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Tsang’s Exit in Hong Kong Marred by Scandal


HONG KONG—Donald Tsang is preparing to leave office after seven years as Hong Kong’s leader mired in scandal and record-low approval ratings, tainting a legacy that until just a few months ago would remember him for his market acumen and decades of loyal government service.

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Associated Press

Hong Kong Chief Executive Donald Tsang attended a question-and-answer session at the Legislative Council in Hong Kong on March 1.

This year, a series of scandals pointing to a cozy relationship with local tycoons, including acceptance of private jet and yacht rides, provoked public ire and drew thousands to street protests.

As the end of his term nears, critics are lambasting the 67-year-old Mr. Tsang, nicknamed “Bow Tie” for his accessory of choice, mostly for failing to address the city’s widening wealth gap or to boost its competitiveness.

His abrupt fall from grace followed a career that had earned praise for several accomplishments, including steering Hong Kong through the global financial crisis and helping pass the city’s first minimum-wage bill. He was awarded British knighthood just before Hong Kong’s 1997 handover to China. He is a practicing Catholic known to attend church every morning.


Mr. Tsang’s support level has dropped to 39%, his lowest ever, according to a poll taken this month by the University of Hong Kong, compared with a popularity rating of 72% when he first took office in 2005.

“It’s disappointing,” says political observer Cheung Chor-yung of Mr. Tsang’s final months in office. “People didn’t anticipate that he would leave office like this.”

Mr. Tsang, who steps down on June 30 as chief executive after 45 years in government, will be succeeded by former cabinet leader Leung Chun-ying, who was chosen to lead Hong Kong on a platform promising affordable housing and a government free of ties to powerful tycoons. Mr. Leung was selected by the city’s election committee after lobbying by Beijing, a choice that underscored the public’s broad resentment over Mr. Tsang’s administration.

Mr. Tsang, for his part, had resisted calls to resign and repeatedly issued tearful apologies for his errors in judgment, which include staying at luxury hotel suites costing more than US$6,000 a night on official trips, a sum nearly three times the local median monthly income.

He admitted to legislators in a recent session that he failed to adequately address the city’s wealth gap, currently the highest in the developed world.

“Before, I always believed that you just needed to make the economy grow, to make the pie grow bigger—and through the trickle-down effect, every level of society could benefit,” he said. “But practice and theory aren’t the same thing.”

His office didn’t return calls seeking comment on Monday.

Under Mr. Tsang’s administration, the ranks of people in poverty rose 5.4% to 1.2 million, while the waiting list to receive public housing—home to nearly half the city’s population—also expanded. Last year, the average wait time was two years.

Meanwhile, the city’s fiscal reserves ballooned, growing from 296 billion Hong Kong dollars (US$38 billion) in 2005, when Mr. Tsang took office, to HK$679.9 billion this year. Such growth has been fueled, in part, by a surge in Hong Kong’s property market, which has seen prices rise 82% since late 2008. The government, which owns all land in the city, has been a major beneficiary of the boom.

Last year, the government used part of its surplus to give HK$6,000 payments to all permanent residents, a move widely panned by lawmakers and administration critics.

“The government isn’t without money,” says Christine Fang, who heads the Hong Kong Council of Social Services. “But they just give it out as candy. There’s no real planning.”

As a seasoned bureaucrat, Mr. Tsang was criticized for being too hesitant in his approach. “He didn’t need to account to the people, and of course he didn’t want to bite the hand that feeds him,” said Alan Leong, member of the city’s Civic Party who unsuccessfully ran against Mr. Tsang for the city’s top job in 2007.

In his previous role as the city’s finance chief, however, Mr. Tsang won wide praise for successfully staving off short-sellers and currency speculators during the 1997-1998 Asian financial crisis by buying billions of dollars worth of stock in Hong Kong-listed companies.

In 2005, Mr. Tsang—then the city’s No. 2 official—was tapped for leadership by Beijing after mass protests effectively ousted his predecessor, Tung Chee-hwa, over the former chief executive’s handling of a severe acute respiratory syndrome, or SARS, outbreak, and for controversial antisubversion legislation. Mr. Tsang was selected for his post not by popular vote, but by an election committee of 800 largely pro-Beijing business and political elites.

Mr. Tsang’s administration will be remembered for a number of accomplishments, among them helping successfully shepherd the minimum-wage bill, as well as a bill to ban anticompetitive practices. Still, the minimum wage’s benefits have been offset by rising inflation, particularly food prices, which rose 7% in 2011. Legislators likewise say the city’s competition bill—passed last week—has been watered down.

Under Mr. Tsang’s watch, Hong Kong weathered the global financial crisis relatively well, helped by the government’s transparent communications and tightening measures, says HSBC economist Donna Kwok.

Mr. Tsang’s team also helped successfully launch and develop a robust offshore business for the Chinese yuan in the city, capitalizing on efforts to internationalize the currency. In 2011, for example, Hong Kong handled 1.9 trillion yuan ($298 billion) in trade settlement and clearances. Meanwhile, retail growth has climbed, fueled by millions of tourists from across the border.

“The continued resilience of the job market and consumer spending is reflective in part of all the ground work that the authorities have done,” said Ms. Kwok.

However, Mr. Tsang’s successor faces a host of problems, including levels of air pollution that surpass most major Chinese cities, and an international school system oversubscribed by locals and expatriates. Surveys repeatedly indicate such poor air quality and difficulty finding schools have made regional rival Singapore—whose gross domestic product eclipsed that of Hong Kong in 2011— a more attractive base for expatriates in the region.

—Trinna Leong
contributed to this article.

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