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Carrie Lam’s policy address is Beijing’s new blueprint

This is translated from CitizenNews' weekly digest tracking Hong Kong's political news over the past week. (一周政情:施政報告突顯中央主導 北部都會全為深港融合

The proposal to build a new CBD known as Northern Metropolis has made headline after Carrie Lam delivered her last policy address in this term as the chief executive. The iron-lady image has led to speculation that she may have received Beijing’s blessing for yet another term. Meanwhile, Central Government does not shy away from being seen as de facto rules in Hong Kong after head and deputies of the Chinese Liaison Office made high-profile visits to districts, some accompanied by government ministers.

The proposed mega CBD in northern part of the city will decide Hong Kong’s urban development, land and housing supply and transport infrastructure for the next two decades. By then, population in the northern part will jump from about 960,000 to over 2.5 million. Five new rail links will connect the new towns and borders of Shenzhen, including one from Hung Shui Kiu to Qianhai. Number of jobs are expected to increase from below 120,000 to 650,000.

The political and economic implications of this project can be decipher from six “WH-s”.

1. WHO’s taking the lead? Compared with previous policy addresses by Carrie Lam, this address has a strong mainland flavour from thinking to its writing, as if it was directly from Beijing. It was a plan orchestrated by Beijing instead by some technocrats from the Hong Kong government.

The most telling sign is authoritative rhetorics throughout the report on how the New Territories strategy fits in grand scheme of the entire country and meet the economic needs of the Greater Bay Area. The cross-border infrastructure, specific and meticulous, has clearly received research input from the Guangdong and Shenzhen authorities. These documents could not be published without a higher calling.

This is another compelling proof when the blueprint received unanimous praise from state media, top mainland officials and major pro-Beijing parties in Hong Kong, including some lawmakers who may have been critical of Lam.

In a break with convention, officials from the Liaison Office recently made high-profile visits to local communities and promised to reflect public sentiments to departments.

The full picture is now clear: the Central Government has comprehensive jurisdiction over Hong Kong and say over Hong Kong’s development.

(2) WHOM this project is for? The answer is in the strategic plan itself. The objective of the entire proposal is to promote the integration of Hong Kong and Shenzhen, and to support the development of the Greater Bay Area as an economic engine for China, boosting economic growth and employment with technology and finance.

The underlying assumption behind the connected transport, including a number of rail links from West to East, is the massive daily travel between Hong Kong and Shenzhen, which will effectively tear down the barriers between existing borders. The newly built households in the northern CBD will also target the affluent class in Shenzhen.

Once the plan becomes reality, there will be no difference in landscape across the Shenzhen River. The boundary between the two systems under one country becomes increasingly murky. It will be counting down to “one country, one system” with Hong Kong’s full integration to the mainland.

(3) WHERE do the residents come from? Northern District has always been remote if not rural to most in Hong Kong. To boost the population in the area from 960,000 to 2.5 million within 20 years, or an average annual increase of 77,000 people, will be equivalent to the total number of One-way Exit Permit arrivals (about 50,000) plus various professional talents and investment migrants. The scheme is clearly to continuously and significantly attract mainlanders from moving to Hong Kong, who may prioritise to live in the newly developed Northern District.

It may also to a certain extent attract those who wished to develop a career in the Greater Bay Area but wish to keep their homes within Hong Kong to enjoy city’s health care and education. The Northern Metropolis plan will fundamentally change Hong Kong demography and shift development north bound.

Hong Kong Chief Executive Carrie Lam holds copies of policies address during a news conference after delivering her policy address at the Legislative Council, Oct. 6, 2021. AP Photo

(4) WHERE does the money come from? Carrie Lam did not disclose the expected cost behind the mega plan, while critics put an estimate of about HK$1,000 billion to $2,000 billion. It will inevitable consume much of the financial reserves, assuming the plan is paid out of public money.

Lam came prepare and said the expense could be covered by issuing bonds during a press conference. With Beijing’s blessing, the government could certainly go ahead with the insurance, where patriotic businessmen and mainland enterprises will follow and buy.

The new development plan, expected to cost trillions over the span of more than 20 years, will fundamentally transform government’s fiscal policy. For decades, officials have adopted keeping expenditure within the limits of revenues and accumulating surpluses. It will now point to a debt-financed approach. It was worth noting government's debt ratio will be tied to the volume of the economic size of the economy. The “big market, small government” and “positive non-intervention” philosophies, once the pride of generation of officials, may gradually fade out.

(5) HOW about Lantau Tomorrow? Soon after taking office, Carrie Lam has proposed the trillion-dollar Lantau Tomorrow reclamation project. She introduced the Northern Metropolis project, yet another mega project with even bigger in scale before the end of her five-year term. This has led to speculation as to whether the original Launtau project will continue or be shelved. Essentially, how could Hong Kong finance and source for the historic constructions at the same time?

Although Lam’s policy address assumed both would be carried on, one could not turn away from the market force. Given Beijing’s green light, local businesses and Shenzhen authorities will be more active participate or cooperate. Landowners and traditional clansmen who own land in Yuen Long and North Districts will involve much more heavily, eying on their interest at stake. It is very likely for officials to lose control of Lantau Tomorrow’s progress, when the project itself was challenging and controversial to begin with. The new Northern Metropolis project adds uncertainty to any study or development of the Lantau Tomorrow’s plan.

(6) WHAT is next for Carrie Lam? Carrie Lam’s failed attempt to push through the extradition bill has sparked off waves of protests that lasted for six months. The Central Government took the opportunity to apply national security law in Hong Kong, drastically restricting the freedom of speech, assembly and association, and overhauling the legal landscape of the city the legal environment in Hong Kong. An exodus all followed. Critics at the time had originally expected Beijing to replace the chief executive and restarted with a reshuffle of top officials. But Lam’s last policy address in this term was used by the Central Government to outline Hong Kong’s economic and development transformation under Beijing’s grip.

These long term measures could have been announced by new chief executive takes office in the mid of next year. To announce it now instead, and Lam’s eagerness to outline government restructuring for the next administration, have both reinforced speculation that she may get a second term.