Chinese restaurants to help pay his way through college and another diploma, in land valuation and management.

None of that was uncommon for a motivated, diligent Hong Kong youth, even one from a disadvantaged background. Still, by just 28, Leung had become the youngest partner in the Hong Kong office of British real estate consultancy Jones Lang Wootton and, soon after, its chairman, before eventually launching his own firm. (Locals called him “emperor among workers.”) Leung realized early on that China was the place to be and, starting in the 1980s, ventured often across the border to drum up business and give seminars on land and housing reform — even, he says, to Communist Party cadres. And he did so with polish: most Hong Kong Chinese are Cantonese and speak notoriously spotty and accented Mandarin, but Leung’s is impeccable.

Today, Leung straddles both high and low worlds. He occupies a town house on Victoria Peak, Hong Kong’s toniest neighborhood. Yet he enjoys street food and will readily order $4 meal boxes — the kind consumed by construction laborers — when working through lunch. His briefcase is the same worn black one he used in college, and he has been known to take the subway to beat the traffic. These may seem small things but, in status-conscious Hong Kong, practically no one with wealth or power would be caught slumming it.

Change Agent
The territory has a reputation worldwide for being extraordinarily rich, and for good reason. It has more billionaires per capita than any country. Flashy skyscrapers stud the landscape, and Mercs and Beemers clog the streets. But Hong Kong is also “cagemen” living in wire-mesh bed spaces, hunched elderly folk collecting trash at dawn and the highest Gini coefficient — a measurement of income inequality — among developed societies. On June 18 the government released figures that showed the wealth gap at its worst in 30 years. About 20% of the 7 million population — more than a million people — live below the poverty line, which in Hong Kong is $40 a day per household.

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Because he was once poor himself, Leung gets it about being hard up. “Many people in the elite group do not believe we have abject poverty,” he says, scathingly referring to the Establishment’s “Central District values” — its metropolitan insularity. Hong Kong, he says, “would do a lot better if everyone could just travel out a bit and see how not just the other half but probably the other 75% live.”

Suen Mo is one of those 75%. A construction worker handicapped by back injuries, Suen, 39, rents a 6-sq-m room on the seventh floor of a walk-up on the edge of Sham Shui Po, one of Hong Kong’s most depressed districts. Suen’s monthly rent is $210, which he manages to pay with the help of a government allowance. The bare-walled room can hardly fit his belongings: a small mattress, a TV, a few hanging clothes and some boxes. Suen, a residents’ representative at two community meetings with Leung, is confident the new CE will give underprivileged citizens like him a better life. “He will not only say something but do something.”

That means tackling housing, Hong Kong’s singular hot-button issue. Despite the city’s international image as a center of finance and trade, it’s property that drives the local economy — averaging a fifth of annual government revenue through land sales and almost a third of GDP. Most of Hong Kong’s big local companies have real estate as their core business, generating billions in cash flow that they plow into other sectors. For individuals, owning and trading property is the key to upward social mobility. About half the population live in their own homes. But that is increasingly beyond many citizens, who accuse developers and officials of colluding to keep supply tight, and thus prices high, and blame wealthier mainland Chinese buyers for elbowing them out of the market. Because the high cost of real estate has a ripple effect throughout the economy, the middle class is squeezed ever more tightly while the poor get poorer.

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Leung says he will release more land for private development and build more and better public housing for the underprivileged by drawing on Hong Kong’s $85 billion of fiscal reserves. Unsurprisingly, the Real Estate Developers Association is lobbying Leung not to “flood” the market and weaken prices. But with public opinion on Leung’s side, legislators are unlikely to block his proposals (even if they stall him in other areas), while Chinese officials will quietly welcome any measures that pre-empt social unrest.

