Bloomberg News

Tang Vows to Tackle Wealth Gap in Bid to Revive Leadership Push

March 08, 2012

Henry Tang, Hong Kong's former chief secretary and candidate for Hong Kong's next chief executive. Photographer: Jerome Favre/Bloomberg

Henry Tang, Hong Kong's former chief secretary and candidate for Hong Kong's next chief executive. Photographer: Jerome Favre/Bloomberg

Hong Kong Chief Executive candidate Henry Tang pledged to boost government spending to tackle a widening wealth gap as he sought to reverse a slump in public support ahead of this month’s election.

The former chief secretary said in an interview yesterday he will expand public housing by a further 60 percent in five years, spend HK$6 billion ($774 million) annually more on schools, and create 100,000 jobs for the middle class should he win election on March 25.

“The middle class has been squeezed,” said Tang, 59. “Every government in the western world is reexamining its role in the market place. I would say government can be more proactive.”

The promises from Tang, who is backed by some of the city’s richest men, are an attempt to address growing public anger over surging property prices and a perception of collusion between government and business that have brought thousands onto the streets. Tang, who has been beset by personal scandals that have eroded his popularity, is battling to revive his candidacy as he trails his main rival by more than 30 percentage points.

“After all the effort he’s spent in highlighting his experience in the past few weeks, we haven’t seen him winning much public support,” said Cheung Chor-yung, a senior teaching fellow in public administration at the City University of Hong Kong. “What he’s been saying about himself and his opponent hasn’t been effective.”

Release More Land

Tang said he would release more land for building to bring down home prices that have tripled in the past decade while the median monthly household income has remained almost unchanged at HK$20,000, according to government data. He said he planned to build 40,000 public rental housing units in five years, on top of 75,000 already allocated.

“Hong Kong people need more housing and I will give them more housing without destroying property value,” he said.

With Hong Kong’s currency pegged to the dollar and the city taking its lead from the U.S. Federal Reserve on monetary policy, Tang said there were limited tools to fight inflation, which averaged 5.3 percent last year and has hurt the poor. He said the dollar peg had provided “stability” and the chance of Hong Kong linking its dollar to a non-convertible currency like the yuan was “minimal.”

Campaign Undermined

Tang’s campaign has been undermined by admissions of his affairs, including an allegation that he fathered a child out of wedlock. He trails Leung Chun-ying, a former government adviser, in opinion polls.

The margin between Leung and Tang widened after Tang said he knew about a basement built without planning permission at a property owned by his wife. Tang said last month he was aware the structure was illegal, and refrained from intervening because of marital issues at the time. In October, he confirmed having an affair and said his wife had forgiven him.

The son of a textile magnate, he has the most nominations from the 1,200-member election committee that will choose Hong Kong’s next leader. Li Ka-shing, Hong Kong’s richest man, Thomas Kwok and Raymond Kwok of Sun Hung Kai Properties Ltd. (16), and Henderson Land Development Co. Chairman Lee Shau-kee are among billionaires on the election committee who supported Tang’s nomination.

While China’s government has refrained from publicly supporting one of the candidates, local newspapers have said Tang was initially Beijing’s pick, while Leung is also acceptable. Leung had 51.2 percent support against 17.7 percent for Tang in a public opinion poll conducted by the University of Hong Kong on Feb. 27-28. Lawmaker Albert Ho had 13.3 percent.

‘Enjoys Support’

“I haven’t been up to Beijing since I started my campaign in October,” Tang said. “I didn’t want to give anyone the perception that I’m going up to Beijing because I want their support. But that’s not to say I’m not enjoying their confidence.”

Asked whether he would step aside before the vote if he was still trailing in the polls, Tang said he was the “only person who can build that consensus that will give us universal suffrage in 2017.” The central government in Beijing has pledged to introduce full voting in Hong Kong in five years.

Tang said he expected the city’s residents to take to the streets in a “major march on July 1,” regardless of who gets elected. That date marks the 15th anniversary of the resumption of Chinese sovereignty over Hong Kong as well as a 2003 rally when 500,000 people protested against the city’s anti-subversion law, ultimately leading to the resignation of then Chief Executive Tung Chee-hwa.

Street Protests

Thousands demonstrated last week to demand the resignation of current Chief Executive Donald Tsang after it emerged he had taken overseas trips on the planes and yachts of his tycoon friends. Tsang apologized for undermining public confidence and pledged to cooperate with a probe by Hong Kong’s anti-graft agency, while denying any wrongdoing.

The scandals surrounding Tsang and Tang threaten to erode Hong Kong’s reputation for rule of law and corruption-free administration, attributes that have distinguished the city of 7.1 million from mainland China and helped underpin its role as a business and financial gateway to the world’s most populous nation.

Tang said he wasn’t concerned that under his watch Singapore, which competes with Hong Kong for financial talent, had outstripped his city’s economy. He said he didn’t “envy” Singapore’s decision to allow gambling which had created a lot of jobs.

‘Gambling Business’

“Truly international financial centers do not engage in gambling business because these two businesses are very different in nature and it creates a different psyche in the city,” he said. “New York is a major financial center and they go to Atlantic City if they want entertainment.”

Tang portrayed Leung as a “risky” choice, arguing he lacked experience and had supported a policy to expand public housing just as the Asian financial crisis hit the region in 1997-1998. Property prices in the city fell more than 60 percent between 1997 and 2003.

Leung, who was a government adviser to Tung then, has promised to speed the construction of public housing and alleviate poverty by spending more on education.

Leung had no immediate response to Tang’s remarks, his spokeswoman Mazy Lee said.

Property developer Vincent Lo, who is backing Leung, said it was “unreasonable and unfair” to blame him for the housing policy as he was a government adviser at the time, not a policy maker.

“Recently, Henry Tang has had so many scandals,” said Lo, the chairman of Shui On Land Ltd. (272) “These are matters he himself will have to face.”

To contact the reporter on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net

To contact the editors responsible for this story: Hwee Ann Tan at hatan@bloomberg.net; Peter Hirschberg at phirschberg@bloomberg.net


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