# With tighter grip, Beijing sends message to Hong Kong tycoons: fall in line Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-09-17 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: Hong Kong property tycoons urged to back Beijing amid power Meta Description: Discover how Beijing is tightening its grip over Hong Kong by requiring property tycoons to support Beijing's interests and address housing shortages. URL: https://financedigest.com/with-tighter-grip-beijing-sends-message-to-hong-kong-tycoons-fall-in-linehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2021-09-17t044158z3lynxmpeh8g03drtroptp4hongkong-security-tycoons-1736837851863-compressed.jpg) By Clare Jim and Farah Master HONG KONG (Reuters) – As Beijing seeks to tighten its grip over Hong Kong, it has a new mandate for the city’s powerful property tycoons: pour resources and influence into backing Beijing’s interests, and help solve a potentially destabilising housing shortage. Chinese officials delivered the message in closed meetings this year amid broader efforts to bring the city to heel under a sweeping national security law and make it more “patriotic,” according to three major developers and a Hong Kong government adviser familiar with the talks. The rules of the [game have changed,”](https://www.financedigest.com/exclusive-olympics-paris-2024-plans-games-relay-changes-fewer-torches-source.html "EXCLUSIVE-Olympics-Paris 2024 plans Games relay changes, fewer torches-source") they were told, according to a source close to mainland officials, who declined to be named because of the sensitivity of the matter. Beijing is no longer willing to tolerate “monopoly behaviour,” the source added. For [Hong Kong’s](https://www.financedigest.com/citadel-accelerates-hiring-push-in-hong-kong-and-london.html "Citadel accelerates hiring push in Hong Kong and London") biggest property firms, that would be a big shift. The companies have long exerted outsized power under the city’s hybrid political system, helping choose its leaders, shaping government policies, and [reaping the benefits](https://www.financedigest.com/can-finance-reap-the-benefits-of-the-cloud-without-compromise.html "Can finance reap the benefits of the cloud without compromise?") of a land auction system that kept supply tight and property prices among the world’s highest. The sprawling businesses of the four major developers, CK Asset, Henderson Land Development, Sun Hung Kai [Properties and New World](https://www.financedigest.com/uks-most-liveable-city-manchester-sets-its-sights-on-the-world-from-tourists-to-property-investors.html "UK’s most liveable city, Manchester sets its sights on the world, from tourists to property investors") Development, extend their influence even further into society. For example, the empire of [Hong Kong’s](https://www.financedigest.com/screening-of-winnie-the-pooh-horror-film-cancelled-in-hong-kong.html "Screening of ‘Winnie the Pooh’ horror film cancelled in Hong Kong") richest man, Li Ka-shing of CK Assets, includes property, supermarkets, pharmacies and utilities. Because the tycoons are so deeply intertwined with the city’s economy and politics, it would be difficult for Beijing to sideline them completely, said CY Leung, former [Hong Kong](https://www.financedigest.com/hong-kong-home-prices-drop-15-6-in-2022-snap-13-years-of-gain.html "Hong Kong home prices drop 15.6% in 2022, snap 13 years of gain") leader and now a vice-chairman of China’s top advisory body. They are a major component of our [political and economic](https://www.financedigest.com/the-politics-economics-and-investment-implications-of-brexit.html "The politics, economics and investment implications of Brexit") ecosystem, so we need to be careful,” Leung told Reuters. “I think we need to be judicious with what we do and not throw the baby out with the bathwater.” INFLECTION POINT Some Chinese officials and state media have blamed tycoons for failing to prevent anti-government protests in 2019 that they [say were rooted in sky-high property prices](https://www.financedigest.com/buy-off-plan-to-beat-stalling-house-prices-and-falling-rental-yields-says-jean-liggett.html "“Buy off-plan to beat stalling house prices and falling rental yields” says Jean Liggett "). The protests, joined by millions of all ages and social strata, demanded greater democracy and less meddling by Beijing in [Hong Kong](https://www.financedigest.com/evergrande-winding-up-lawsuit-in-hong-kong-adjourned-to-nov-7.html "Evergrande winding-up lawsuit in Hong Kong adjourned to Nov 7"), which had been promised wide-ranging freedoms until 2047. The new directives mark an inflection point in the power play between Beijing and the tycoons, who once held kingmaking sway in [Hong Kong’s](https://www.financedigest.com/luxury-yacht-owned-by-sanctioned-russian-oligarch-docked-in-hong-kong.html "Luxury yacht owned by sanctioned Russian oligarch docked in Hong Kong") political leadership race. Now the focus is on contribution to the country; this is not what the traditional business sector in [Hong Kong](https://www.financedigest.com/ubs-gives-hong-kong-staff-covid-quarantine-cash-memo.html "UBS gives Hong Kong staff COVID quarantine cash -memo") is used to,” said Raymond Tsoi, chairman of Asia Property Holdings (HK) and a member of the advisory group Chinese People’s Political Consultative Conference Shanxi Committee. In March, Beijing made sweeping electoral changes. In a new election committee, responsible for choosing the next leader of