June 28, 2019 / 3:57 AM / 4 months ago

Breakingviews - A “shareholder” vote would help Hong Kong CEO

Hong Kong Chief Executive Carrie Lam attends a news conference in Hong Kong, China, June 15, 2019. REUTERS/Athit Perawongmetha

HONG KONG (Reuters Breakingviews) - Being a chief executive is hard work anywhere, but serving as Hong Kong’s comes with an extra degree of difficulty. Many locals want Carrie Lam to quit the rare political role that carries the corporate-style title for her ill-judged extradition proposal. No boss, though, could succeed under the suffocating governance structure she endures. Some pressure would be eased by letting the city’s “shareholders” pick their leader, even if from a pre-determined field.

As Hong Kong prepares to commemorate Establishment Day, the anniversary of Britain handing Hong Kong back to China in 1997, the special administrative region remains on edge. Lam set off mass protests with a plan to allow those accused of a crime on the mainland to be sent there for trial. She put the bill on ice, but her popularity is now the lowest for any of the city’s chief executives, according to the University of Hong Kong, which started polling on the subject in 1992.

Hong Kong’s leader must contend with powerful tycoons, restive residents and an almighty central government. Any corporate counterpart would be paralysed by the analogous combination of influential clients, subjugated shareholders and a dominant board. None of the city’s three previous chiefs served two full terms in office.      

    It is likely that Lam’s missteps will prompt Chinese President Xi Jinping to rethink how Hong Kong is governed. There is no shortage of boardroom-type lessons, but giving shareholders more sway would be a strong way to restore some trust.

    As it stands, a committee of 1,200 Beijing loyalists chooses the chief executive. This arrangement does not allow for a popular mandate and thus confers little legitimacy, a big reason Lam and her predecessors have been easy targets. One idea would be to revive the controversial idea – previously endorsed by Beijing but ultimately rejected by the city’s legislature – of allowing Hongkongers to pick their leader, but only from a pool of candidates who first secure majority backing from the committee.

    This compromise plan is what triggered the pro-democracy Umbrella Movement in 2014. Given the mess Hong Kong finds itself in now, though, legislators could be more open to giving voters a louder voice. Lam, for example, might have thought twice about her unpopular extradition bill if she knew she’d be facing a ballot. Shareholders with a say can make the CEO at least somewhat accountable.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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