The feud between Leung Chun-ying and Financial Secretary John Tsang is almost an open secret in Tamar.
A government source told me that when Leung shocked Hong Kong in July 2015 with his callous sacking of two ministers — one for home affairs and the other for the civil service, the chief executive also aimed to kick Tsang out of his cabinet.
But Tsang remained, for one reason or another.
Leung and Tsang never liked each other
Indeed, the travails were there since the very beginning.
In 2012, Tsang was asked to stay in the new government as Beijing’s way of mollifying the business sector after mainland cadres pressed election committee members to ditch Henry Tang.
Leung has never been popular with Hong Kong’s tycoons and businessmen.
And Leung, for his part, has been bent on making Tsang a cipher since day one: he proposed a new directorate post — deputy financial secretary — and wanted Paul Chan, his trusted confidant, for the job.
“A deputy to share the financial secretary’s workload is fully intended to give the financial secretary more time and space to respond to the macro global financial environment and focus on crisis management,” Leung wrote on his blog in May 2012, two months before his swearing-in.
Chan did not have the chance to wrest power from Tsang as Leung’s entire government reshuffle was shot down by the Legislative Council.
Many of Tsang’s subordinates — directors of bureaus in finance and business — remained in the new government like Secretary for Financial Services and the Treasury Chan Ka-keung and Hong Kong Monetary Authority chief Norman Chan.
Leung’s feud with Tsang grew during the ensuing years of the new administration.
In 2013, Hang Lung Properties chairman Ronnie Chan, one of the very few pro-Leung heavyweights from the business community, slammed Tsang for being a “miser”.
“Our financial chief doesn’t know how to spend when he’s sitting on a gigantic fiscal reserve of hundreds of billions of dollars… A scrooge who doesn’t want to invest for society, like funding the government’s welfare programs…”
Observers thought Ronnie Chan was just venting for Leung.
Tsang’s track record
Having been in office for more than nine years since July 2007, Tsang is Hong Kong’s longest-serving financial chief since 1997.
But before long, he will either resign to kickstart his campaign for the top job or step down when the term of the government ends next year.
Now let’s have a quick check of Tsang’s report card over the years.
The government recorded successive surpluses throughout his tenure, with the only exception being the 2008-09 fiscal year when Hong Kong was still reeling from the global financial tsunami.
Fiscal reserves reached HK$860 billion (US$110.89 billion) by the end of March, excluding HK$74 billion set aside for public housing development.
The revenue windfall is equivalent to 24 months of government expenditure. Tsang must admit the government is “flooded with money” these days. Hong Kong has never been on such a strong fiscal standing.
Government reserves were HK$490 billion when Tsang took office. It’s safe to say that there are few places in the world that are better off than Hong Kong.
What is even more impressive is that Tsang has been able to keep government coffers swelling despite an administration inclined to splash out on social welfare.
Tsang is not a miser. Recurrent expenditure on social welfare has doubled compared with a decade ago when he took over government accounts.
The budget for all such handouts and relief measures for 2016-17 is estimated at HK$66 billion, almost a fifth of total spending, with a year-on-year increase of above 13 percent.
Remember that Hong Kong’s economic growth, the ultimate source of revenue, is long past the double-digit era.
The financial chief must be hailed for his outstanding performance from bookkeeping to tapping new income sources.
These numbers speak for themselves.
Tsang’s critics, like Leung’s own adherents, must give a convincing account of exactly how Tsang has failed to move in tandem with Leung to pump money into the latter’s welfare initiatives.
When trumpeting his feats in welfare, housing and livelihood issues, Leung must not forget to acknowledge the efforts of his colleagues like Tsang and many others.
Some say Tsang is overly punctilious in financial matters even during the stock and property boom but isn’t it enshrined in the Basic Law to be prudent in finance?
“The SAR shall follow the principle of keeping expenditure within the limits of revenues in drawing up its budget, and strive to achieve a fiscal balance, avoid deficits and keep the budget commensurate with the growth rate of its gross domestic product,” according to Article 107 of the mini constitution.
Tsang’s sound track record makes him a serious contender, a man with proven credentials, for Hong Kong’s top job if only he is allowed to enter the race.
The election to be held in March can genuinely live up to its name if it will be a contest between Tsang and Leung, who have entirely opposite approaches to governance.
Why Tsang is already out
Yet, sadly, Tsang may have already been denied such a chance.
In Beijing’s dictionary, a candidate’s capabilities and popularity are defined as liabilities.
As noted in my previous column, only the most loyal and trustworthy “comrade-in-arm” can take up the job. This is the top — and maybe the only — requirement for the CE candidate.
Communist cadres don’t like a popular figure to head the SAR government: he might want to leverage his popularity and become less “controllable” and even defy some instructions from the central authorities.
What’s more, Tsang, in Beijing’s eyes, carries some unfavorable luggage — his strong western upbringing.
His family emigrated to the US in the 1960s. He spent his prime years in the US, high school in New York City and undergraduate years at the Massachusetts Institute of Technology and then remained and worked in Boston.
He converted to Catholicism and became an enthusiastic advocate for human rights and racial equality when he was a college student.
Tsang returned to Hong Kong and joined the colonial government in 1982. In the run-up to the handover, he served as private secretary to Governor Chris Patten until the last day of British rule.
Beijing was never short of words against the last colonial ruler like “a sinner for a thousand years” when Patten revved up democratic politics.
Given Beijing’s rancor throughout the latter part of the transition, Tsang would never score any brownie points for working under Patten.
Tsang was then appointed director of Hong Kong’s Economic and Trade Office in London after 1997. Some observers commented then that the Tung Chee-hwa administration demoted him and drove him into political exile.
Tsang’s political career started to take off during the administration of Donald Tsang, whom he first met at Harvard Kennedy School of Government.
His old classmate made him director of the Chief Executive’s Office after Tung’s resignation in 2005.
This article appeared in the December issue of the Hong Kong Economic Journal Monthly
Translation by Frank Chen with additional reporting
[Chinese version 中文版]
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