22 October 2016
The Liaison Office appears to be stepping up its operations in Hong Kong since last year's Occupy protests. Photo: HKEJ
The Liaison Office appears to be stepping up its operations in Hong Kong since last year's Occupy protests. Photo: HKEJ

Beijing liaison office buys US$70 million in HK properties

The Chinese government has spent at least US$70 million buying Hong Kong properties over the past 12 months, official records show.

Three sources close to Chinese officials told Reuters the move reflected the central government’s desire to tighten its grip in Hong Kong after the pro-democracy Occupy protests last year that posed one of the biggest political challenges to China’s Communist Party leaders in decades.

“They’re very concerned,” said a Hong Kong delegate to the National People’s Congress who meets with Liaison Office staff. “I think it’s natural for them to expand … They feel they have to try harder, most definitely.”

The Liaison Office declined to comment on the purchases, which appeared to be mostly to house staff.

EJ Insight has been reporting on the Liaison Office’s property holdings in the territory since last year. (See related stories)

Hong Kong’s Basic Law provides for a high degree of autonomy for the former British colony, but there is no legal restriction against the Liaison Office, Beijing’s main representative in the city, buying property.

Since December, when the Occupy protesters and road blockades were cleared away by police, the Liaison Office has paid more than US$70 million for at least 62 new apartments, according to a Reuters review of more than 500 land registry records.

This included a new block of 48 flats sold for HK$480 million (US$62 million) by a company owned by Henderson Land chairman Lee Shau-kee.

A spokesperson for Henderson Land said this was a “private investment” by Lee and declined to comment further.

The Liaison Office, set up in 1999, two years after Hong Kong reverted to Chinese rule, already owned a sizeable real estate portfolio in one of the world’s most expensive property markets.

Reuters calculations, based on the purchase prices listed on land registry documents, suggest the Liaison Office has spent around HK$3 billion (US$387 million) on properties including an ocean-front clubhouse in the upmarket Stanley area, offices in six locations and at least 490 apartments.

Around a quarter of that sum was spent after 2012.

The Liaison Office has also sold one car park, one residential block, two shops, three apartments, one beachfront villa and three office units for a total of HK$1.23 billion since 1999, documents showed.

The role of the Liaison Office and its operations in Hong Kong are little known, and it does not publish information on the size of its staff, its budget or property holdings.

There have been other recent signs of Beijing stepping up operations in Hong Kong through a high-level branch of the Communist Party’s Central Committee — the United Front Work Department — to try to thwart the recurrence of another populist movement.

“I can’t say for sure they’ve speeded up their expansion since Occupy,” said another source with ties to Liaison Office officials.

“But this is consistent with their pattern of expansion over the past few years … It will continue.”

A former staffer of the Liaison office told Reuters the latest moves were a “re-allocation of their offices and dormitories” rather than an outright expansion, although he declined to give more details.

A third source said there has been a “conspicuous increase” in Liaison Office staff carrying out youth outreach work and grassroots patriotic initiatives since Occupy, in a bid to cool the democratic fervour of local youth.

The Liaison Office and state-owned Xinhua News Agency, which before the Liaison Office was established acted as a quasi-representative office for Beijing in Hong Kong, have been purchasing property since 1980 through a private company, Newman Investment Company Ltd., documents show.

Newman’s two directors, Li Wenze and Li Zailin, are employed as deputy directors in the Liaison Office’s financial administration department, according to Reuters’ examination of Hong Kong company records and a source with direct knowledge of personnel within the office.

Reuters correspondents visited seven of the Liaison Office’s wholly-owned property blocks, purchased between 1985 and 2003. All were used as staff accommodation, according to people working in the buildings, property agents and neighbors.

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Related stories:

Liaison Office has exquisite taste for property (Nov. 26, 2014)

Why is the Liaison Office selling its properties? (Feb. 6, 2015)

Liaison Office snaps up Sai Ying Pun building for HK$480 mln (Feb. 17, 2015)

HK properties, passports generate profit for liaison office (April 16, 2015)

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