Hong Kong and some of its lawmakers, a greater “patriotic” force has emerged, while many of the prominent tycoons, including Li, 93, will be absent for the first [time since Hong Kong returned](https://www.financedigest.com/ogrady-to-return-to-bank-of-ireland-as-ceo-irish-times.html "O’Grady to return to Bank of Ireland as CEO – Irish Times") to Chinese rule in 1997. Hong Kong’s Constitutional and Mainland Affairs Bureau said the new election committee would be more broadly representative of Hong Kong, going beyond the vested [interests of specific sectors](https://www.financedigest.com/bullish-outlook-for-pbsa-sector-in-2017-as-investment-builds-and-interest-heads-north-of-the-border.html "Bullish outlook for PBSA sector in 2017 as investment builds and interest heads north of the border"), specific districts and specific groups, which it called “inadequacies” in the system. The source close to Chinese government [officials told Reuters a team in the Hong Kong](https://www.financedigest.com/hong-kong-finance-official-to-make-first-visit-to-britain-in-three-years.html "Hong Kong finance official to make first visit to Britain in three years") and Macau Affairs Office and the Liaison Office (HKMAO) had sought to curtail the influence of groups perceived to have done little for Beijing’s interests in the city. HKMAO and the Liaison Office did not respond to requests for comment. Sun Hung Kai said it was confident about the [future of Hong Kong and would continue to invest](https://www.financedigest.com/investing-in-the-future-with-alternative-web-data.html "Investing in the future with alternative web data") there and in mainland cities. Henderson Land and New World Development declined to comment, while CK Holdings did not respond to request for comment. Li did not respond to a request for comment. [‘GIVE BACK](https://www.financedigest.com/giving-the-control-of-the-payment-process-back-to-consumers.html "Giving the Control of the Payment Process Back to Consumers") MORE Developers have already taken measures to show the message was received. New World and Henderson Land have donated rural land as reserves for social housing. In recent weeks, Nan Fung Group, Sun Hung Kai, Henderson Land and Wheelock applied for a public-private partnership scheme, the first applications since the [programme was launched](https://www.financedigest.com/uk-to-launch-new-billion-pound-home-insulation-programme.html "UK to launch new billion-pound home insulation programme") in May 2020. The programme offers developers an opportunity to build on a higher percentage of [open land](https://www.financedigest.com/jaguar-land-rover-opens-three-european-self-driving-tech-hubs.html "Jaguar Land Rover opens three European self-driving tech hubs"), but they must use at least 70% of the extra floor area for public housing. Several told Reuters last year that the programme was unattractive because there were many restrictions and a [risk of higher](https://www.financedigest.com/dollar-higher-on-risk-aversion-euro-revisits-parity.html "Dollar higher on risk aversion; euro revisits parity") costs. Beijing is not telling us what to do, but [saying you need to solve](https://www.financedigest.com/german-minister-says-on-right-track-to-solving-co2-emitting-car-row.html "German minister says ‘on right track’ to solving CO2-emitting car row") this problem,” Hopewell Holdings’ Gordon Wu told Reuters, adding that “it won’t be impatient but it will give you pressure. Another developer source, who declined to be named because of the sensitivity of the issue, said Chinese officials had laid out expectations, but no strategy or deadline. We can continue our [businesses as long as we give back](https://www.financedigest.com/improve-your-business-while-saving-the-planet-and-your-back-with-easycat.html "Improve your business while saving the planet and your back with EasyCat") more to society,” said the source, a senior official at a top developer in Hong Kong. The sector needs to [step up efforts to ease](https://www.financedigest.com/china-steps-up-easing-cuts-lending-benchmarks-to-revive-faltering-economy.html "China steps up easing, cuts lending benchmarks to revive faltering economy") the housing shortage, he added. Most of the developers have published statements and newspaper advertisements, along with other Chinese corporations, to support the national [security legislation and electoral changes](https://www.financedigest.com/hungary-pledges-legal-changes-to-secure-eu-recovery-funding-govt.html "Hungary pledges legal changes to secure EU recovery funding – govt"). Critics of the moves said they crushed democratic dreams, while authorities said they were necessary to restore stability after the 2019 demonstrations. Adrian Cheng, 41, who took over as chief executive of New World, founded by his grandfather, told Reuters late last year the company needs to become more relevant to society, especially in a new environment where firms have to carefully balance the [interests of various parties](https://www.financedigest.com/new-gleif-challenge-facility-extends-ability-to-trigger-updates-of-legal-entity-identifier-data-to-all-interested-parties.html "New GLEIF Challenge Facility Extends Ability to Trigger Updates of Legal Entity Identifier Data to All Interested Parties"). “It’s not easy. I have a lot of grey hair you can’t see,” Cheng said. (Additional reporting by James Pomfret; Editing by Anne Marie Roantree and Gerry Doyle) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---