If anyone is distressed about Leung’s plan to throw money at Hong Kong’s problems, it’s the city’s old guard. “I hope Hong Kong does not go down that slippery slope toward large government, persistent budget deficits, heavy public debt, financial meltdown and monetary crisis,” warned Joseph Yam, a former head of the Hong Kong Monetary Authority and an open backer of Leung’s rival Tang, in a recent academic paper. Should the world be worried that Hong Kong is abandoning market forces? Leung’s supporters say he wants to tinker with, not transform, Hong Kong. “I don’t see him like Hollande in France or even Obama — these people are far more radical,” says former Solicitor General Daniel Fung. “[But] because he doesn’t espouse Hong Kong’s usual freewheeling capitalism, the Establishment thinks this guy’s seriously wacko.”

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Mr. Controversial
Over everything looms the shadow of China. During a TV debate between Leung and Tang before the CE vote, Tang said that in Executive Council meetings Leung had suggested using tear gas against demonstrators protesting the introduction of an antisubversion law and had recommended placing restrictions on an independent-minded private broadcaster. Leung denied this, and because council meetings are confidential, none of its other members would publicly verify either man’s assertions. But Tang’s claims reinforced what Leung’s critics believe: that he possesses a hard-line streak and is Beijing’s agent. Says legislator and democracy activist Leung Kwok-hung (no relation): “He is a ruthless guy whose agenda is to serve China’s communists.”

In a way, Hong Kong is projecting onto Leung its attitude toward China, which, even after 15 years as a part of the People’s Republic, is ambivalent at best. Hong Kong people take pride in China’s global might and readily accept the economic goodies, like trade privileges, the mainland tosses their way. But, accustomed to a free and Western-style society, they also fear Beijing gradually imposing authoritarian controls on their home.

That fear expresses itself in ways big and small. Hong Kong is the only place in China to commemorate the 1989 Tiananmen crackdown every June 4. This year, at least 100,000 men, women and children, including many mainlanders in Hong Kong, held a candlelight vigil in one of the city’s major parks. A week later, about 25,000 marched to the Chinese liaison office in Hong Kong to protest the suspicious hospital death of long-jailed Tiananmen activist Li Wangyang, who mainland authorities claim committed suicide. It’s not just human rights. Hong Kong citizens deeply resent, for example, mainland mothers using the city’s medical services to give birth. Some months ago, a cell-phone video of a Hong Kong man berating a Chinese woman for letting her child eat on the subway went viral as an illustration of how mainlanders don’t respect Hong Kong’s rules.

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Given such a climate, Leung’s closeness to China can be a liability — yet also an asset. Even before taking office, he announced that effective Jan. 1, 2013, mainland mothers whose husbands are not Hong Kong residents would be barred from using the city’s private hospitals to give birth. Beijing officials raised no objection to the ruling, probably because they wanted to shore up Leung’s position in Hong Kong. “I have credibility with the Chinese leadership,” he says.

The biggest test of his relationship with Beijing will be whether Leung delivers on China’s promise to allow Hong Kong to directly elect its Chief Executive in 2017. Despite populist overtures in other areas, Leung doesn’t seem totally committed to full democracy. He notes that the Basic Law requires a nomination mechanism for candidates — which sounds like a less-than-open process. “If you look at [Leung’s manifesto],” says James Tien, a property and garment magnate, “it touches very little on human rights and democracy.”

Leung’s personal credibility too is a major political challenge for him. Just days before his swearing-in, he was embroiled in another controversy when the press exposed unauthorized modifications to his Peak home. While Leung acknowledged he was “seriously negligent,” he denied knowing the structures were illegal when he bought the property. Still, a symbol of his realization of the Hong Kong dream was now a reflection of the same sin that helped bring down his rival Tang. Suddenly, the outsider seemed little different from an Establishment insider.

Win the trust of Hong Kong’s citizens. Ease social inequality without alienating Big Business. Foster democracy without unsettling Beijing. By any benchmark, Leung has a huge task ahead of him. But he might have karma on his side, perhaps even destiny. Government House is the white colonial mansion set in 2.5 hectares of gardens where almost all of Hong Kong’s past leaders have lived. Leung’s father used to stand guard at Government House. Now the son will rule from it. If Leung stands for anything, it’s the notion that anything is achievable. That, above all, is the spirit of Hong Kong.

—with reporting by Joe Jackson And Vanessa Ko / Hong Kong

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